Bund, TBronx, il fiume giallo, una carryola di debiti (VM91)
- Creatore Discussione gastronomo
- Data di Inizio
dan24
Forumer storico
masgui ha scritto:
fangulo....ieri ho regalato 100 euri ad eni su uno short..stoppato ...perchè non potevo seguire...ed oggi lo avrei chiuso a +300 euri...
sto fuori come un balcone...domani devo uscire..venerdì idem in quel di arezzo...a luglio me ne vado 10 giorni in sardegna...quindi mi conviene chiudere qui e riparlarne a settembre...anzi ad ottobre..che a fine settembre vado via altri 15 giorni
Fleursdumal
फूल की बुराई
ricordati di passare di qui dan così sul lungomare ti faccio fare un giro sul trenino 
sembra che la nostra borsetta si stia per fondere con Londra
sembra che la nostra borsetta si stia per fondere con Londra
Fleursdumal
फूल की बुराई
crudo quasi a 76,5 come sperato ma sta chiudendo in recupero il pig
T-Bond a target 106,5 , gli shortsterling inglesi son franati sul fatto che la BOE a giugno aveva votato 4 a favore contro 5 contrario a un nuovo rialzo di 0,25 , che però non tarderà ad arrivare
T-Bond a target 106,5 , gli shortsterling inglesi son franati sul fatto che la BOE a giugno aveva votato 4 a favore contro 5 contrario a un nuovo rialzo di 0,25 , che però non tarderà ad arrivare
Fleursdumal
फूल की बुराई
TREASURIES-Prices sink on spillover from Euro bond weakness
Wed Jun 20, 2007
By Richard Leong
NEW YORK, June 20 (Reuters) - U.S. Treasury debt prices sank on Wednesday, ending their three-day rally, as weakness in the European government bond market spilled into its U.S. counterpart.
Concern over global inflation was fanned as German Bunds fell after central banks in Europe signaled concerns over growing price pressures.
Reuters Pictures
Photo
"When Bunds sold off, Treasuries came down," said Frank Hsu, director of global fixed income at Fimat in New York.
Sweden's Riksbank raised its key rate by a quarter point, while meeting minutes from the Bank of England indicated it may raise borrowing costs in July.
U.S. 10-year notes <US10YT> were down 7/32 in price for a yield of 5.12 percent, up from 5.09 percent late on Tuesday, but well below the 5.33 percent set last week.
The yield on 10-year notes briefly hit their lowest level in two weeks as investors went into treasuries in a flight to safety amid worries over the fallout from the troubled hedge funds managed by Bear Stearns Cos
Those bids, and unwinding of rate hedges on this week's bond supply offset the Treasuries selling spurred by weaker Bund prices, Hsu said.
REBOUND INTERRUPTED
Wednesday's Treasury losses interrupted a mini-rally for the market, which was hammered last week by mortgage-related selling and a growing consensus the Fed would not ease rates by year-end.
"People are just reassessing where they want to be. We are just taking a breath here," said Richard Schlanger, portfolio manager at Pioneer Investments USA Inc. in Boston.
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Editors Choice: Best pictures
from the last 24 hours.
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Friday's tame core inflation reading and this week's slack housing data, including a drop in housing loan applications reported by the Mortgage Bankers Association, revived hopes that the Fed may still trim rates this year.
U.S. rate futures suggested that traders have priced back in a slight chance of a Fed rate cut. Just a week ago, they showed that traders were bracing for a possible rate increase by year end.
The declines in mortgage applications, home builder sentiments and housing starts supported the view that the U.S. housing downturn has not touched bottom and would remain a drag on U.S. economic growth, analysts said.
Meanwhile, the day's scheduled public appearances by several Fed officials failed to stir any response. San Francisco Fed President Janet Yellen and New York Fed President Timothy Geithner spoke about financial risks at a conference about trends in Asian financial sectors, sponsored by the San Francisco Fed. Neither addressed the U.S. economy or monetary policy in their speeches
At 1 p.m. (1700 GMT), Dallas Fed President Richard Fisher was set to discuss the Fed and the regional economy at an event in Abilene, Texas.
