Is Bear Stearns' 10-month-old High Grade Structured Credit Strategies Enhanced Leverage hedge fund now officially dead? It sure seems that way. The latest is that Merrill Lynch has balked at a plan that would require Bear Stearns to inject up to $1.5 billion into the ailing fund in return for agreements that the likes of JPMorgan, Citigroup and Merrill would not demand further collateral for about a year. Merrill didn't go for it and has put about $800 million in bonds held by the fund at what will likely be firesale prices. So this spells effectively the end of the fund. It does not appear that the Blackstone Group intends to go forward with any plays, if it ever intended to at all. Perhaps we're seeing a shift in power that will play out as other credit-oriented funds hit rocky roads. Lenders will certainly have the upper hand and be in a position to dictate favorable terms going forward. You have to think that big lenders might be considering the collateral positions at other funds with preventative medicine on their minds.
Our take on this news: Let hem go under.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment