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Hasenstab slashes Irish debt holding

Franklin Templeton’s Michael Hasenstab, who made billions of dollars investing in Irish bonds, continued to cut his holdings of Ireland’s debt in the first quarter as yields plunged.

The amount of Irish debt held by US and Luxembourg- registered versions of Hasenstab’s Templeton Global Bond Fund and the Templeton Global Total Return Fund fell 61% to a face value of €1.8bn during the first quarter, according to figures compiled by Bloomberg from filings. In the six months to March, the holdings fell by 73%, or by €5bn. Franklin Templeton declined to comment on its Irish strategy.

Hasenstab snapped up Irish government bonds during the financial crisis to become the largest private holder of its debt. The fund manager began to build his position in 2011, as Ireland’s benchmark 10-year bond yield reached a euro-era high of 14.2%.

The yield has since plunged to 0.73%, aided by ECB president Mario Draghi’s quantitative easing program. His €1.1tn stimulus package is set to continue until at least September 2016 with €60bn worth of asset purchases including bonds issued by national governments and EU institutions being bought a month.

Irish government bonds maturing in 2018 now carry a negative yield, and its bonds have returned about 71% since the end of 2011, according to an index compiled by Bloomberg.

Some of Hasenstab’s bets haven’t paid off as well, with Ukraine negotiating with a group of five creditors, including biggest bondholder Franklin Templeton, as it struggles to repay debt.

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