Of the three, only Geithner is a voting member of the Fed's rate-setting committee.
Among other maturities, two-year Treasury notes <US2YT>, which reflects the market's Fed outlook, were down 2/32 in price for a 4.98 percent yield versus 4.94 percent late Tuesday.
Five-year debt <US5YT> fell 4/32 in price to yield 5.04 percent versus late Tuesday's 5.00 percent, while the long bond <US30YT> slid 13/32 in price for a yield of 5.23 percent, versus 5.20 percent late on Tuesday.
Wed Jun 20, 2007
By Richard Leong
NEW YORK, June 20 (Reuters) - U.S. Treasury debt prices sank on Wednesday, ending their three-day rally, as weakness in the European government bond market spilled into its U.S. counterpart.
Concern over global inflation was fanned as German Bunds fell after central banks in Europe signaled concerns over growing price pressures.
Reuters Pictures
Photo
"When Bunds sold off, Treasuries came down," said Frank Hsu, director of global fixed income at Fimat in New York.
Sweden's Riksbank raised its key rate by a quarter point, while meeting minutes from the Bank of England indicated it may raise borrowing costs in July.
U.S. 10-year notes <US10YT> were down 7/32 in price for a yield of 5.12 percent, up from 5.09 percent late on Tuesday, but well below the 5.33 percent set last week.
The yield on 10-year notes briefly hit their lowest level in two weeks as investors went into treasuries in a flight to safety amid worries over the fallout from the troubled hedge funds managed by Bear Stearns Cos
Those bids, and unwinding of rate hedges on this week's bond supply offset the Treasuries selling spurred by weaker Bund prices, Hsu said.
REBOUND INTERRUPTED
Wednesday's Treasury losses interrupted a mini-rally for the market, which was hammered last week by mortgage-related selling and a growing consensus the Fed would not ease rates by year-end.
"People are just reassessing where they want to be. We are just taking a breath here," said Richard Schlanger, portfolio manager at Pioneer Investments USA Inc. in Boston.
Reuters Pictures
Photo
Editors Choice: Best pictures
from the last 24 hours.
View Slideshow
Friday's tame core inflation reading and this week's slack housing data, including a drop in housing loan applications reported by the Mortgage Bankers Association, revived hopes that the Fed may still trim rates this year.
U.S. rate futures suggested that traders have priced back in a slight chance of a Fed rate cut. Just a week ago, they showed that traders were bracing for a possible rate increase by year end.
The declines in mortgage applications, home builder sentiments and housing starts supported the view that the U.S. housing downturn has not touched bottom and would remain a drag on U.S. economic growth, analysts said.
Meanwhile, the day's scheduled public appearances by several Fed officials failed to stir any response. San Francisco Fed President Janet Yellen and New York Fed President Timothy Geithner spoke about financial risks at a conference about trends in Asian financial sectors, sponsored by the San Francisco Fed. Neither addressed the U.S. economy or monetary policy in their speeches
At 1 p.m. (1700 GMT), Dallas Fed President Richard Fisher was set to discuss the Fed and the regional economy at an event in Abilene, Texas.
Of the three, only Geithner is a voting member of the Fed's rate-setting committee.
Among other maturities, two-year Treasury notes <US2YT>, which reflects the market's Fed outlook, were down 2/32 in price for a 4.98 percent yield versus 4.94 percent late Tuesday.
Five-year debt <US5YT> fell 4/32 in price to yield 5.04 percent versus late Tuesday's 5.00 percent, while the long bond <US30YT> slid 13/32 in price for a yield of 5.23 percent, versus 5.20 percent late on Tuesday.
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The dip buyers were no where to be found today as the market slid slowly lower all day before accelerating to the downside towards the close. The decline was not spread out evenly though. While energy and utilities were down over 2.5%, consumer related sectors were down less than 1%. The relative strength of the consumer sectors is somewhat surprising as it came on a day when fears were raised over the housing slowdown and its continued impact on the mortgage market.
The financial sector fell one percent in the final hour of trading on concerns that the trouble at Bear Stearns' sub-prime mortgage hedge fund will spread to other funds.
