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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n