Financial Times – BlackRock, the US asset manager, will pay UBS $15bn for a portfolio of subprime mortgage debt in a deal that the Swiss bank plans to announce today with its first-quarter results, people familiar with the transaction said.
The debt – which is being bought by BlackRock at a 25 per cent discount to its face value of $20bn – will be placed in a new fund and marketed to investors, the people said. UBS will hold a minority interest in the fund, which will enable it to participate in any potential upside.
UBS declined to comment. It has said it expects to announce a loss of about SFr12bn ($11.4bn) for the first quarter. So far, it has taken total writedowns of $38bn, mostly for mortgage assets.
To fill that hole, it has raised SFr13bn from investors including the Government of Singapore Investment Corporation and members of the Saudi royal family. It also has announced a SFr15bn rights offer.
BlackRock’s move represents one of the more significant examples of a growing number of contrarian bets by leading financial firms that say that the worst is over in the credit markets.
Goldman Sachs, private equity firms including TPG and several hedge funds have all been buying mortgage assets – in some cases reversing bets of last year.
