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Hedge fund leverage is returning

Hedge funds have begun to raise leverage levels again in recent weeks as prime brokers and other lenders become bolder about extending credit in more stable markets, a lawyer specializing in the sector said on Tuesday.

Henry Bregstein, attorney at law at Katten Muchin Rosenman, said that some strategies, such as multi-strategy funds and funds of funds, had tentatively started to increase leverage to as much as 50 percent within the last six weeks.
 
"We’re starting to see some leverage come back into the hedge fund industry," he told Reuters on the sidelines of the GAIM hedge fund industry conference here.
 
"With the stronger funds, we’re beginning to see some working on new leverage transactions… Markets appear to have stabilised."

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