Fitch Assigns Initial Ratings of ‘BB-’ to Harbinger Capital’s Spectrum (MarketWatch)
Fitch also assigns a ‘BB-’ rating to Spectrum’s proposed note offering of a 9.5%, $150 million senior secured notes. The new 144A notes are a tack-on to the existing $750 million 9.5% senior secured notes. It will be issued under the existing indenture with the same maturity of June 15, 2018. The funds will be used for general corporate purposes, including potential refinancing or acquisitions. Acquisitions are expected to be bolt-on’s in margin accretive businesses such as household insect control or the less seasonal pet supply category.
Cliff Warren’s Skybound Capital Sets Up Office in Hong Kong (AsianInvestor)
Skybound Capital has become the first South African fund-of-hedge-fund (FoHF) manager to set up in Hong Kong as it seeks to double its AUM to $500 million within three years. Chief investment officer Michael Tostée moved to the city late last month to head the business, while Theodore Shou, who joined from a Hong Kong family office on October 1 and previously worked on manager selection at HSBC Private Bank, is responsible for portfolio management. Skybound, which has $275 million in total AUM, received its type-9 asset management licence from Hong Kong’s Securities and Futures Commission last month. It has transferred management of its two Asia-focused products to the new office: the Dragonfly Asia Pacific Fund and the China Red Fund, which were both established in 2006.
Oil Falls Back as Europe Woes Outweigh Fed View (IBNLive)
Crude oil futures fell back on Wednesday as uncertainties about Greece’s bailout loan emerged, deepening the euro zone debt crisis and outweighing a U.S. Federal Reserve view of a somewhat brighter economic outlook. In early trade, hopes that the Fed might signal monetary easing to help boost sluggish economic growth pushed prices up. However, a downturn in euro zone manufacturing further put the spotlight on the region’s festering debt crisis and data showing an increase in U.S. crude stockpiles last week tempered the day’s move up in prices. The dollar trimmed losses against the euro after the Fed’s Open Market Committee said in a statement following its two-day meeting that the U.S. economy strengthened somewhat in the third quarter. That view was interpreted by some as removing the potential for further policy easing, as least for the moment, analysts said. Crude futures initially held gains after the statement was released as some interpreted risks signals it raised as opening the door for more easing, but many analysts did not see it that way. “The Fed did not give any indication about QE3, which the market was on the lookout for,” said John Kilduff, a partner at hedge fund Again Capital LLC in New York.
Hedge Fund Insight from the Mizuho-Eurekahedge Index (HedgeCo)
Coinciding with the launch of the Mizuho-Eurekahedge Index, the first Mizuho Eurekahedge Indices Analysis Report has been released. The report examines global hedge funds through the lens of the Mizuho-Eurekahedge Index, which gives a fresh perspective on the hedge funds industry. This is because the new index is what is known as ‘asset weighted’ and follows a new methodology, which is unique from existing hedge fund indices, including Eurekahedge’s very own ‘equal weighted’ indices.
Annaly Capital Prepares ‘War Chest’ (WSJ)
Banks, hedge funds and other financial institutions are “raining assets” on the markets as they reduce risk, countering the Federal Reserve’s efforts to stimulate the economy, the head of a mortgage bond investment firm said Wednesday. Annaly Capital Management (NLY) Chief Executive Michael Farrell said the New York-based real estate investment trust has reduced its debt and amassed a $3.5 billion “war chest” to exploit falling asset prices as competitors also race to raise cash by selling assets. Speaking on a conference call, Farrell suggested that investors extrapolate the unwinding of failed firm MF Global over companies or hedge funds that will need to reduce risk on their balance sheets ahead of stiffer regulation. Selling is coming from domestic and foreign sources for a variety of reasons, including avoiding currency risk and avoiding the margin-damping effects that faster home-loan refinancing will have on mortgage-backed securities, he added. “It’s raining assets,” Farrell said. “And you want to be (as) bulletproof as you can be during that period.” The selling is so deep that higher-yield spreads are likely “here for a while,” which is hurting the Fed’s ability to affect the market by keeping interest rates low, he said.
Drake Hedge Fund Manager Find $175k by SEC (HedgeCo)
The Securities and Exchange Commission announced the filing of a civil injunctive action against Drake Asset Management, LLC (Drake), of Glen Head, NY, and Oliver R. Grace, Jr., of Hobe Sound, FL, for conducting a scheme to evade the group purchase limits of the public offerings of seven banks that were converting from mutual to stock ownership. The SEC’s complaint alleges that, from 2003 through 2007, Grace knowingly or recklessly failed to disclose his association with certain entities, including hedge funds managed by Drake, which participated in the offerings alongside Grace. Under Grace’s direction, Drake also knowingly or recklessly failed to disclose the hedge funds’ association with Grace. By failing to disclose these associations, the Drake hedge funds and Grace were able to acquire stock that exceeded the offerings’ group purchase limits, in violation of offering terms and banking regulations.
Och-Ziff Capital Management Group Reports Low Third Quarter (Bloomberg)