By Svea Herbst-Bayliss and Dane Hamilton
BOSTON/NEW YORK (Reuters) - Several U.S. lenders have takencontrol of failing hedge fund Peloton Partners' assets, one dayafter the fund said it was liquidating a portfolio, a personfamiliar with the situation said on Friday.
Some banks are taking matters into their own hands, whileothers are being more patient and are cooperating with anorderly liquidation, said the person who was briefed on thematter but who is not authorized to publicly speak about it.
The person refused to name Peloton's lenders who tookcontrol of the assets.
The news marks the second severe blow in as many days forPeloton, a three-year-old London-based firm that told investorson Thursday that it had to shut its ABS Master Fund. While thefund gained 87 percent last year on savvy subprime bets, it gotinto trouble recently by making bad bets on the value of highlyrated securities.
The lenders quick move illustrates what some hedge fundindustry sources say are growing tensions between some fundsand lenders over loans at a time many large banks are gettingjittery about more risk after having written down billions indollars on bad housing market bets in the last six months.
"Leverage is getting pulled and some of these are very highquality assets," said one London-based hedge fund manager whoasked to remain anonymous because he did not want his ownlenders to know he is talking about them. He said banks areespecially nervous about loans to hedge funds that are exposedto credit securities.
Peloton's founders, Ron Beller and Geoffrey Grant, alsoblamed their lenders for their problems, complaining manytightened terms without regard to creditworthiness or trackrecord. For Peloton this "has compounded our difficulties andmade it impossible to meet margin calls," the pair wrote.
Beller had only recently escaped news headlines after ahigh-profile trial exposed how a former assistant at GoldmanSachs robbed him of $2 million (1 million pounds).
Peloton has a second fund, the Multi-Strategy Fund, whosefate remained unknown after redemptions were suspended thisweek.
When it became clear that hedge fund Citadel InvestmentsGroup, which rescued ailing portfolios from Sowood Capital andAmaranth in the past, had no interest in Peloton, some lendersgot even more nervous and took the assets back, a person said.
But several people said the banks may face the same sort oftroubles trying to unload Peloton's former asset as the hedgefund would have.
Meanwhile another lender who has no stake in Peloton deniedthat banks were panicking and hastily pulling money.
"When counterparty risk is reasonable and they have goodcredit, we work with hedge funds," the person who is a seniorexecutive in a major bank's prime brokerage division said."There is no benefit in being reactive and blowing a fund out."
(Editing by Richard Chang, Leslie Gevirtz)
