Business

Tuesday August 18, 2009

China’s CIC to invest US$2b in US mortgages


HONG KONG: China Investment Corp (CIC), the country’s US$200bil sovereign wealth fund, is set to pour up to US$2bil soon into the US mortgage system by hiring mandates under the US Treasury-backed Public-Private Investment Plan (PPIP), sources said.

Under the PPIP programme launched earlier this year the US government plans to seed a number of public-private investment funds that would combine taxpayer money with private capital to buy as much as US$40bil in toxic securities from banks.

The move came after the United States and China in late July ended their first annual “Strategic and Economic Dialogue” where they agreed to lead the global economy out of recession and China expressed hopes for safer investments in the world’s biggest economy.

”The Chinese government is always trying to seek a more ideal way to invest in US assets rather than purely buying US government bonds all the time,” said one of the sources.

”Some might think US$2bil for a US$200bil sovereign fund is not big money, but it can be regarded as an innovative and positive option for Chinese investment,” said the source.

The firms in talks with CIC are designated PPIP managers and include Alliance Bernstein LP, with sub-advisers Greenfield Partners LLC and Rialto Capital Management LLC; Angelo Gordon and Co LP with GE Capital Real Estate; BlackRock Inc; Invesco Ltd; Marathon Asset Management LP; Oaktree Capital Management LP; RLJ Western Asset Management LP; Trust Company of the West; and Wellington Management Co LLP, said the sources.

CIC has yet to select any firms as mandates but is expected to make a decision before the end of August, said the sources with direct knowledge of the matter. – Reuters

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