, boerse-express
Heta: Wird Kärnten zu Argentinien? US-Geierfonds gehen bereits an Bord
Die Nachrichtenagentur Bloomberg berichtet, dass sich Hedgefonds daran gemacht haben Heta-Schulden aufzusammeln um daraus Kapital zu schlegen. Der Bloomberg-Bericht in seiner englischen Originalfassung:
"Klagenfurt has long been a magnet for visitors from around the world, attracted by the idyllic Woerthersee lake and the Karawanken mountain range that the region shares with Slovenia.
Now this city of 97,000, the capital of the Austrian state of Carinthia, is attracting a new crowd, one that isn’t interested in the scenery as much as in the leftovers of the country’s biggest bank failure since World War II. Hedge funds including Palmerston Capital Management and Knighthead Capital Management have been trading in the debt of Heta Asset Resolution AG, a “bad bank” set up after the failure of Hypo Alpe-Adria-Bank International AG, according to three people familiar with the matter, who asked not to be named because it’s private. They’re speculating on the remnants of a lender whose rapid expansion unraveled after the 2008 financial crisis in a near-collapse that exposed fraud and corruption.
It’s an investment that hinges on whether Austrian taxpayers will have to continue to fund the bailout, one of the
most politically unpopular actions taken in recent years. It will also test new European Union laws designed to protect taxpayers from shouldering the cost of failing banks. “This is something of a political hot potato and certainly high-risk, high reward,” said Jonathan Tyce, senior banks analyst for Bloomberg Intelligence. “The game is to guess what haircut the regulator will ultimately apply.”
Switching Trades
Distressed investors have nonetheless zeroed in on Heta speculating losses could be smaller than anticipated or that state guarantees on Heta’s debt are enforced. They’re also drawn in by an environment with few large beaten-down opportunities. Global corporate defaults fell to 53 last year, an 80 percent drop from the peak in 2009, according to Moody’s Investors Service.
Stuart Wain, who heads Palmerston, had been betting against the Austrian bad bank and was reaping the rewards of that wager at the start of this year, one of the people said. Debt tied to the failed lender had plunged about 25 percent in the last few months of 2014 and another 14 percent in January as the Austrian government weighed pulling support. With Heta securities trading around 50 cents on the dollar, Wain switched trades, the person said. Wain, a former JPMorgan Chase & Co. trader who started Palmerston last year, bought the debt in March.
Rapid Rise
Jesse McCormick, chief operating officer at Palmerston, and Laura Torrado, general counsel at Knighthead, declined to comment on the investment. Heta was created to resolve the soured assets of Hypo Alpe, a lender started in 1896. A century later, it was a small mortgage lender that expanded rapidly in the former Yugoslavia.
Its rapid rise was bankrolled by a blanket guarantee of its owner, the southern province of Carinthia, giving it access to cheap and unlimited funding. Hypo Alpe’s growth accelerated when the anti-immigrant politician Joerg Haider became Carinthia’s governor in 1999. Haider allowed the bank to increase the volume of guaranteed bonds to a peak of 24.7 billion euros in 2007, at the time more than 10 times his state’s annual budget. In return, he said he expected gratitude to be shown by funding projects, such as a floating stage in the Woerthersee, or a new soccer stadium in Klagenfurt.
The bank imploded when loans in the region soured during the global economic decline. The Austrian government was forced to step in to prevent its collapse in 2009 and the bailout has since cost taxpayers 5.5 billion euros ($6 billion). After the collapse, Hypo Alpe’s former chief executive officer, board members and politicians in Carinthia and Croatia were jailed after being convicted of breach of trust, graft, false accounting and other wrongdoings.
Bond Slide
Heta’s bonds slid last year from above 100 cents on the dollar as speculation grew that Austria’s government was considering withdrawing support. It pulled the plug on March 1, saying that it would no longer use taxpayer money to fund Heta’s wind-down.
