What's up in the prime brokerage business?

Not all hedge funds fared poorly in 2007. There were some outright home runs hit. Lahde Capital, for example, hit a home run. Most funds ended up for the year. There's a lot to worry about it in 2008, however, starting with their prime brokers. Needless to say the likes of Bear Stearns and Morgan Stanley have been through a lot. Less so Goldman Sachs. All that may result is tougher borrowing and trading conditions for hedge funds, especially newer ones. According to Financial News Online, Morgan Stanley has been asking for as much as one percentage point over LIBOR for funds that want to use high-yield securities as collateral. It used to ask for about .1 percent before the crisis took root. This will likely push hedge funds to get creative with their financing, seeking other sources and perhaps relying on smaller prime brokers.  

For more:
- here's the Financial News Online article