Saturday 18 January 2020

US investment fund banks 50pc profit by cashing in Irish bonds

Joe Brennan and Donal Griffin

A major US investment fund has slashed its holding of Irish bonds to cash in on gains of up to 50pc, made since 2010.

Boston-based Loomis Sayles & Co has cut its holding of Irish Government bonds three years after swooping in to buy the nation's debt as it headed for the bailout.

The amount of Irish debt held by funds including the flagship Loomis Sayles Bond Fund fell 31pc to 329,496 securities in August, according to data compiled by Bloomberg and the company's website.

Loomis is controlled by top fund manager Daniel Fuss and was the second biggest private-sector holder of Irish debt after Franklin Templeton.

That number two slot now goes to French investor Carmignac Gestion SA.

Loomis has been selling bonds after making a huge gain on its Irish bet.

Quick financial sacrifices to resolve debt problems helped Ireland navigate the crisis, Brian Kennedy, a Loomis Sayles portfolio manager who works with Fuss, said in an email last month.

The gain on some bonds has been about 50pc, he said. Meg Clough, of Loomis Sayles in Boston, declined to provide more details when contacted yesterday.

Loomis anticipated Ireland's recovery and the European Central Bank's willingness to keep the euro region together.


Fuss, who managed the two best large US bond funds over the past decade, began buying Irish debt in the third quarter of 2010, filings show, as the nation's bonds yields soared and the country's banks came close to collapse.

"Those that were brave enough to dip their toe in the Irish market, when it was at distressed levels and most investors were running away, are reaping the benefits now," said Alan McQuaid, chief economist at Merrion Capital in Dublin. "Some may be happy enough to take some money off the table now to lock in those gains and look for other opportunities elsewhere."

The bonds, which plunged 7.2pc in the fourth quarter of 2010, jumped 11pc in 2011, according to the Bloomberg Ireland Sovereign Bond Index.

But they soared by 30pc last year and another 5.7pc in the first half of this year.

Loomis Sayles's disclosed holdings of Irish 4.5pc bonds, maturing in April 2020, declined by half to about 97,000 securities, the data show. The firm no longer has any disclosable investment in 4.5pc bonds due in October 2018 after previously holding more than 47,000, the data show.

Carmignac Gestion, run by Edouard Carmignac, more than doubled its holdings of Irish Government bonds that mature in March 2023, data compiled by Bloomberg shows. The firm is now second only to Franklin Resources as the biggest disclosed owner of Irish bonds.

Irish Independent

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