West Palm Beach (HedgeCo.Net) – At a time when most financial institutions are recovering from multi-billion dollar writedowns and anxiety is running high on Wall Street, BlackRock Inc. is moving forward and taking advantage of some recent pitfalls in the marketplace.
BlackRock has gotten a huge vote of confidence from the fed; one that’s worth $30 billion. As Bear Stearns is getting bought out by its former rival, JPMorgan Chase, The Federal Reserve Bank of New York has entrusted BlackRock to manage Bear’s $30 billion portfolio, adding to $1.4 trillion they already manage.
Under guidelines established by the New York Fed to “minimize disruption to financial markets and maximize recovery value,” BlackRock will manage and liquidate the assets to repay creditors and other expenses of the company.
The $30 billion will be placed into a new company that has been established in Delaware and set up by the central bank. According to the deal, JPMorgan will provide the first $1 billion, followed by $29 billion supplied by the Fed.
Taking advantage of the recent housing crisis, Blackrock has also teamed up with hedge fund Highfields Capital Management to back a new firm that buys distressed mortgages.
The new company, Private National Mortgage Acceptance Company, also known as PennyMac, will aid borrowers in restructuring loans in hopes of avoiding foreclosures. Requesting “patient capital,” PennyMac asks investors to hold their assets in the fund for a minimum of 5-7 years.
"Over the next two to three years, we anticipate that the volume of bank-held nonperforming mortgages will grow dramatically," Senior Managing Director of Highfields Jonathon Jacobson said. "PennyMac will be extraordinarily well positioned as both a buyer and servicer of these assets.”
News of both their new ventures sent BlackRock’s shares soaring over 9%, taking it to $224.53.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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