By Polya Lesova, MarketWatch
Jul 21, 2007
SourceNEW YORK (MarketWatch) -- Barclays Plc, once an investor in a now worthless Bear Stearns hedge fund that bet on subprime securities, is now considering its options for recovering $400 million it invested in the fund, the Wall Street Journal reported in its online edition on Saturday. Barclays (BCS) was an investor in the Bear Stearns Asset Management's High-Grade Structured Credit Strategies Enhanced Leverage Fund, which put billions of dollars in the subprime-mortgage market, the Journal reported.
Barclays lent the fund about $200 million and later offered an additional $250 million, the Journal reported. The $200 million loan has been paid off, while the $250 million was never extended, the Journal said.
However, Barclays is now considering its options for recovering $400 million that it invested in the fund separately from the loan, the Journal reported, citing people familiar with the matter. The possibilities are a negotiated settlement or litigation.
Barclays said recently that it had "some" exposure to the Bear fund, but said that the exposure was not material, the Journal reported.
Barclays (BCS) said earlier this week that two of its hedge funds that made big bets on subprime securities are worth virtually nothing.
The High-Grade Structured Credit Strategies Enhanced Leveraged Fund, in which Barclays invested, is worth nothing, while there is "very little value" left for investors in the larger, less leveraged High-Grade Structured Credit Strategies Fund, based on estimates at the end of June, according to a letter the investment bank sent to clients.
Polya Lesova is a MarketWatch reporter based in New York.