Amundi Preparing for Bond Selloff With $1.9 Billion Credit Lineby and
Financing could be used to meet redemptions as `last resort'
Bond market liquidity a `significant risk' for asset managers
Amundi Group SA, Europe’s largest asset manager which is preparing an initial public offering, has arranged a 1.75 billion-euro ($1.9 billion) credit line that could be used to meet fund redemptions in the event of an extreme bond market selloff.
The company, which oversees 954 billion euros in assets including about 500 billion euros in fixed income, put the facility in place to prepare for the IPO, said Vincent Mortier, deputy chief investment officer at the Paris-based firm. The financing could also be used for other corporate purposes such as acquisitions, he said.
“It’s only one piece of the puzzle” in liquidity management, Mortier said in a telephone interview. “It’s a liquidity line which could be used when and if we need to intervene to support funds which are in difficulty in the market. It’s purely a last resort.”
Amundi, owned by Societe Generale SA and Credit Agricole SA, joins competitors including BlackRock Inc. and Aberdeen Asset Management Plc in raising funds to help meet redemptions if there’s no market liquidity. BlackRock has more than quadrupled its amount to $2.1 billion, while Aberdeen’s Martin Gilbert said his firm had arranged about $500 million in financing if things were to get “ugly” in the bond market.
Bond market liquidity “is one of the very significant risks and has been the case for several years and has not improved,” said Mortier. Amundi would draw on credit lines in “only the most extraordinary of circumstances.”
Amundi plans to list in Paris next month as Societe Generale divests its stake to raise cash. Analysts at banks managing the IPO say the asset manager could be valued at about 8 billion euros, people with knowledge of the matter said earlier this month. That would make it one of the biggest offerings of a financial company in Europe this year.