Seeking Alpha
Research analyst, long/short equity, ETF investing, foreign companies
Profile| Send Message|
( followers)  

France's largest investment bank, BNP Paribas, released a statement Thursday saying it has temporarily suspended the net asset value [NAV] calculation of three funds, all of which are invested in U.S. asset-backed securities (inc. sub-prime mortgages) and it has also frozen redemptions. BNP shares were last down 3.5% to €82.44 in afternoon trading in Paris. Bloomberg reports the three funds: Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia, had approximately €2 billion ($2.76B) of assets on July 27, including €700M in subprime loans. BNP said, "The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating." NAV calculations and fund subscriptions/redemptions will resume as soon liquidity returns to the market. In the meantime, BNP plans to provide fund investors with additional information in one month. Subprime-related troubles have also forced redemption freezes at Bear Stearns and Union Investment Management in Germany; NIBC Holding in The Netherlands, reported a €137M year-to-date subprime loss.

Sources: Press release, Bloomberg, MarketWatch
Commentary: Open Thread: Bear StearnsGoldman Denies Hedge Fund LiquidationI-Bank Stocks Are Falling Knives
Stocks/ETFs to watch: BNPQY.PK

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

Source: BNP Paribas Hit by Subprime, Suspends Redemptions on Three Funds