The financial sector fell one percent in the final hour of trading on concerns that the trouble at Bear Stearns' sub-prime mortgage hedge fund will spread to other funds.
gipa69
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f4f ti ricordi la telefonata di ieri in cui ti parlavo della debolezza del settore obbligazionario legato alle cartolarizzazioni più deboli... 
Investment banks fell across the board, led by a 2.5 percent drop in Bear Stearns Cos. (NYSE
SC - News) to $143.20 as it struggled to keep afloat two hedge funds that suffered big losses on securities tied to the subprime mortgage market. Merrill Lynch & Co. Inc. (NYSE:MER - News), a main lender to the funds, was seeking bids on $800 million of assets it seized as collateral.
Merrill fell 2.62 percent to end the day at $87.68.
Investment banks fell across the board, led by a 2.5 percent drop in Bear Stearns Cos. (NYSE
SC - News) to $143.20 as it struggled to keep afloat two hedge funds that suffered big losses on securities tied to the subprime mortgage market. Merrill Lynch & Co. Inc. (NYSE:MER - News), a main lender to the funds, was seeking bids on $800 million of assets it seized as collateral.Merrill fell 2.62 percent to end the day at $87.68.
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Merrill Sells Bear Stearns Fund Assets
Wednesday June 20, 4:57 pm ET
Merrill Lynch Launches Auction of Bear Stearns Fund Assets, Expects to Recoup $850 Million
NEW YORK (AP) -- Merrill Lynch & Co. on Wednesday launched an auction of assets from two troubled hedge funds controlled by Bear Stearns Cos., triggering a rarely seen confrontation between two major Wall Street players.
Multiple people familiar with the auction, speaking on condition of anonymity because they were not authorized to discuss it publicly, confirmed that it took place despite last-minute speculation it might be canceled.
Bear Stearns had hoped its rivals who invested in the funds -- including JPMorgan Chase & Co., Deutsche Bank, and Citigroup Inc. -- would allow it to put together a rescue plan. So far, only JPMorgan Chase seemed willing to negotiate after it canceled its own auction that was planned for Wednesday afternoon.
Merrill Lynch is selling high-grade, collateral-backed debt obligations worth about $850 million. Other creditors could follow in the coming days.
The Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund and the High Grade Structured Credit Strategies Fund have slumped this year because some of their assets were pegged to the mortgage market. Borrowers with weaker credit have been defaulting on subprime loans, and that has caused instability throughout the market.
The funds, run by mortgage veteran Ralph Cioffi, sold roughly $4 billion of subprime mortgage-backed securities last week.
Spokesmen from Merrill Lynch, JPMorgan and Bear Stearns would not comment on the asset sale.
Wednesday June 20, 4:57 pm ET
Merrill Lynch Launches Auction of Bear Stearns Fund Assets, Expects to Recoup $850 Million
NEW YORK (AP) -- Merrill Lynch & Co. on Wednesday launched an auction of assets from two troubled hedge funds controlled by Bear Stearns Cos., triggering a rarely seen confrontation between two major Wall Street players.
Multiple people familiar with the auction, speaking on condition of anonymity because they were not authorized to discuss it publicly, confirmed that it took place despite last-minute speculation it might be canceled.
Bear Stearns had hoped its rivals who invested in the funds -- including JPMorgan Chase & Co., Deutsche Bank, and Citigroup Inc. -- would allow it to put together a rescue plan. So far, only JPMorgan Chase seemed willing to negotiate after it canceled its own auction that was planned for Wednesday afternoon.
Merrill Lynch is selling high-grade, collateral-backed debt obligations worth about $850 million. Other creditors could follow in the coming days.
The Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund and the High Grade Structured Credit Strategies Fund have slumped this year because some of their assets were pegged to the mortgage market. Borrowers with weaker credit have been defaulting on subprime loans, and that has caused instability throughout the market.
The funds, run by mortgage veteran Ralph Cioffi, sold roughly $4 billion of subprime mortgage-backed securities last week.
Spokesmen from Merrill Lynch, JPMorgan and Bear Stearns would not comment on the asset sale.
