Hedge Fund LIM Focusing More on Distressed Trading in Asia

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Hong Kong-based hedge fund LIM Advisors is focusing more on buying high-yield and distressed bonds and loans in the Asia-Pacific region after the pandemic roiled markets earlier this year.

“A year ago, we were doing more direct private lending and less distressed debt,” said George Long, chief investment officer at LIM Advisors, who founded the firm in 1995. “Because of the Covid-19 shock, there has been more distressed debt in Asia.”

Signs of strains have been mounting in the region, with Asia junk bond giant China Evergrande Group spurring jitters among investors and commodities firm Vedanta Resources Ltd. faced with credit-rating warnings before big debt repayments are due. A total of $20 billion of dollar bonds sold by Asia-Pacific borrowers with yields of at least 15% -- characterizing them as stressed -- are set to mature by the end of next year, according to Bloomberg-compiled data.

“The opportunity now is in the secondary markets rather than direct lending and we are more focused on trading,” said Long, adding that the firm will still do “opportunistic lending depending on the situation.”

Peter Warbanoff, previously the head of distressed and opportunistic credit, left in May and is now a consultant to the firm, according to Long. Warbanoff was primarily focused on direct lending and the firm is “not actively looking to replace him,” he said.

©2020 Bloomberg L.P.

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