3 Degrees Asset Management, a Singapore-based hedge fund focusing on distressed debt, said it started a fund to invest in the performing debt of Asian borrowers.

 

The $27.3 million ($37.8 million) 3 Degrees Credit Opportunities Fund will focus mainly on senior secured bank loans, receivables, private placements, high-yield and convertible bonds, the firm said in an e-mailed statement today.

 

The investment opportunities are “large and growing rapidly,” with more than US$20 trillion of debt on the balance sheets of Asian commercial banks, Moe Ibrahim, founder of the firm and the fund’s portfolio manager, said in the statement. The firm said it has been operating the strategy via separate accounts it manages for investors since June, returning an annualized 28% after fees.

 

The fund “will capitalize on the systemic inefficiencies endemic to Asian credit markets,” Ibrahim said.

 

3 Degrees will target companies that generate enough cash flow to repay maturing debt, without depending on additional fund-raising, it said.

 

The fund targets an annual net return of more than 20%, the firm said. It has a two-year lock-up and charges fees equal to 1.5% of client assets and 20% of investment profits.