Asia hedge firms see distressed asset opportunity

By Jeffrey Hodgson

HONG KONG, March 31 (Reuters) - Hedge funds betting on the debt of troubled companies look set to feast after years of lean pickings in Asia Pacific as the global credit crunch tosses up a banquet of opportunities, industry players said on Monday.

Macro hedge fund managers, who bet on trends in currencies, interest rates and other assets, are also seen doing well amid the current global market turmoil, which has battered many hedge funds investing exclusively in stock markets.

"Where are we adding (exposure) right now? I'd be adding actually distressed towards the end of this year. Australia looks very interesting in that respect, getting more interesting by the day," Michael Garrow, vice-president with The Blackstone Group (BX.N: Quote, Profile, Research), told the GaimAsia hedge fund conference in Hong Kong.

"We're seeing that with our multi-strategy managers who are kind of doing some of the asset allocation for us. They're on one of the biggest hiring sprees for credit and distressed (specialists) in as long as I've known them."

The Hong Kong-based executive with Blackstone's fund of hedge fund unit, which manages about $30 billion, said Japan was also a market that was likely to provide distressed investment opportunities, particularly in the property sector.

Several Australian companies have become casualties of the global credit crunch, which has closed off their usual avenues of borrowing. These include debt-laden shopping mall owner Centro Properties Group (CNP.AX: Quote, Profile, Research) which is under pressure to sell assets to raise cash.

Asia-focused hedge funds have been among industry's worst performers globally since the start of the year, according to research firm and consultancy Eurekahedge. After producing five straight years of double-digit percentage gains, the Eurekahedge Asian Hedge Fund Index is down about 4.23 percent this year.

This compares with declines of 0.78 percent and 1.94 percent respectively in its North American and European indexes.