SIV Superfund to Begin Soliciting Investors - WSJ

Bank of America (BAC), Citigroup (C) and J.P. Morgan Chase (JPM) will next week begin looking for partner banks to invest in their SIV-saving superfund, the Wall Street Journal reported Friday. The fund, which aims to create a potential buyer for the assets of off-balance-sheet investments known as SIVs [structured investment vehicles], has been in the making since September (full story). SIVs, which sell short-term debt and use the proceeds to buy higher-yielding assets, ran into trouble when credit markets dried up over the summer after traditional debt buyers were spooked by the illiquid vehicles' lack of transparency and valuation difficulties. The so-called superfund will only buy high-quality assets, a move it hopes will bolster investor confidence. Blackrock (BLK) is expected to be named the $75-100 billion fund's manager, sources say. It is not expected to invest in the fund, perhaps in an effort to enhance its transparency as a neutral party. Some banks have shown informal interest in the fund, the Journal says, though "the real test will come as they assess the financial terms." Bankers say they hope to have the superfund running by January. Potential investors include Wachovia (WB), Goldman Sachs (GS), Merrill Lynch (MER), Federated Investors (FII) and Bear Stears (BSC). The participation of European banks such as HSBC (HBC), Barclays (BSC), Deutsche Bank (DB), UBS (UBS) and Credit Suisse (CS) is considered critical due to their track-records in structured finanace (full story).

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