Pacific Investment Management Co. shrugged off talk of a haircut to become this year’s biggest buyer of debt issued by Austria’s failed lender, Hypo Alpe- Adria-Bank International AG.
Pimco has snapped up about 226 million euros ($282 million) of the bank’s bonds this year, with its $9.3 billion Diversified Income Fund, based in Ireland, leading the pack, data compiled by Bloomberg show. The latest numbers show Pimco having amassed 251 million euros of Hypo’s bonds, most of it purchased before the nationalized lender was turned into a winddown vehicle and renamed Heta Asset Resolution AG this month. Pimco now ranks second among disclosed bondholders, behind Deutsche Bank AG.
The data, derived from regulatory filings by Pimco and other funds, doesn’t reveal when exactly Pimco purchased the bonds or whether it still holds them. Pimco’s German press office didn’t immediately return requests by Bloomberg News seeking comment.
Heta’s 4.375 percent, 2 billion-euro senior bond maturing in 2017, one of the bank’s biggest and most liquid securities, fetched yields ranging from 3.455 percent on May 22 to 18.4 percent on Sept. 29, according to Bloomberg generic prices. Like most of the company’s bonds, it is guaranteed by the Austrian province of Carinthia, a former owner.
The securities slumped early this year when then Austrian Finance Minister Michael Spindelegger contemplated sending Hypo Alpe into insolvency. They recovered when he later ruled it out but plummeted again when the government proposed a bank insolvency law that some investors thought might be used to bail in Heta’s bonds. That too never materialized.
Austria voided some 800 million euros of subordinated debt, including about 200 million euros of bonds owned by Deutsche Bank’s DWS unit, via a law enacted in July that overrode the Carinthian guarantees on those bonds. It decided to leave the bank’s senior bonds untouched. DWS and other investors have filed lawsuits against the legislation in Austrian courts.
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