Hedge funds scoop up House of Fraser bonds

London - A number of American hedge funds have begun buying up bonds from British department store group House of Fraser as trading concerns rise.

Apollo Global Management Group, based in New York, is said to have been among the hedge funds to have bought bonds, according to The Sunday Times. The moves follows on from last year, when the department store group sold 175 million pounds with of bonds on the Luxembourg stock exchange as part of a 300 million refinancing scheme.

With sales and profits increasingly under pressure and HoF lacking the much-needed capital investment promised by its current owner, Chinese conglomerate Sanpower, the value of the department store's bonds has dropped to 83 pence in the pound.

The deal is said to be an "opportunistic" move from the hedge funds due to the low price of the bonds. However, as the bond were acquired by Apollo's trading desk, which acquires and sells bonds for profit, instead of its private equity business, which uses debt positions to help take control of companies in distress, rumours of a potential takeover are currently not on the table.

Photo: James Petts from London, England (House of Fraser) via Wikimedia Commons