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2 Aug 2007

Austrailan Funds Suffer Losses

Australia's Macquarie Bank this week warned retail investors with positions in two of its high yield investment hedge funds are set to suffer losses of up to 25 percent. In comes as the U.S. sub prime mortgage market continues to weaken with Macquarie predicting related losses of up to $300 million.

According to Macquarie Fortress Investments director Peter Lucas, the average price of assets in the portfolio has dropped by 4 percent in the last month. Macquarie Bank follows Basis Capital and Absolute Capital as investment firms caught up in the U.S. mortgage crisi, Macquarie Bank produced record earnings in 2007.

Macquarie is the third Australian institution to flag possible losses as spooked investors have marked down the value of credit assets, with potential losses magnified by borrowings.

However, yesterday Macquarie spokeswoman Lisa Jamieson said that the bank's earnings won't be affected after Macquarie Fortress Investments Ltd., which had $873 million in two funds, was forced to sell assets to avoid breaching loan agreements.

Alex Akesson
Editor for HedgeCo.Net