SAN FRANCISCO (Thomson Financial) - Legg Mason Inc. said late Friday it has cut its holdings of securities issued by certain asset-backed commercial paper issuers held by two of its non-U.S.
liquidity funds.
As a result, as of Dec. 21, Legg Mason said 3.2% of the $164 billion of assets under management in its liquidity business has exposure to structured investment vehicles, a type of ABCP. Roughly 1.1% of the liquidity assets are invested in bank-sponsored SIVs, the Baltimore-based asset management company added.
Legg Mason also said it is 'confident that its liquidity funds will continue to maintain a stable net asset value and their portfolios are appropriately positioned to continue to satisfy the liquidity needs of investors.'
The firm said it enhanced the liquidity of the two funds 'in light of current market conditions and the composition of their portfolios and to provide further support for one of the fund's portfolio ratings.'
Neither fund, nor their shareholders, incurred any loss in connection with the transactions, Legg Mason said.
In one fund, based in Dublin, Ireland, Legg Mason said it reduced the fund's SIV holdings through a deal whereby the fund received $890 million in cash for certain SIV securities that were transferred to a unnamed bank in connection with a total return swap between the bank and the company. Legg Mason also purchased $132 million of SIV securities from the fund.
In the second fund, Legg Mason said it agreed to pay $99 million cash to acquire conduit securities issued by Canadian ABCP issuers.
Including the transactions announced Friday, Legg Mason expects to post a quarterly charge related to its liquidity fund support of $22.2 million, or 15 cents a share, after tax and after giving effect to related adjustments to a revenue sharing agreement with a subsidiary.
Shares of Legg Mason fell 41 cents to close at $71.23. Gabriel Madway gm/gm/kh COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
As a result, as of Dec. 21, Legg Mason said 3.2% of the $164 billion of assets under management in its liquidity business has exposure to structured investment vehicles, a type of ABCP. Roughly 1.1% of the liquidity assets are invested in bank-sponsored SIVs, the Baltimore-based asset management company added.
Legg Mason also said it is 'confident that its liquidity funds will continue to maintain a stable net asset value and their portfolios are appropriately positioned to continue to satisfy the liquidity needs of investors.'
The firm said it enhanced the liquidity of the two funds 'in light of current market conditions and the composition of their portfolios and to provide further support for one of the fund's portfolio ratings.'
Neither fund, nor their shareholders, incurred any loss in connection with the transactions, Legg Mason said.
In one fund, based in Dublin, Ireland, Legg Mason said it reduced the fund's SIV holdings through a deal whereby the fund received $890 million in cash for certain SIV securities that were transferred to a unnamed bank in connection with a total return swap between the bank and the company. Legg Mason also purchased $132 million of SIV securities from the fund.
In the second fund, Legg Mason said it agreed to pay $99 million cash to acquire conduit securities issued by Canadian ABCP issuers.
Including the transactions announced Friday, Legg Mason expects to post a quarterly charge related to its liquidity fund support of $22.2 million, or 15 cents a share, after tax and after giving effect to related adjustments to a revenue sharing agreement with a subsidiary.
Shares of Legg Mason fell 41 cents to close at $71.23. Gabriel Madway gm/gm/kh COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.