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HEDGE FUNDS
Everquest IPO tied to troubled Bear hedge fund
Cioffi's fund transferred risky mortgage derivatives to firm he helps run
By Alistair Barr, MarketWatch
Last Update: 1:18 PM ET Jun 15, 2007
SAN FRANCISCO (MarketWatch) -- Everquest Financial, a company that filed plans for an initial public offering last month, has ties with a troubled hedge fund run by investment bank Bear Stearns Cos.
The High-Grade Structured Credit Strategies Enhanced Leverage Fund, run by Bear mortgage veteran Ralph Cioffi, sold roughly $4 billion of subprime mortgage-backed securities on Thursday.
The fund slumped 23% in the first four months of 2007, according to The Wall Street Journal. It was probably selling its highest-rated and most heavily traded securities first to raise cash to meet redemption requests and possible margin calls, hedge-fund investors and bond-market traders said on Thursday. See full story.
The hedge fund, as well as another run by Cioffi called the Bear Stearns High Grade Structured Credit Strategies Fund, transferred riskier parts of collateralized debt obligations, or CDOs, that they owned to Everquest when the company was being set up last year, according to the company's IPO filing with the Securities and Exchange Commission.
In return, the Bear Stearns hedge funds got a large stake in Everquest and nearly $150 million in cash, the filing said.
In addition to running the Bear Stearns hedge funds, Cioffi is co-chief executive of New York-based Everquest, the filing noted.
"If the stories are correct about the problems at the fund, it sounds like they off-loaded the riskiest positions to Everquest," said Josh Rosner, a managing director at research firm Graham Fisher & Co.
"It is not clear if this was before or after they were aware that those positions were hurting the hedge fund, but the decision seems to have happened before news leaked of the funds' supposed problems," he added.
"Everquest is in a registration process with the SEC, so there's nothing I can say about it," said Elizabeth Ventura, a Bear Stearns (BSC : The Bear Stearns Companies Inc
News , chart , profile , more
Last: 143.20-3.59-2.45%
BSC143.20, -3.59, -2.4%) spokeswoman, on Friday. Another spokeswoman at the bank said Cioffi was unavailable for comment.
CDOs are a bit like mutual funds, but they usually buy securities that are backed by loans. These complex structures helped fuel the U.S. mortgage boom in recent years by purchasing some of the riskier parts of mortgage-backed securities that other investors didn't want.
CDOs are sliced up into different "tranches." The highest-rated parts get cash flows from the underlying assets first and are last to be hit by any losses. The riskiest bits, known as equity tranches, represent the first loss position in a CDO and get paid after the other parts receive cash. Reflecting these different risks, CDO equity tranches offer much higher yields than the highest-rated parts.
The Bear hedge funds transferred mostly equity and "mezzanine" tranches of CDOs to Everquest. Mezzanines are subordinate to the highest-rated parts of CDOs, but they're rated higher than equity tranches, which are typically unrated.
At the end of 2006, Everquest had more than a third of its assets in CDO equity tranches. During the first quarter, the company bought equity tranches in three more CDOs for $32.9 million, according to its IPO filing.
Many of those CDOs have invested in mortgage-backed securities backed by subprime home loans, Everquest also noted in the filing.
The transfer of the CDO tranches to Everquest was not negotiated at arm's length and the price the company paid for the assets may be higher than what the Bear hedge funds could have gotten for them from other investors, the company explained in its filing.
Everquest also warned that there's no liquid public market for CDO equity tranches, so the assets are difficult to value. Such valuations depend on management assumptions about future cash flows that are "highly subjective."
"When we get to CDO exposures, these are relatively illiquid and not very transparent. So other than a ratings downgrade or sale of a security, you are largely valuing portfolios to models," Rosner said.
"By the time the cycle unwinds, we will have seen some very interesting marks across" Wall Street, he added. "This is the problem with large illiquid trades. Marks in the CDO market are generally subject to significant management judgment until they are actually traded."
Rosner also wondered whether Everquest's exposure to CDOs backed by subprime mortgages is appropriate for retail investors.
