BlackRock Responds To Zero Hedge Query On Its Italian Debt Exposure

Tyler Durden's picture

Earlier we asked some simple questions regarding BlackRock's sovereign debt exposure. Multi-trillion asset manager BlackRock responds:


Hopefully this response will satisfy the market and make it comfortable with BlackRock as an intermediate-term going concern. Then again clarifications such as this one by other Blackrock professionals, namely that the market is wrong, probably will not help:


So, what happens if the spreads do reflect fundamentals? Will Blackrock apply Mark to Market to its Italian holdings? And perhaps BLK can follow in Jefferies' footsteps and be so kind to break down it gross and net exposure for all to see? After all, there is nothing to hide among its "nominal exposures."

More from Bloomberg:

BlackRock Inc., the world’s biggest money manager, said it’s “comfortable” holding intermediate Italian bonds as a surge in yields triggers concern the collapse of the government will force the nation to seek a bailout.


“Our view has been that a solution to stabilize European sovereign and financial markets is very far from conclusion, and thus, maintaining very nominal exposures to some of the countries with substantial refinancing needs was the right portfolio posture,” BlackRock Chief Investment Officer Rick Rieder said in an e-mailed statement to Bloomberg News.


On Oct. 13, Rieder said on Bloomberg Television’s “Inside Track” with Erik Schatzker that BlackRock was buying Italian debt given improved prospects for a resolution to the euro zone sovereign debt crisis. Italian 10-year notes, which finished today at 7.25 percent, traded at 5.82 percent on Oct. 13.


"The ultimate outcome we think is going to be constructive,” as far as European policy makers’ efforts to contain the crisis, Rieder in the Oct. 13 interview.


“We have become more comfortable with the levels of some of the debt, like some intermediate Italian bonds,” Rieder said in the statement today. “These levels will foster a greater sense of urgency towards an ultimate European solution. However, we still maintain a very conservative posture here and see a number of hurdles which still have to be cleared before growing positions.”


In a separate Bloomberg television interview on Oct. 21, Rieder said BlackRock remained a buyer of Italian government debt as European policy makers were set to gather to address the region’s sovereign debt crisis. “Italy is attractive,” Rieder said during an interview on “InBusiness With Margaret Brennan” on Bloomberg Television that day. Euro finance ministers meet on Oct. 21, followed by ministers from all 27 European Union countries the following day.


We are encouraged that policy makers appear to be meeting and addressing the challenges implicit in some of the recent proposals, and think these debt levels require policy movement and decision-making,” Rieder said in the statement today. “We are optimistic that this will happen over time, but still think that markets will be stressed until that time comes, and thus are maintaining a very conservative posture.”

In other words, BlackRock is betting, hopefully not the house, that Italy is Too Big To Fail and someone else will not make a case study that could cost the company billions. Surely to former Lehmanite (and former vice chairman of the all important TBAC) Rick Rieder, this is prudent risk management. Unfortunately, it did not quite work out for the Norwegian sovereign wealth fund's foray into Greek "hold to infinity" investing.

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Smithovsky's picture

BlackRock's share price does not reflect fundamentals.

But in a few days it will.  

Hard1's picture

Italy's fundamentals are that their massive debt needs a 30% haircut at least to bring debt to sustainable levels in perpetuity (coverage of interest payments).  That is if nothing else happens to dissapoint.  Oh... wait..... did I say  40% haircut?

ratso's picture

Blackrock "is comfortable with intermediate bonds".  That can't possibly be true.

Git_Naked's picture

Love the title of this post. Well done, gents.

dlmaniac's picture

"what happens if the spreads do reflect fundamentals?"

Declare it a non-credit event and apply some Mark to Myth accounting. All will be fine.

Comay Mierda's picture

cant wait to see the blackrock bankruptcy filing to see how much they owe CNBC for pump fees

Hippocratic Oaf's picture

Mark to markets?!?!?!?!? Tyler..........when does that ever Happen?

RiverRoad's picture

Let those chips fall.....

Mactheknife's picture

Blackrock full of shit.

Ag1761's picture

You didn't say 40%, I distinctly heard you say 60% my good man.

SGS's picture

Mayday Mayday - BlackCock Down!

I did it by Occident's picture

don't worry, maybe Dr. Bernanke will prescribe some Viagra for the unfortunate patient. :)

Buck Johnson's picture

No kidding, they are going to really feel it.  Over 7% and still climbing, they think that Italy will be bailed out but who will pony up the trillion or so to do it or calm the market? 

jdelano's picture

Uh--anybody notice the reverse flash crash?  Did this really happen?:

Panafrican Funktron Robot's picture


2nd week October:  There's no way in hell the 10 year tops 6%.  We're a buyer.

