正文
Excerpt: Financial Times article
Bear Stearns on Tuesday toldinvestors in two stricken hedge funds managed by the bank that one fundhad lost all its value and the other had about nine cents remaining forevery dollar invested following bad bets on the US subprime mortgagemarket.
The losses, especially for the less leveraged of the two funds, were worse than investors expected.
“Theyare a big investment house. They are supposed to be professional,” saidone fund of funds executive. “There is nothing to do now except maybego shoot the guy who did it.”
Bear Stearns declined to comment.The two funds at one point had more than $20bn in investments, much ofit using borrowed money.
The funds were heavily exposed tothe troubled subprime mortgage market through complex debt securitiesknown as collateralised debt obligations (CDOs). Amid a sharp increasein late payments and defaults on subprime home loans – made toborrowers with patchy credit histories – the funds ran aground ascreditors made margin calls.
The near collapse of the two fundswas an embarrassment to Bear Stearns, a leader in the packaging andsale of mortgage-backed securities.
Bear Stearns shares are offabout 9 per cent since the trouble at the two funds came to light andthe price of buying insurance against a default by the bank on itsbonds has increased. Bear Stearns' stock price was about 2 per centlower at $137.20 in after-hours trade.
In addition to risksassociated with a $1.6bn loan extended by Bear Stearns to support thefunds, investors appear concerned that the bank would have troubleexpanding its asset management business.
Bear Stearns on Tuesday toldinvestors in two stricken hedge funds managed by the bank that one fundhad lost all its value and the other had about nine cents remaining forevery dollar invested following bad bets on the US subprime mortgagemarket.
The losses, especially for the less leveraged of the two funds, were worse than investors expected.
“Theyare a big investment house. They are supposed to be professional,” saidone fund of funds executive. “There is nothing to do now except maybego shoot the guy who did it.”
Bear Stearns declined to comment.The two funds at one point had more than $20bn in investments, much ofit using borrowed money.
The funds were heavily exposed tothe troubled subprime mortgage market through complex debt securitiesknown as collateralised debt obligations (CDOs). Amid a sharp increasein late payments and defaults on subprime home loans – made toborrowers with patchy credit histories – the funds ran aground ascreditors made margin calls.
The near collapse of the two fundswas an embarrassment to Bear Stearns, a leader in the packaging andsale of mortgage-backed securities.
Bear Stearns shares are offabout 9 per cent since the trouble at the two funds came to light andthe price of buying insurance against a default by the bank on itsbonds has increased. Bear Stearns' stock price was about 2 per centlower at $137.20 in after-hours trade.
In addition to risksassociated with a $1.6bn loan extended by Bear Stearns to support thefunds, investors appear concerned that the bank would have troubleexpanding its asset management business.
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