Credit events in the autos sector in May have spurred concerns about hedge fund losses and their impact on the market. April was the worst month for hedge funds since September 2002, and doom-mongers are fearful that May will be even worse after convertible arbitrage and credit funds were caught out by the downgrades of General Motors and Ford Motor Company.
It has been rumoured that some credit hedge funds will have suffered losses of 10%-15% as a result of CDO exposure to General Motors and Ford, according to equity research from Morgan Stanley, and talk of hedge fund bankruptcies has been rife – although none have been confirmed.
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