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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: orkrious who wrote (82965)	6/21/2007 4:05:58 PM
From: clutterer	Read Replies (1) of 110194

UPDATE 1-Merrill sold only $100 mln of Bear fund CDOs-source Thu Jun 21, 2007 1:35PM EDT NEW YORK, June 21 (Reuters) - Merrill Lynch & Co. (MER.N: Quote, Profile, Research) sold only $100 million of the $850 million in collateralized debt obligation bonds it seized from troubled hedge funds of Bear Stearns & Co. (BSC.N: Quote, Profile, Research), a person familiar with the auction said on Thursday. The sale of the CDOs late on Wednesday was one of several planned by Wall Street banks trying to extricate themselves from the funds managed by Bear Stearns' asset management unit. The Bear Stearns funds have lost billions of dollars from bad bets on securities backed by subprime mortgages, which in recent years have become the main ingredient in many CDOs. Merrill Lynch spokesmen were not immediately available for comment. Merrill's seizure of assets marked its departure from the fund, along with at least three other banks that closed their positions, sources said. But the failure to sell the entire block may have indicated the investment bank was unhappy with bids received on the assets, a fund manager said. Banks' sales of the CDOs have stirred controversy in the market since the securities are not often traded, and some managers contend the assets' values are inflated over what they could garner if sold. The fate of the hedge funds was in question on Thursday. Bear Stearns and adviser Blackstone Group [BG.UL] are still hoping to restructure the funds, a source familiar with the situation said on Thursday. Bear earlier this week proposed adding $1.5 billion of its money to the funds as part of a restructuring plan to retain its Wall Street investors.

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