Wanted: CIC bond managers

By Xin Zhiming (China Daily)
Updated: 2008-02-01 09:14

The country's $200 billion sovereign wealth fund China Investment Corp (CIC) is hiring external bond managers to handle capital in two fixed-income products.

CIC is looking for fund houses that can manage investments in active global fixed-income and emerging market debt, it said on its website yesterday. Fixed-income products refer to any type of investment that yields a regular or fixed return.

The fund said the annual investment return in the global market should be 150 basis points, or 1.5 percent, more than a GDP-weighted customized global bond index. For emerging markets, it should be 200 basis points, or 2 percent, more than the JPMorgan EMBI global benchmark. The benchmarks in both cases are in US dollars.

Applicants must have at least six years of investment experience in the relevant asset class and be managing at least $15 billion of fixed-income assets, excluding money market funds, CIC said. They must be financially stable with robust risk management processes and must not have received any "severe" regulatory penalties in the last three years.

The application deadline is February 15 and all documents must be submitted to the CIC by February 29. After two rounds of interviews, the CIC will invite finalists to negotiate fees.

The CIC could complete the interview process in March, an insider was quoted by Dow Jones as saying.

China Business News reported yesterday that Barclays Plc Chairman Marcus Agius said the bank hopes to become an investment manager for CIC. Barclays Global Investors has contacted CIC about the matter, the report said.

Modeled on Singapore's state investment arm Temasek, CIC was launched in September last year.

CIC invested $3 billion in US private equity fund Blackstone in June 2007. In December it paid $5 billion to No 2 US investment bank Morgan Stanley for its equity units, mandatorily convertible into 9.9 percent of the bank's common shares.

Given its $200 billion scale, CIC has sparked concern in international financial circles. But China has clarified that only one-third of its capital, or less than $70 billion, will be invested overseas. The remainder will be used to bail out domestic commercial banks and to help some policy banks go commercial.

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