21 June 2007

BAD NEWS BEAR By RODDY BOYD - Business News | Financial | Business and Money

BAD NEWS BEAR By RODDY BOYD - Business News | Financial | Business and Money: "June 20, 2007 -- The end came yesterday for a Bear Stearns hedge fund that had been teetering on the edge of solvency for a week, when Merrill Lynch announced that an $850 million auction designed to recoup some of its loans to the fund was back on.

The fate of Bear's High- Grade Structured Credit Strategies Enhanced Leverage fund - forced to suspend redemptions after reporting a 23 percent loss - had been the focus of intense negotiations between Bear and its biggest rivals. While sporting $600 million under management, the Bear fund was massively levered, bringing its portfolio size to over $6 billion.

On Monday, Merrill delayed an auction in order to give Bear and its adviser Blackstone a chance to put together a bailout plan. Bear's plan, presented yesterday afternoon, had too many strings attached for the fund's lenders. The firm offered to pump $1.5 billion in life-saving cash into the fund, but only if its creditors agreed to hold off on margin calls and chip in another $500 million.

A Bear spokesman declined comment.

The bond market's most battered players - the hedge funds and trading desks specializing in mortgage-backed securities - now have to handle a total of $2 billion or more hitting a market that is still licking its wounds from the f"

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