The SuperSIV fund, set up to provide cash to structured investment vehicles hurt by subprime-mortgage holdings, plans to start buying assets "within weeks," its sponsors said yesterday.
The fund's size, originally envisioned at about $80 billion, will be determined by "SIVs' needs and evolving market circumstances," Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. said in a statement. BlackRock Inc., the asset manager, will oversee the fund.
The urgency that led to the creation of the SuperSIV has eased after separate SIV bailouts by banks including Citigroup, HSBC Holdings P.L.C. and Societe Generale, of Paris. Citigroup said last week that it would take over seven SIVs with $58 billion of debt to avoid forced asset sales that would push credit-market prices lower.
The fund, also known as the Master Liquidity Enhancement Conduit, or M-LEC, will provide "an optional source of liquidity for eligible high-quality assets," the banks said in the statement.
SIVs, which sell short-term debt and invest the proceeds in higher-yielding securities, have cut their holdings more than 25 percent since August to $298 billion, according to Moody's Investors Service. They emerged in August as one of the biggest threats to capital markets, which were rocked by record-high defaults on subprime mortgages. Financial institutions have since reported more than $70 billion of losses and write-downs.