"Everquest is an opportunity for retail investors to own managed CDO exposures to equity tranches -- the first loss pieces," he said. "Only qualified institutional buyers can invest in CDOs, so it is interesting that the SEC is allowing the sale of shares in this company to retail investors."
Rosner co-authored a study earlier this year on how rising delinquencies and foreclosures in the subprime mortgage market could hurt some CDOs. See full story.
Everquest has hedged some of these risks. In its IPO filing, the company said that the Bear hedge funds transferred credit default swaps on May 8 that offer protection against default on 48 tranches of asset-backed securities held by its CDOs.
Credit default swaps mainly focus on subprime mortgage-backed securities. Those hedges may not cover all the risks involved, Everquest added.
Everquest also noted potential conflicts between the interests of Cioffi and his hedge funds and the interests of future Everquest shareholders. The company said it plans to resolve those conflicts by requiring that its managers "act in a manner that they consider fair and equitable in the allocation of business opportunities," according to the IPO filing.
Certain transactions involving Everquest's managers must also be approved by "disinterested" directors on the company's board, Everquest explained.
Everquest also said that the interests of the company and the Bear Stearns hedge funds are strongly aligned. The funds owned roughly 67% of Everquest's ordinary shares at the end of 2006, the company noted in its filing.
Alistair Barr is a reporter for MarketWatch in San Francisco.
Everquest IPO tied to troubled Bear hedge fund
Cioffi's fund transferred risky mortgage derivatives to firm he helps run
By Alistair Barr, MarketWatch
Last Update: 1:18 PM ET Jun 15, 2007
SAN FRANCISCO (MarketWatch) -- Everquest Financial, a company that filed plans for an initial public offering last month, has ties with a troubled hedge fund run by investment bank Bear Stearns Cos.
The High-Grade Structured Credit Strategies Enhanced Leverage Fund, run by Bear mortgage veteran Ralph Cioffi, sold roughly $4 billion of subprime mortgage-backed securities on Thursday.
The fund slumped 23% in the first four months of 2007, according to The Wall Street Journal. It was probably selling its highest-rated and most heavily traded securities first to raise cash to meet redemption requests and possible margin calls, hedge-fund investors and bond-market traders said on Thursday. See full story.
The hedge fund, as well as another run by Cioffi called the Bear Stearns High Grade Structured Credit Strategies Fund, transferred riskier parts of collateralized debt obligations, or CDOs, that they owned to Everquest when the company was being set up last year, according to the company's IPO filing with the Securities and Exchange Commission.
In return, the Bear Stearns hedge funds got a large stake in Everquest and nearly $150 million in cash, the filing said.
In addition to running the Bear Stearns hedge funds, Cioffi is co-chief executive of New York-based Everquest, the filing noted.
"If the stories are correct about the problems at the fund, it sounds like they off-loaded the riskiest positions to Everquest," said Josh Rosner, a managing director at research firm Graham Fisher & Co.
"It is not clear if this was before or after they were aware that those positions were hurting the hedge fund, but the decision seems to have happened before news leaked of the funds' supposed problems," he added.
"Everquest is in a registration process with the SEC, so there's nothing I can say about it," said Elizabeth Ventura, a Bear Stearns (BSC : The Bear Stearns Companies Inc
News , chart , profile , more
Last: 143.20-3.59-2.45%
BSC143.20, -3.59, -2.4%) spokeswoman, on Friday. Another spokeswoman at the bank said Cioffi was unavailable for comment.
CDOs are a bit like mutual funds, but they usually buy securities that are backed by loans. These complex structures helped fuel the U.S. mortgage boom in recent years by purchasing some of the riskier parts of mortgage-backed securities that other investors didn't want.
CDOs are sliced up into different "tranches." The highest-rated parts get cash flows from the underlying assets first and are last to be hit by any losses. The riskiest bits, known as equity tranches, represent the first loss position in a CDO and get paid after the other parts receive cash. Reflecting these different risks, CDO equity tranches offer much higher yields than the highest-rated parts.
The Bear hedge funds transferred mostly equity and "mezzanine" tranches of CDOs to Everquest. Mezzanines are subordinate to the highest-rated parts of CDOs, but they're rated higher than equity tranches, which are typically unrated.