3rd week October:  There's no way in hell the 10 year tops 7%.  We're doubling down.

LOL Blackrock.

Btw, speaking of Erik Schatzker, does anyone else tend to want to beat his face with an iron mallet everytime he appears on the air?  He's like a mutant SuperDouche.  

GeneMarchbanks's picture

'Btw, speaking of Erik Schatzker, does anyone else tend to want to beat his face with an iron mallet everytime he appears on the air?  He's like a mutant SuperDouche.'

You're not alone, friend.

HedgeAccordingly's picture

in this case.. it is not bro's before hoe's LOL -

Freddie's picture

Blackrock = the new Lehman.  I sometimes get them confused with Blackstone.  More scum.

SilverDoctors's picture

Nice work Tyler! Keep up this sort of exposure to the MF Global customer assets theft.
For those who haven't noticed, the CME is stating that $80 million worth of COMEX REGISTERED gold and silver are unavailable for delivery due to the MF Global bankruptcy. 
Did Corzine use $80 million worth of clients gold & silver warehouse receipts as collateral for a short term $400 Million loan?

The only way ANYONE at MF goes to prison over this is if the MSM reaches critical mass and the public becomes outraged.  Zerohedge can push this story to critical mass.  Don't let up!

RiverRoad's picture

Yup.  Keep forcing those MSM bitches to print bro'.

fuu's picture


They still use fundamentals over there? Trouble.

hack3434's picture


GeneMarchbanks's picture


Wow. That is not going to end well...

fuu's picture

Nope, that's going to leave a mark.

alien-IQ's picture

Tyler...I think you just opened up one big-ass can of worms.

this is gonna be fun.

TruthInSunshine's picture

Blackrock respectfully asks the already compliant media (thank your for continuing cooperation, main stream media-government proxies of The Treasury & non-governmental but sometimes governmental Federal Reserve 'Bank'), and more likely, intelligent, inquisitive bloggers, backed with facts and data, to refrain from asking relevant questions pertaining to the compost heap of toxic assets it has accumulated en masse.


Thank you,



catacl1sm's picture

HEY! Compost is useful! Italian bonds... not so much.

Freddie's picture

Obama and Al Waleed's US media.

ex VRWC's picture

Deeper.  Let me shove my head deeper into the sand.  Eventually I will see no evil, hear no evil, and you won't be able to hear me speak it either.

Optimusprime's picture

But your butt will be sticking up in the air.  Hmmm.

I did it by Occident's picture

Paging Banzai! 

this would be great cartoon. 

multiple ostrich heads (all the usual suspects Fed, IMF, ECB, etc.) poking out of the ground in china and one of them says, "hey guys, umm, do you think it's time to acknowledge reality?"



Note to self's picture

Can we have some numbers with that?

Amused2Death's picture


FubarNation's picture

The power of ZH. 


It is becoming greater and greater.  Frightening and enlightening at the same time.



alien-IQ's picture

"You shall know the truth, and the truth shall make you mad"

Aldus Huxley

RiverRoad's picture

Enlightening is the MO.  Frightening?  That's relative.

dpr10's picture

you kick ass tyler...awesome..

Freddie's picture

BlackRock - the Joe Paterno of Wall Street.

Dr. Nancy's picture

All that's happening is predictable, as there are 7 stages that every
major economy goes through. Those who know how it works profit & massive
wealth is transferred to them. Several months ago I learned this
information from a millionaire whose site I found & am sharing it with
everyone I know.
His free video

"How To Create Incredible Wealth in Today's Economic Crisis"

is at:
Hope this info helps everyone as much as it has me.
Dr. Nancy

WineSorbet's picture

Please pedal your pablum somewhere else.

Note to self's picture

Clearly you have lost you way on this very confusing internet.  Its a series of tubes, you know.

jcaz's picture

Thank you, Dr Nancy-  you're a breath of stupidity in a sea of enlightenment;

You're why I remain short.

RichardP's picture

Actually, I think remaining short has something to do with growth hormones.

Piranhanoia's picture

she found a millionaire.  The dream of a professional whore.

Vergeltung's picture

MMmm, spam. delicious.


pods's picture

I will sign up just to protect all the money that the Nigerian Minerals Minister is going to deposit in my bank account.