Austria’s financial regulator then ordered a 15-month debt moratorium while it figures out how much creditors will have to contribute to the unwinding of Heta’s soured assets. Most of Heta’s debt is state-guaranteed and the economic and legal viability of those guarantees is a big unknown factor in valuing the debt. Another is the quality of what Heta owns. An audit that found additional writedown needs of between 5.1 billion euros and 8.7 billion euros triggered the government’s halt of support.
New York Fund
Knighthead, based in New York with $4.3 billion, is no stranger to complex sovereign situations after being involved in creditor action focused on Argentina and Puerto Rico. Wain, who was head of European credit trading at JPMorgan until 2013, has $150 million and targets debt in the region. Heta owes about 7.1 billion euros to German banks and insurers, the Bundesbank has said, with the biggest disclosed creditors being Commerzbank AG and Deutsche Pfandbriefbank AG.
Among the top mutual funds holding Heta debt securities are Pacific Investment Management Co. and Deutsche Bank AG’s fund
manager DWS. The portion of Heta’s debt that’s attracted vulture funds is about 10.2 billion euros of liabilities backed by the province of Carinthia. The biggest and most easily-traded are the 4.25 percent 1.25 billion-euro bonds due October 2016 and the 4.375 percent 2 billion-euro bond due January 2017. The securities trade at about 57 cents on the euro, according to prices compiled by Bloomberg.
Can’t Pay
Carinthia’s governor has said that the province of 556,000 people, which has an annual budget of 2.4 billion euros, can’t pay if the guarantees come due. The province has already sought federal help for funding of its day-to-day operations. Finance Minister Hans Joerg Schelling has responded that creditors guaranteed by Carinthia have no recourse to the federal government. He’s urged the state to seek talks with
Heta’s guaranteed creditors and explore options such as buying the bonds at a discount. Heta is the first institute to be wound down under the
European Union’s new Bank Recovery and Resolution Directive. A group of Heta bondholders representing about a quarter of the outstanding debt has appointed Kirkland & Ellis LLP as legal counsel. “Some investors think that if there is a bail-in of senior debt, the haircut might not be as severe as bond prices suggest,” said Simon Adamson, an analyst with CreditSights in London. ‘It’s difficult to assess that with so little
information on the value of Heta’s assets.’’
"Klagenfurt has long been a magnet for visitors from around the world, attracted by the idyllic Woerthersee lake and the Karawanken mountain range that the region shares with Slovenia.
Now this city of 97,000, the capital of the Austrian state of Carinthia, is attracting a new crowd, one that isn’t interested in the scenery as much as in the leftovers of the country’s biggest bank failure since World War II. Hedge funds including Palmerston Capital Management and Knighthead Capital Management have been trading in the debt of Heta Asset Resolution AG, a “bad bank” set up after the failure of Hypo Alpe-Adria-Bank International AG, according to three people familiar with the matter, who asked not to be named because it’s private. They’re speculating on the remnants of a lender whose rapid expansion unraveled after the 2008 financial crisis in a near-collapse that exposed fraud and corruption.
It’s an investment that hinges on whether Austrian taxpayers will have to continue to fund the bailout, one of the
most politically unpopular actions taken in recent years. It will also test new European Union laws designed to protect taxpayers from shouldering the cost of failing banks. “This is something of a political hot potato and certainly high-risk, high reward,” said Jonathan Tyce, senior banks analyst for Bloomberg Intelligence. “The game is to guess what haircut the regulator will ultimately apply.”
Switching Trades
Distressed investors have nonetheless zeroed in on Heta speculating losses could be smaller than anticipated or that state guarantees on Heta’s debt are enforced. They’re also drawn in by an environment with few large beaten-down opportunities. Global corporate defaults fell to 53 last year, an 80 percent drop from the peak in 2009, according to Moody’s Investors Service.
Stuart Wain, who heads Palmerston, had been betting against the Austrian bad bank and was reaping the rewards of that wager at the start of this year, one of the people said. Debt tied to the failed lender had plunged about 25 percent in the last few months of 2014 and another 14 percent in January as the Austrian government weighed pulling support. With Heta securities trading around 50 cents on the dollar, Wain switched trades, the person said. Wain, a former JPMorgan Chase & Co. trader who started Palmerston last year, bought the debt in March.
