Bear Stearns hedge fund survives

Some people thought that the news that Merrill Lynch would seize and sell $850 million in bonds held as collateral in the Bear Stearns High Grade Structured Credit Strategies Enhanced Leveraged Fund would spell the end of the fund. It's not working out that way. While Merrill bailed (thought it as not able to sell a lot of the bonds), JPMorgan Chase, Goldman Sachs and Bank of America all reached deals with Bear that do not necessitate further fire sales. They may have been worried about what the bond dump would do to the markets. Smart move there. The deal allows them to seal the bond back to the hedge fund for cash. So the Bear funds survive for another day. The future is still an open question. You have to think that the lines of credit that kept a lot of hedge funds humming are going to constrict a bit.

For more:
- here's the New York Times article