Boston Globe – –Merrill Lynch & Co. will proceed with a plan to sell about $800 million of bonds from a money-losing hedge fund run by Bear Stearns Cos., a day after delaying a similar auction, people with knowledge of the offering said.
Merrill, a creditor to the fund, began distributing a list to investors of bonds it may offer in the sale, according to the people, who declined to be named .
The firm is pressing ahead with the sale while Bear Stearns tries to pull together a rescue plan to bail out the hedge fund, a person said.
Bear Stearns, the biggest broker for US hedge funds, has offered to provide $1.5 billion in loans to help rescue the fund and is seeking cash from some of the fund’s existing creditors, which also include Citigroup Inc. and JPMorgan Chase & Co.
The fund’s potential closure sparked concern about wider losses in the market for subprime mortgage bonds and so-called collateralized debt obligations.
Bear Stearns made the lending commitment in a meeting with creditors after losses forced the fund to sell off $4 billion of mortgage bonds last week. Merrill and JPMorgan had each planned to sellabout $400 million of CDOs owned by the fund this week.
