naked capitalism

What the credit crisis gives, it also takes away. Bond giant Pimco was a huge winner on the Fannie/Freddie rescue, but Bloomberg reports that it did not fare so well with Lehman.

From Bloomberg:

Pimco Advisors LP, Vanguard Group Inc. and Franklin Advisers Inc. are among the investment companies that will face losses of at least $86 billion stemming from the collapse of Lehman Brothers Holdings Inc….

Mutual fund companies’ filings show they hold more than $143 billion of bonds, led by Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund, and Valley Forge, Pennsylvania-based Vanguard….

While bond investors will recover different amounts based on their ranking in Lehman’s capital structure, models of credit default swaps assume lenders will recoup 40 percent of their loans overall in a bankruptcy….

Pimco holds Lehman bonds in at least 12 of its funds, including the $134 billion Total Return Fund. Bill Gross, manager of the fund and co-chief investment officer of Pimco, was buying Lehman bonds as recently as June, Bloomberg data show.

John Woerth, head of public relations at Vanguard, said the company holds Lehman bonds among the $450 billion of fixed income it manages…

Axa SA, Europe’s second-biggest insurer, and unnamed affiliates, own 7.25 percent of Lehman’s equity, according to the filing. Clearbridge Advisers LLC, the asset manager that Baltimore-based Legg Mason Inc. acquired from Citigroup Inc. in 2005, held 6.33 percent, according to the filing. Boston-based FMR LLC, the parent of Fidelity, the world’s largest mutual fund company, held 5.9 percent, the filing said.

Update 1:10 PM: The Wall Street Journal reports that certain Japanese banks have material exposures. Even though the numbers are not large by US standards, they may prove significant to some of the smaller banks.

From the Wall Street Journal:

Several Japanese banks — flush with cash and relatively unscathed by the global credit crisis — are among the top bank lenders to Lehman Brothers Holding Inc., which filed for bankruptcy protection on Monday with $613 billion in debt.

Aozora Bank, a mid-sized Tokyo bank, was No.1 on the list of largest bank lenders with a loan of $463 million, followed by Mizuho Corporate Bank, with a $289 million loan….Other big Japanese lenders to Lehman included Shinsei Bank, another mid-sized Tokyo bank, and Mitsubishi UFJ Financial Group, Japan’s largest bank.

For big Japanese banks like Mitsubishi UFJ and Mizuho, which have huge balance sheets, the loan losses related to Lehman may appear modest.

But smaller banks like Aozora and Shinsei may have a tougher time absorbing the losses. The two banks have been turned around by private-equity investors after collapsing during Japan’s bad-loan crisis. But their performance has been weak in recent quarters. Faced with powerful competition from Japan’s giant banks, they have forayed deeper into riskier business areas…..

The filing doesn’t necessarily mean the loans extended by these banks would go sour…

Filling the slack created by the retreat of Western banks, Japanese banks have been increasing lending business overseas in the past year or so.