Basis Capital suspended redemptions for its $1 billion Basis Yield Fund earlier this week after rating agency actions unsettled Basis’ usual markets, reports FinancialStandard.com. The Basis Yield hedge fund was invested in collateralized debt obligations, collateralized loan obligations and subprime mortgages.
Downgrades by Moody’s Investors Service and the placement of funds on credit watch by Standard & Poor’s spooked investors, which prompted the change. The fund had 79% of its assets invested in non-investment grade CDOs, CLOs and subprime mortgages, according to an advisor of one of the funds client’s. The remaining balance was composed of liquid securities.