Hedge funds are preparing to muscle in on the riskiest part of the $550 billion commercial mortgage bond market, where a handful of firms control the fate of deals.
Ellington Management Group LLC, Saba Capital Management LP and a fund of MatlinPatterson are among investors considering purchases of so-called B-pieces of newly issued commercial property bonds, according to people familiar with the three firms’ plans who asked not to be identified because the information is private. Buyers of the securities are the first to lose money when buyers default; in exchange they earn higher returns and control over which mortgages are included in new deals created by Wall Street.
Read more...Hedge Funds Plotting CMBS Gatekeeper Coup: Mortgages - Bloomberg
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