HK Jockey Club mandates Stone Harbor for EM debt

The Hong Kong Jockey Club, which despite its modest size is one of Asia’s most sophisticated institutional investors, has hired Stone Harbor Investment Partners for an emerging-market debt (EMD) mandate.

The $8 billion club has provided Stone Harbor a mandate of over $200 million. The club has been investing in emerging-market debt since 2009, and this mandate is a result of it increasing its exposure, according to people familiar with the move.

The 2008 financial crisis created huge opportunities in the credit spectrum, as spreads widened to unprecedented levels. The Jockey Club created a credit portfolio that comprised of high-yield, bank loans and emerging-market debt. This was not only an opportunistic move, but part of a trend at the institution to diversify across the capital structure, away from equities.

The move has paid off so far, and the club wants to increase exposure, but particularly to EMD, as it believes it offers relatively more value today than high yield or bank loans.

The club declined to name its existing line-up of credit managers, but says its EMD third-party manager was hitting capacity limits, so it added Stone Harbor to the mix. It was also a way to diversify the EMD bucket, given the bigger degree of exposure.

Stone Harbor is based in New York with offices in London and Singapore. It was established in 2006, but the investment group has been together for 18 years, originally at Salomon Smith Barney and then at Citigroup Asset Management. Its EMD team is primarily based in New York under CIO Peter Wilby.

It is 100% employee owned and now manages $37 billion of institutional client money. It employs a combination of proprietary fundamental research with quantitative asset allocation.