A hedge fund managed by Bear Stearns is scrambling to sell large amounts of mortgage-backed bonds in a potentially troubling sign for the broader mortgage-backed bond market, The Wall Street Journal reported in its online edition.
Bear Stearns' High-Grade Structured Credit Strategies Enhanced Leverage Fund is facing losses and, together with a sister fund, is trying to sell about $4 billion in bonds to raise cash for redemptions and to prepare for likely margin calls, according to the report, which cited people close to the fund.
Bear Stearns was not immediately available for comment.
Bids for the bonds, many of which are backed by risky subprime mortgages, are due on Thursday, shortly after Bear reports quarterly results. The fund could be shut down if the sale is not a success, the Journal reported.