Osaka Financial has told clients that the ban on redemptions from a high yield bond fund with $780 million in funds under management was not systemically important enough to spark a new credit crisis like that which preceded the subprime crash in 2008.

The Focused Credit Fund run by respected manager, Third Avenue Management, held at least 20% of its assets in illiquid debt instruments announced it would suspend investor withdrawals from the fund after a slew of redemptions prompted by concerns over the high-yield bond market.

Markets have been awash with speculation that the similarity in circumstances surrounding the shuttering of Third Avenue’s fund and the 2007 closure of two Bear Stearns hedge funds heavily exposed to subprime mortgages could be a precursor to a 2007/08-style credit crunch but Osaka Financial chief economist, Satoshi Mihuko, insisted the risks were slim to non-existent.

“The assets causing the jitters in the high yield or ‘junk’ bond market are corporate bonds which represent loans made to companies who couldn’t get financing via conventional means. Many of these companies are involved in the US shale oil industry and the collapse in oil prices means they aren’t able to pay the interest on their debt”

“This has led to a number of defaults and there are fears that contagion from these defaults could make its way into mainstream markets leading to another credit crunch. Osaka Financial doesn’t believe there will be any contagion because the market for these junk bonds is far smaller than the subprime market was in 2007 before it collapsed,” he explained.

About Osaka Financial
Established in 2007, Osaka Financial is a fully-independent investment and asset management practice providing bespoke financial and wealth management solutions to individuals and families who need to build upon and conserve their wealth. We provide a comprehensive range of services including asset management, retirement planning and portfolio design.

Staffed by a number of exceptionally well-qualified finance professionals, Osaka Financial’s business philosophy reflects the core values of its founders: uncompromising independence, clarity, performance, fiduciary responsibility and integrity.