At the end of 2006, Everquest had more than a third of its assets in CDO equity tranches. During the first quarter, the company bought equity tranches in three more CDOs for $32.9 million, according to its IPO filing.
Many of those CDOs have invested in mortgage-backed securities backed by subprime home loans, Everquest also noted in the filing.
The transfer of the CDO tranches to Everquest was not negotiated at arm's length and the price the company paid for the assets may be higher than what the Bear hedge funds could have gotten for them from other investors, the company explained in its filing.
Everquest also warned that there's no liquid public market for CDO equity tranches, so the assets are difficult to value. Such valuations depend on management assumptions about future cash flows that are "highly subjective."
"When we get to CDO exposures, these are relatively illiquid and not very transparent. So other than a ratings downgrade or sale of a security, you are largely valuing portfolios to models," Rosner said.
"By the time the cycle unwinds, we will have seen some very interesting marks across" Wall Street, he added. "This is the problem with large illiquid trades. Marks in the CDO market are generally subject to significant management judgment until they are actually traded."
Rosner also wondered whether Everquest's exposure to CDOs backed by subprime mortgages is appropriate for retail investors.
"Everquest is an opportunity for retail investors to own managed CDO exposures to equity tranches -- the first loss pieces," he said. "Only qualified institutional buyers can invest in CDOs, so it is interesting that the SEC is allowing the sale of shares in this company to retail investors."
Rosner co-authored a study earlier this year on how rising delinquencies and foreclosures in the subprime mortgage market could hurt some CDOs. See full story.
Everquest has hedged some of these risks. In its IPO filing, the company said that the Bear hedge funds transferred credit default swaps on May 8 that offer protection against default on 48 tranches of asset-backed securities held by its CDOs.
Credit default swaps mainly focus on subprime mortgage-backed securities. Those hedges may not cover all the risks involved, Everquest added.
Everquest also noted potential conflicts between the interests of Cioffi and his hedge funds and the interests of future Everquest shareholders. The company said it plans to resolve those conflicts by requiring that its managers "act in a manner that they consider fair and equitable in the allocation of business opportunities," according to the IPO filing.
Certain transactions involving Everquest's managers must also be approved by "disinterested" directors on the company's board, Everquest explained.
Everquest also said that the interests of the company and the Bear Stearns hedge funds are strongly aligned. The funds owned roughly 67% of Everquest's ordinary shares at the end of 2006, the company noted in its filing.
Alistair Barr is a reporter for MarketWatch in San Francisco.
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Merrill Revives Plan to Sell Bear Stearns Fund Bonds (Update1)
By Jody Shenn
June 19 (Bloomberg) -- Merrill Lynch & Co. will proceed with a plan to sell about $800 million of bonds from a money-losing hedge fund run by Bear Stearns Cos., a day after delaying a similar auction, people with knowledge of the offering said.
Merrill Lynch, a creditor to the fund, began distributing a list to investors of bonds it may offer in the sale, according to the people, who declined to be named because the details aren't public.
The firm is pressing ahead with the sale while Bear Stearns pulls together a rescue plan to bail out the hedge fund, one of the people said. Bear Stearns, the biggest broker for U.S. hedge funds, has offered to provide $1.5 billion in loans to help rescue the fund and is seeking cash investments from some of the fund's existing creditors, which also include Citigroup Inc. and JPMorgan Chase & Co.
The fund's potential closure sparked concern about wider losses in the market for subprime-mortgage bonds and so-called collateralized debt obligations.
``It's tough to tell whether this was an isolated event or whether there will be other funds like this that have bought this type of paper and are facing mark downs or redemptions,'' said Peter Nolan, a product portfolio manager who runs the CDO business at Chapel Hill, North Carolina-based Smith Breeden Associates Inc. The firm manages about $34 billion in fixed- income assets, about a third of which are asset-backed bonds.
Sale Increased
Bear Stearns made the lending commitment in a meeting with creditors after losses forced the fund to sell off $4 billion of mortgage bonds last week. Merrill Lynch and JPMorgan had each planned to sell about $400 million of bonds of CDOs owned by the fund this week.
