Sub-Prime Forces Solent Fund Shut Down

Aug 20 2007 | 12:53pm ET

London hedge fund manager Solent Capital Partners has been forced to shutter a year-old asset-backed vehicle due to the credit crisis.

Solent will wind down its US$1.5 billion Mainsail II fund after being denied short-term financing through the sale of commercial paper, MarketWatch reports. The fund, which is drawing on emergency bank loans, may be forced to sell assets at a deep discount, Solent said in a statement today. Mainsail II had debts of roughly US$1.3 billion at the end of, according to Moody’s Investor Service.

“Current market volatility and lack of market liquidity with respect to the sub-prime lending markets have caused adverse conditions with respect to the liquidity and market exposures of the company’s underlying portfolio of investments,” the firm, which manages some US$8.8 billion, said.

Mainsail II invested in both residential and commercial mortgage-backed securities, as well as collateralized debt obligations.

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