`SuperSIV' Fund to Start Buying in Weeks, Banks Say

`SuperSIV' Fund to Start Buying in Weeks, Banks Say

Dec. 18 (Bloomberg) -- 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 today.

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 an e-mailed statement. New York- based BlackRock Inc., the largest publicly traded U.S. 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, London-based HSBC Holdings Plc and Societe Generale SA of Paris. Citigroup said last week it would take over seven SIVs with $58 billion of debt to avoid forced assets sales that would further 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 by 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 that were rocked by record high defaults on subprime mortgages. Financial institutions have since reported more than $70 billion of losses and writedowns.

Bank of America, based in Charlotte, North Carolina, and New York-based JPMorgan both run money-market funds that own short- term debt issued by SIVs.

Bank of America shares fell 8 cents to $41.62 at 2:51 p.m. in New York Stock Exchange composite trading, while those of Citigroup fell 17 cents to $30.60. JPMorgan's shares fell 45 cents to $44.08 and BlackRock shares rose $3.79 to $207.03

BLOOMBERG