Posted inChinaFixed Income

Barings launches QDLP fund in China

The firm’s fourth fund under the scheme invests in global high yield bonds.
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The Barings Global High Yield Bond No.5 Private Fund (Fund V)is available to qualified investors in mainland China after it was registered with the Asset Management Association of China to be distributed to qualified investors in Mainland China.

It will invest in both fixed and floating rate high yield corporate debt, primarily listed or traded in the US and Europe markets, according to the UK asset manager.

“With relatively high yields on offer, and combined with robust corporate fundamentals, we believe there is attractive long-term relative value to be found in below investment-grade rated credits” says Martin Horne, Barings’ head of global public fixed income.

The Qualified Domestic Limited Partnership (QDLP) scheme allows licensed foreign asset managers to raise renminbi-denominated sums from qualified individuals and institutions in China, with assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and real estate. The scheme was first launched as pilot in Shanghai in 2013.

High yield credit opportunities

Barings believes that the US and European high yield market are “well established and sizeable”, which offers compelling income prospects and lower sensitivity to interest rate movements compared with most fixed income markets.

Issued by the Barings’ Shanghai-based QDLP subsidiary of its wholly foreign-owned enterprise (WFOE), Fund V is among a series of funds based on the firm’s global high yield bond strategy.

“As markets evolve, Barings has successively launched several versions of QDLP funds based on the firm’s flagship global high yield bond strategy,” a spokesperson told FSA.

“The selection aims to accommodate the changing needs of domestic investors across various market environments.”

The other funds include products denominated in US dollars, currency hedged, and with monthly distributions.

Since receiving its QDLP license in 2018, Barings has launched three QDLP products, including the Barings Global High Yield Bond No.3 Private Fund in August last year.

The investment manager was registered as a private fund manager wholly-foreign owned enterprise (WFOE) in 2019, and launched an equity private fund the same year.

Barings manages $87bn in global high yield credit across structured vehicles, separate accounts and commingled funds, as of 31 December 2021, according to the spokesperson.

Part of the Mark Allen Group.