News from the Wall Street Journal shows that two more Australian funds are feeling some heat. The funds in question are managed by Absolute Capital Ltd. — 50 percent owned by an ABN AMRO unit — and have halted investor withdrawals amid recent losses:
… Absolute Capital Ltd., which invests in collateralized debt obligations, said it is temporarily halting withdrawals from two funds with about 200 million Australian dollars (US$176.7 million) in assets. The Sydney-based manager of structured credit funds … cited losses in the two funds of as much as an estimated 6% this month and a lack of liquidity in global structured-credit markets. But it played down the funds’ direct exposure to the subprime market, putting it at less than 5%.
I’d recently written about about subprime-related problems with two hedge funds at another Aussie fund manager, Basis Capital Funds Management Ltd., a few weeks back. If anything, continuing problems in the Asian capital markets underscore just how far problems in the US mortgage markets really reach:
The impact of the subprime woes in Asia is only gradually unfolding. Banks and insurance companies, particularly in Japan, have significant holdings of collateralized debt obligations, which are bundles of bonds backed by debt including home loans, which are sliced into portions, each representing a different degree of risk. Japanese investment-banking giant Nomura Holdings Inc. wrote down $260 million of its exposure to U.S. subprime loans and said it is considering exiting from the market for residential mortgage-backed securities, which included the repackaging of subprime loans.