Among the losers in the housing debacle is Pacific Investment Management Co., the world’s biggest bond fund firm. Pimco said in a June 30 investment report that its holdings in Mexican homebuilders were partly to blame for a 6.6 percent loss in the second quarter of 2013 in its $1.6 billion Pimco Emerging Markets Corporate Bond Fund. (PEMIX) It was the fund’s worst quarter ever.
In addition to Pimco, losers in Mexican-housing stocks, bonds, loans and derivatives contracts included London-based Barclays Plc (BARC), BlackRock Inc.’s funds, New York-based Citigroup Inc., Zurich-based Credit Suisse Group AG and Frankfurt-based Deutsche Bank AG. None of the firms will disclose the impact on their portfolios of their Mexican-housing investments.
“It went from a compelling business thesis to one that got bigger and bigger and borrowed more, and then the music just stopped,” says William Perry, a portfolio manager at Stone Harbor Investment Partners LP, which oversees $55 billion in emerging-markets debt and which finished selling its Mexican homebuilder bonds in May.
Deutsche Bank says Urbi didn’t make a $3 million payment on a $55 million loan and also failed to pay $1.55 million in interest on two loans.
Don't you just feel for those poor duped investment companies?