BarCap put more money into SIV funds

12 September 2007

Barclays Capital has invested a further $1.5 billion into a Golden Key, a fund that has had troubles following the liquidity crisis.

The firm is a structured investment vehicle (SIV) and manages $5 billion of assets.

The SIV raised funds on the commercial paper money market and used this to make investments in mortgage-backed securities and other long-term investments.

But as the crisis in the US sub-prime market unfolded the funds had to sell assets and now Golden Key is going to pay out all commercial paper investors through a liquidity facility.

This means that Barclays will have to loan $1.5 billion to cover the commercial papers because of the liquidity facility underwritten by the bank.

Recently, BarCap has had to put $1 billion into another SIV-lite fund, Mainsail II, run by Solent, and $1.6 billion to save Cairn High Grade Funding I.

According to the Times, BarCap estimates that it will register a $152 million loss, at worst.

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