(Bloomberg) -- Goldman Sachs Group Inc. asset managers are reducing borrowing for two funds focused on North American energy infrastructure after extreme market volatility resulted in a “material impact” on their net asset value.
The bank has decided to “effectively eliminate the net leverage” of its MLP Income Opportunities Fund and MLP and Energy Renaissance Fund, its asset management arm said in separate statements. As of January 31, the funds had combined assets of about $590 million, mainly in companies that operate energy pipelines and terminals in the U.S., according to the company’s website.
The funds “incurred significant interest rate breakage costs” by terminating fixed rate borrowings, Goldman said in the statements. The elimination of leverage and recent market volatility resulted in a material impact to the net asset value in the funds, Goldman said, without elaborating on the scale of the impact.
A gauge of oil market volatility in New York rose to the highest level in records dating back to 2007 on Monday as crude prices crashed amid the simultaneous supply and demand shocks of the dissolution of the OPEC-Russia alliance and the spread of the coronavirus. Energy Transfer LP, the top holding in both funds, has fallen 34% since Thursday.
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