Korea Hedge Funds Are Binging on Risky Bonds Without Ratings
- Sales of convertible bonds rose to $2.5 billion in ‘19: KCMI
- Investors are lured by “refixing” clause and high returns
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Burgeoning hedge fund demand is pushing convertible bond sales in Korea toward a record year, a spree that’s also sowing concern that too much risk will end up in unsophisticated hands.
Unlike elsewhere, many end-investors in Korean hedge funds are individuals who have shifted out of traditional mutual funds in search of higher returns. It’s a fact that sits uncomfortably with observers who worry what will happen if they force redemptions on funds holding relatively illiquid securities.