Rapid Rise
Jesse McCormick, chief operating officer at Palmerston, and Laura Torrado, general counsel at Knighthead, declined to comment on the investment. Heta was created to resolve the soured assets of Hypo Alpe, a lender started in 1896. A century later, it was a small mortgage lender that expanded rapidly in the former Yugoslavia.
Its rapid rise was bankrolled by a blanket guarantee of its owner, the southern province of Carinthia, giving it access to cheap and unlimited funding. Hypo Alpe’s growth accelerated when the anti-immigrant politician Joerg Haider became Carinthia’s governor in 1999. Haider allowed the bank to increase the volume of guaranteed bonds to a peak of 24.7 billion euros in 2007, at the time more than 10 times his state’s annual budget. In return, he said he expected gratitude to be shown by funding projects, such as a floating stage in the Woerthersee, or a new soccer stadium in Klagenfurt.
The bank imploded when loans in the region soured during the global economic decline. The Austrian government was forced to step in to prevent its collapse in 2009 and the bailout has since cost taxpayers 5.5 billion euros ($6 billion). After the collapse, Hypo Alpe’s former chief executive officer, board members and politicians in Carinthia and Croatia were jailed after being convicted of breach of trust, graft, false accounting and other wrongdoings.
Bond Slide
Heta’s bonds slid last year from above 100 cents on the dollar as speculation grew that Austria’s government was considering withdrawing support. It pulled the plug on March 1, saying that it would no longer use taxpayer money to fund Heta’s wind-down.
Austria’s financial regulator then ordered a 15-month debt moratorium while it figures out how much creditors will have to contribute to the unwinding of Heta’s soured assets. Most of Heta’s debt is state-guaranteed and the economic and legal viability of those guarantees is a big unknown factor in valuing the debt. Another is the quality of what Heta owns. An audit that found additional writedown needs of between 5.1 billion euros and 8.7 billion euros triggered the government’s halt of support.
New York Fund
Knighthead, based in New York with $4.3 billion, is no stranger to complex sovereign situations after being involved in creditor action focused on Argentina and Puerto Rico. Wain, who was head of European credit trading at JPMorgan until 2013, has $150 million and targets debt in the region. Heta owes about 7.1 billion euros to German banks and insurers, the Bundesbank has said, with the biggest disclosed creditors being Commerzbank AG and Deutsche Pfandbriefbank AG.
Among the top mutual funds holding Heta debt securities are Pacific Investment Management Co. and Deutsche Bank AG’s fund
manager DWS. The portion of Heta’s debt that’s attracted vulture funds is about 10.2 billion euros of liabilities backed by the province of Carinthia. The biggest and most easily-traded are the 4.25 percent 1.25 billion-euro bonds due October 2016 and the 4.375 percent 2 billion-euro bond due January 2017. The securities trade at about 57 cents on the euro, according to prices compiled by Bloomberg.
Can’t Pay
Carinthia’s governor has said that the province of 556,000 people, which has an annual budget of 2.4 billion euros, can’t pay if the guarantees come due. The province has already sought federal help for funding of its day-to-day operations. Finance Minister Hans Joerg Schelling has responded that creditors guaranteed by Carinthia have no recourse to the federal government. He’s urged the state to seek talks with
Heta’s guaranteed creditors and explore options such as buying the bonds at a discount. Heta is the first institute to be wound down under the
European Union’s new Bank Recovery and Resolution Directive. A group of Heta bondholders representing about a quarter of the outstanding debt has appointed Kirkland & Ellis LLP as legal counsel. “Some investors think that if there is a bail-in of senior debt, the haircut might not be as severe as bond prices suggest,” said Simon Adamson, an analyst with CreditSights in London. ‘It’s difficult to assess that with so little
information on the value of Heta’s assets.’’