BOSTON (Reuters) – Money manager BlackRock Inc is launching more distressed securities funds to take advantage of the current credit market troubles, chairman and chief executive, told Reuters.
When speaking at the Merrill Lynch Financial Services conference in New York, Fink says the firm would launch funds investing in distressed mortgages and distressed real estate. These funds would raise “multibillion dollars,” Fink says.
“This is a time to be innovative,” he says.
BlackRock, the biggest listed U.S. asset manager, has already raised a “very large” leveraged-loan fund and is now in the process of investing the money.
The firm had $1.3 trillion in assets under management at the end of September.
BlackRock, which last month posted strong quarterly earnings as its funds steered clear of subprime mortgages and other troubled assets, has an exposure of about $4.2 billion to structured investment vehicles (SIVs) out of its total money market assets of about $320 billion, Fink said.
Many SIVs had issued asset-backed commercial paper to raise cheap short-term funding to buy higher-yielding but risky subprime securities. These problem SIVs have been scrambling to find funding or have come under pressure to sell assets to meet their obligations.
Legg Mason Inc, the second-biggest listed U.S. asset manager, says it has about $10 billion of investments in asset-backed commercial paper issued by SIVs. Legg also says it has procured letters of credit from a bank for $238 million to support the credit ratings of its two rated money market funds.
Fink says almost all of BlackRock’s SIV exposure was to vehicles sponsored by HSBC Holdings Plc and Citigroup