Merrill today increased its sale to $800 million, the people said. The securities, which are mostly backed by mortgages or home-loan bonds and rated AAA or AA, represent the entire collateral for Merrill's loans, one person said.
Russell Sherman, a Bear Stearns spokesman, Jessica Oppenheim, a spokeswoman for New York-based Merrill Lynch, and Brian Marchiony, a spokesman for New York-based JPMorgan, declined to comment today.
The banks may be considering a bailout because asset sales could force them to revalue their own investments and those of other funds they lend to, said Josh Rosner, managing director at New York-based investment-research firm Graham Fisher & Co.
``The value that assets are being carried at may well be proved to be far above'' what they're really worth, Rosner said.
`Ripple Effect'
A bailout would be reminiscent of that of Long-Term Capital Management LP, which lost $4.6 billion, in 1998, he said. At the time, lenders met and agreed to take a 90 percent stake in the Greenwich, Connecticut-based fund and slowly liquidated the assets to limit the impact of its collapse.
An ``unraveling'' of the Bear Stearns fund ``threatens to have a ripple effect on valuations,'' Kathy Shanley, a senior analyst in Chicago at Gimme Credit LLC, an independent corporate- bond researcher, said in a report today.
The 10-month-old fund, known as the High-Grade Structured Credit Strategies Enhanced Leverage Fund and run by Bear Stearns senior managing director Ralph Cioffi, began with about $600 million in investors' money. It halted redemptions after investors sought to withdraw $300 million by June 30.
Losses
The fund has lost about 20 percent this year, while a sister fund that uses less borrowed money is down a smaller amount. Blackstone Group LP, based in New York, helped prepare the rescue plan, the New York Post reported today.
The fund had borrowed at least $6 billion. Other lenders include London-based Barclays PLC, which would invest about $250 million under the plan proposed yesterday, the Wall Street Journal reported today. New York-based Citigroup Inc. is leading a committee of creditors that may supply another $250 million, the Journal said, citing people it didn't identify.
UBS AG, Switzerland's biggest bank, shut down its Dillon Read Capital Management LLC hedge fund unit last month, after losses executives linked to turmoil in the mortgage-bond market, where delinquencies and defaults on so-called subprime loans, or ones to bad-credit borrowers, are at the highest since 1997.
The Bear Stearns fund's positions that were to be sold this week included bonds from a variety of CDO types, including securities mostly backed by subprime-mortgage bonds, buyout loans and other CDOs, according to offering documents.
More Sales
Bank of America Corp. this week is also offering some other CDO securities on behalf of the Bear Stearns fund as part of a previously planned sale, the person said. Louise Hennessy, a spokeswoman for the Charlotte, North Carolina-based bank, Danielle Romero-Apsilos, a Citigroup spokeswoman, and Tom Vogel, a Barclays spokesman, all declined to comment.
CDOs are investment vehicles that repackage loans, derivatives and bonds into new securities, providing managers with ongoing fees and underwriting revenue to banks. Some of that new debt gets higher credit rating than the underlying assets and some offers potentially greater return.
Hedge funds are private, largely unregulated pools of capital whose managers participate substantially in any gains on the money invested.
To contact the reporter on this story: Jody Shenn in New York at [email protected] .
Last Updated: June 19, 2007 18:26 EDT
By Jody Shenn
June 19 (Bloomberg) -- Merrill Lynch & Co. will proceed with a plan to sell about $800 million of bonds from a money-losing hedge fund run by Bear Stearns Cos., a day after delaying a similar auction, people with knowledge of the offering said.
Merrill Lynch, a creditor to the fund, began distributing a list to investors of bonds it may offer in the sale, according to the people, who declined to be named because the details aren't public.
The firm is pressing ahead with the sale while Bear Stearns pulls together a rescue plan to bail out the hedge fund, one of the people said. Bear Stearns, the biggest broker for U.S. hedge funds, has offered to provide $1.5 billion in loans to help rescue the fund and is seeking cash investments from some of the fund's existing creditors, which also include Citigroup Inc. and JPMorgan Chase & Co.
