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Hedge fund bail-out likely

Calcutta News.Net
Friday 22nd June, 2007

Bear Stearns is proposing to bail out a US$3.2b hedge fund which is in trouble.

In increased efforts to salvage the High-Grade Structured Credit Strategies Fund, which made bad calls on mortgage bonds, it is believed Bear Sterns will assume the loans of lenders to the
fund.

The possible collapse has sent stocks and bonds of financial companies lower.

The fund lost about 10 percent of its value this year, while a related fund, the 10-month old High-Grade Structured Credit Strategies Enhanced Leverage Fund, lost about 20 percent.

The funds were speculating in subprime mortgages during a time when defaults were increasing.

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