The Swiss bank was buying bonds in the struggling Chinese real estate developer until May.
Evergrande is suddenly on everyone's lips, particularly after the overnight decline in equity markets worldwide, much of it prompted by worries about potential contagion should the Chinese developer default.
Even in Switzerland, UBS and Credit Suisse shares felt the pressure as a result of increasingly widespread expectations the troubled real estate developer will not make interest payments on its debt later this week, leading to a potential default.
As finews.com previously indicated, UBS holds $275.7 million in Evergrande's dollar bonds while Credit Suisse ostensibly has no investments.
Buying Lasted into Summer
A fund analysis issued by Morningstar shows that UBS, Blackrock and HSBC were accumulating more of the developer's bonds until relatively recently when it was already clear the company was experiencing financial difficulties. UBS increased its share of Evergrande issues by 25 percent between January and the end of May in its Asian high yield bond fund, even though its overall exposure to the developer fell 0.09 percent.
Bailout Uncertain
Patrick Ge, a research analyst at Morning star, said that some managers «believe Evergrande is a buy» at current levels.
«Investors should not take for granted that a government rescue package, such as the one granted to Huarong Asset Management, is a given in the case of Evergrande.» Ge added.
