'Hedge funds look to distressed assets'

14 December 2007 / by None
With many banking institutions "burdened" with high levels of impaired credit assets and significant losses, one expert has suggested that there could be new opportunities of hedge funds.

In the wake of the sub-prime crisis, hedge funds could be well-positioned to take on distressed assets while banks struggle to write new business due to capital restraints, Francois Barthelemy of F&C partners claimed.

To address the issue, "fresh" capital needs to be raised and impaired assets should be sold to investors who are able to "work them through bankruptcies or restructuring", he stated.

"Only hedge funds have the legal and investment expertise to buy that type of assets and they are likely to do really well as a result of it," he argued.

In related news, the Credit Opportunities I fund set up by John Paulson to capitalise upon problems he predicted would occur within the US sub-prime market increased by 550 per cent between January and the end of October, the Financial Times reported.

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