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Hedge Funds Find Credit

Hedge Funds Find Credit

Prime Brokers Offering Credit to Hedge Funds Again


The largest hedge funds are likely to stay with the large prime brokerage houses, but prime brokers are offering credit to entice non-top tier hedge funds.  The biggest hedge funds are still concerned about banks failing, so they are unlikely to switch to a new broker even if credit rates are competitive.  Banks are lowering rates for lending in order to induce other hedge funds seeking leverage in the credit crunch. 

"Banks have all lowered their rates and are competing again -- at one moment they were pushing hedge funds away, now they're competing for funds," said Oliver Dobbs, chief investment officer of portfolio management at hedge fund firm CQS, talking about convertible arbitrage strategies.
"Up to five-times leverage is available on a blended basis for a relative value fund and perhaps as much as 10-times for the right individual credit," he told Reuters.

Last year's collapse of Lehman Brothers (LEHMQ.PK) saw many banks and hedge funds grow nervous over their relationships with one another.  Source

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