Bear Stearns Investors Won’t See Profits
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Bear Stearns Cos. told investors in its two failed hedge funds that they’ll get little if any money back after “unprecedented declines” in the value of securities used to bet on subprime mortgages.
“A leading player, which has honed a reputation as a sage investor in mortgage securities, has faltered,” the managing director of Egan-Jones Ratings Co., Sean Egan, said.
Estimates show there is “effectively no value left” in the High-Grade Structured Credit Strategies Enhanced Leverage Fund and “very little value left” in the High-Grade Structured Credit Strategies Fund, Bear Stearns said in a two-page letter. The second fund still has “sufficient assets” to cover the $1.4 billion it owes Bear Stearns, according to the letter, obtained yesterday by from a person involved in the matter.
