In the wake of more financial institutions revealing exposure to the US sub-prime market, a number of groups have spoken out over the matter in an attempt to calm investor concerns.
Mariner Financial Limited (Mariner) yesterday released a statement to the Australian Securities Exchange (ASX) stating shareholders should not be overly alarmed by the spate of companies announcing exposure to the US sub-prime market.
“[We] have no exposure to CDOs, (colateralised debt obligations) CLOs, (colateralised loan obligations) credit derivatives, bridge loans, hedge funds,” the statement said.
“Or any other structured credit transaction other than through a 14.2 per cent shareholding in the separately listed Mariner Bridge Limited, which disclosed last week that a small percentage of its total assets are exposed to the US sub-prime market,” it said.
Allco Finance Group (Allco) also confirmed it has no direct exposure to US sub-prime assets.
“Allco has invested (and therefore has a total exposure of) A$6 million in an externally-managed investment grade CDO,” an Allco company statement said.
“The investment has been in place for since 2004 and has performed well to date.
“Some Allco managed funds have small amounts invested in CDOs, however to date they have not had any non-performing loans or assets.”
The group also has a white-label mortgage platform called Möbius, which operates in the Australian market.
“The business is not affected by the issues associated with US sub-prime mortgages and does not offer the affordability products/features prevalent in US sub-prime portfolios, which are a large factor in losses in the US portfolios,” the statement said.
“Allco restates that the impact of the US sub-prime market crisis is negligible, and reiterates its earnings guidance for the year ended 30 June 2007. The results for the company will be released on August 21, 2007.”
Macquarie Bank announced this week that its investment funds, Macquarie Fortress Notes Fund and the Macquarie Fortress Fund could lose up to 25 per cent or $300 million of their value as a result of the sub-prime crisis.
Another group hit by the down fall in the market is international investment and advisory firm Babcock & Brown.
Babcock & Brown confirmed yesterday that it has an insignificant exposure to the market and that it is comfortable that as a result of the cautious approach and strong controls it has in place its exposure has not been impacted by the latest downgrades from the US based ratings agencies.
Australia’s investment market was alerted to connections to US sub-prime market fallout last month when Standard & Poor’s placed both Basis Capital’s Yield and Aust Rim Opportunity Funds on hold.
