‘Kyobo Investment’ foreign bond private equity fund lost 99%

Input 2020.11.09 19:51

It was found that up to 99% of the losses were incurred in the private equity fund “Kyobo Global M”, a foreign fund financed by Kyobo Securities. The fund was sold for 10.5 billion won through Shinhan Bank.

According to the financial investment industry on the 9th, Shinhan Bank sent a notice confirming the loss of the fund to the investors of Kyobo Global M Fund. In the announcement, Shinhan Bank said: “The Kyobo Global M Fund is expected to have a base price adjustment of around 10” and “It is expected to be around 1% of the initial investment due to the leverage of the total return swap (TRS) “.

This fund was invested in bonds issued by WBL, an American finance company specializing in short-term loans for small business owners in the United States, and redirectly invested in a fund set up by Tandem Credit Facility, a manager based in Hong Kong. In May, Kyobo Securities replaced the manager with PGCM because the tandem did not comply with the terms and conditions of operation.

Due to the novel coronavirus (Corona 19), small business owners’ sales dropped dramatically, resulting in bond default, and KB Securities decided to repay the TRS 5 billion won provided to the fund, resulting in a 99% loss. .

In the industry, it is pointed out that while the bonds invested by the fund were insolvent, local managers neglected to oversee the bond issuer WBL and, even when new funds were poured in, they may have triggered the fund’s yield to prevent it.