A team of distressed debt traders who resigned from Deutsche Bank earlier this year have set up their own boutique investment bank in Hong Kong.
SC Lowy, which opened today, will deal exclusively in distressed and illiquid investments across Asia, an asset class that has become increasingly fashionable among banks and hedge funds since the financial crisis struck.
“With the volatility and level of distress that came back in the market over the last 18 months we decided it was the time for us to be entrepreneurs and build our own business,” said Michel Lowy, chief executive, who founded the company alongside Soo Cheon Lee.
Mr Lee estimated that the total size of the distressed market in Asia-Pacific, excluding Japan, was as high as $100bn.
Mr Lowy and Mr Lee previously led Deutsche Bank's Asian distressed products group and cut their teeth at Cargill, trading distressed and illiquid investments in the aftermath of the 1997 Asian financial crisis.
Mr Lowy caused a stir when he resigned from Deutsche Bank in March, having founded its Asian distressed debt operation in 1999. Under his leadership the group was regarded as the region's leading force in distressed debt trading and investing.
While the opaque nature of trading in the loans and bonds of troubled companies makes industry data hard to come by, market participants say that investment banks and hedge funds have been aggressively moving into the Asian market in recent months.
Bonds are termed distressed when they yield at least 10 percentage points more than similar-maturity government notes. Near-distressed or stressed bonds have yields of between 7 and 10 percentage points.
Half of the new bank's 14 employees followed Mr Lowy from Deutsche Bank, including Chetan Baxi, chief operating officer, and Robert Lepsoe, head of origination and special situations. Nine of the employees are also shareholders.
Mr Lowy declined to say how much they had invested.
Mr. Hedge is indeed the more than the 'Long Hair' of the Forum.
I have hear several discussions about banning his ID, but he were still keep alive possiby for some special reasons.
For bond and interest rate trading, you can indeed make serious money (for the bank) because of very huge leverage, provided you have the credit line. For conservative Banks, they will most likely only dealing with such counterparties who is well established and well-known in the trade.
10% spread over treasury sound seriously risky to me. If there is second wave after they launch their funds...
On the other hand, we could not rule out there is possibility that there are some unsophisticated small 'private funds' in China which is run by 'relatives of ...etcs' whos size is in excess of 100m RMB from the local counties..., though they are becoming rare...
[quote] Mr. Hedge is indeed the more than the 'Long Hair' of the Forum.
I have hear several discussions about banning his ID, but he were still keep alive possiby for some special reasons.
For bond and interest rate trading, you can indeed make serious money (for the bank) because of very huge leverage, provided you have the credit line. For conservative Banks, they will most likely only dealing with such counterparties who is well established and well-known in the trade.
10% spread over treasury sound seriously risky to me. If there is second wave after they launch their funds...
On the other hand, we could not rule out there is possibility that there are some unsophisticated small 'private funds' in China which is run by 'relatives of ...etcs' whos size is in excess of 100m RMB from the local counties..., though they are becoming rare... actually, they are not running a bank
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