The fund's potential closure sparked concern about wider losses in the market for subprime-mortgage bonds and so-called collateralized debt obligations.
``It's tough to tell whether this was an isolated event or whether there will be other funds like this that have bought this type of paper and are facing mark downs or redemptions,'' said Peter Nolan, a product portfolio manager who runs the CDO business at Chapel Hill, North Carolina-based Smith Breeden Associates Inc. The firm manages about $34 billion in fixed- income assets, about a third of which are asset-backed bonds.
Sale Increased
Bear Stearns made the lending commitment in a meeting with creditors after losses forced the fund to sell off $4 billion of mortgage bonds last week. Merrill Lynch and JPMorgan had each planned to sell about $400 million of bonds of CDOs owned by the fund this week.
Merrill today increased its sale to $800 million, the people said. The securities, which are mostly backed by mortgages or home-loan bonds and rated AAA or AA, represent the entire collateral for Merrill's loans, one person said.
Russell Sherman, a Bear Stearns spokesman, Jessica Oppenheim, a spokeswoman for New York-based Merrill Lynch, and Brian Marchiony, a spokesman for New York-based JPMorgan, declined to comment today.
The banks may be considering a bailout because asset sales could force them to revalue their own investments and those of other funds they lend to, said Josh Rosner, managing director at New York-based investment-research firm Graham Fisher & Co.
``The value that assets are being carried at may well be proved to be far above'' what they're really worth, Rosner said.
`Ripple Effect'
A bailout would be reminiscent of that of Long-Term Capital Management LP, which lost $4.6 billion, in 1998, he said. At the time, lenders met and agreed to take a 90 percent stake in the Greenwich, Connecticut-based fund and slowly liquidated the assets to limit the impact of its collapse.
An ``unraveling'' of the Bear Stearns fund ``threatens to have a ripple effect on valuations,'' Kathy Shanley, a senior analyst in Chicago at Gimme Credit LLC, an independent corporate- bond researcher, said in a report today.
The 10-month-old fund, known as the High-Grade Structured Credit Strategies Enhanced Leverage Fund and run by Bear Stearns senior managing director Ralph Cioffi, began with about $600 million in investors' money. It halted redemptions after investors sought to withdraw $300 million by June 30.
Losses
The fund has lost about 20 percent this year, while a sister fund that uses less borrowed money is down a smaller amount. Blackstone Group LP, based in New York, helped prepare the rescue plan, the New York Post reported today.
The fund had borrowed at least $6 billion. Other lenders include London-based Barclays PLC, which would invest about $250 million under the plan proposed yesterday, the Wall Street Journal reported today. New York-based Citigroup Inc. is leading a committee of creditors that may supply another $250 million, the Journal said, citing people it didn't identify.
UBS AG, Switzerland's biggest bank, shut down its Dillon Read Capital Management LLC hedge fund unit last month, after losses executives linked to turmoil in the mortgage-bond market, where delinquencies and defaults on so-called subprime loans, or ones to bad-credit borrowers, are at the highest since 1997.
The Bear Stearns fund's positions that were to be sold this week included bonds from a variety of CDO types, including securities mostly backed by subprime-mortgage bonds, buyout loans and other CDOs, according to offering documents.
More Sales
Bank of America Corp. this week is also offering some other CDO securities on behalf of the Bear Stearns fund as part of a previously planned sale, the person said. Louise Hennessy, a spokeswoman for the Charlotte, North Carolina-based bank, Danielle Romero-Apsilos, a Citigroup spokeswoman, and Tom Vogel, a Barclays spokesman, all declined to comment.
CDOs are investment vehicles that repackage loans, derivatives and bonds into new securities, providing managers with ongoing fees and underwriting revenue to banks. Some of that new debt gets higher credit rating than the underlying assets and some offers potentially greater return.
Hedge funds are private, largely unregulated pools of capital whose managers participate substantially in any gains on the money invested.
To contact the reporter on this story: Jody Shenn in New York at [email protected] .
Last Updated: June 19, 2007 18:26 EDT