Hedge Fund Sees China's Distressed Debt Generating Juicy Returns

Bets on beaten-down Chinese distressed bonds could pay off if the nation persists with its credit easing and there’s a sustained rally in the domestic stock market, according to an Asia-based hedge fund that manages $3.5 billion, Bloomberg News reported. Distressed dollar bonds from Chinese issuers have had their best start to a year since 2012. A strategy that includes investing in these notes “could generate out-sized returns” if an improving economy and share gains help investors recover more money from troubled debt, said Kevin Wu, a portfolio manager at Pinpoint Asset Management. Wu is one of the managers of the Pinpoint Multi-Strategy Fund, an offshore hedge fund which has posted an annualized return of 11.3 percent since June 2014. Pinpoint Asset, which has been involved in high-profile Asia restructurings including that of troubled commodities trader Noble Group Ltd., also runs three onshore hedge funds. Read more

Location