AMP fund hit by falling dollar 'on hold'
Standard and Poor’s (S&P) has placed the AMP Capital Structured High Yield (SHY) fund ‘on hold’ following notification that the fund cannot make distributions until September next year.
The AMP SHY fund is invested in international assets hedged to the Australian dollar. The decline of the dollar has meant the fund has incurred losses on its currency hedging.
The fund manager is using its borrowing assets to meet its required currency settlements.
David Erdonmez, an S&P fund services analyst, said: “The SHY portfolio is comprised of high yield private debt, which means the fund’s assets are illiquid; investments are viewed as buy and hold. In meeting recent currency settlement obligations, the fund has drawn down on its borrowing facility and used all of the income generated over the preceding period. The net effect of this decision is that the fund will be using income generated from the underlying assets primarily to pay down the borrowing facility before any future distributions can occur.”
The rating will be reviewed on a continuing basis.
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