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Millennium Global Liquidates Emerging-Markets Credit Hedge Fund

Date: Monday, October 20, 2008
Author: Saijel Kishan, Bloomberg

Millennium Global Investments Ltd., a London-based asset manager with $15 billion in assets, is liquidating a hedge fund that buys emerging-market debt after lenders withdrew credit, according to two people familiar with the situation.

The firm started selling assets of Millennium Global Emerging Credit Fund Ltd. last week, said one of the people, who asked not to be identified because the information is private. Tim Draper, a spokesman for the firm, declined to comment.

``We're going to see a lot more liquidations,'' said K. Daniel Libby, a manager at Greenwich, Connecticut-based Sands Brothers Asset Management LLC, which invests in hedge funds. ``Hedge funds that don't have high amounts of cash on hand are going to be most at risk.''

Hedge funds focusing on emerging markets have lost 22 percent on average this year, according to data compiled by Hedge Fund Research Inc. Emerging-market stocks and bonds have fallen, led by China, Russia and Brazil, as commodity prices plunged and investors shunned riskier assets on concern the global economy is entering a recession. The MSCI Emerging Markets Index has plunged 54 percent this year.

Highland Capital Management LP, based in Dallas, last week shut its flagship Highland Crusader Fund and another fund. Barclays Capital Inc. seized $642 million of leveraged loans from Highland.

Market Turmoil

Hedge funds are suffering amid the turmoil in global financial markets that started with the meltdown in U.S. subprime mortgages. An estimated 700 funds may go out of business by the end of the year, an increase of 24 percent from 2007, according to Hedge Fund Research.

The emerging-markets credit fund, one of six hedge funds managed by Millennium, had $818 million in assets as of Aug. 29, according to data compiled by Bloomberg. It gained 13 percent for the year and 25 percent annually since it was started in November 2006.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net