UPDATE 2-Legg Mason reduces ABCP investments in two funds
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NEW YORK, Dec 28 (Reuters) - Money manager Legg Mason Inc (LM.N) on Friday said it has reduced its asset-backed commercial paper investments in two of its non-U.S. liquidity funds.
Legg Mason, which took the action to enhance its two funds' liquidity, said it has accrued an aggregate expense in December of $22.2 million, or $0.15 per share after tax.
The firm, the second-largest publicly traded U.S. money manager, said that neither the fund, nor their shareholders, incurred any loss in connection with the transactions.
Baltimore-based Legg Mason also said the funds' exposure to so-called structured investment vehicles, or SIVs, has declined substantially due to maturing paper and various sales.
Commercial paper is a key source of short-term financing for businesses. Asset-backed commercial paper (ABCP) is short-term debt tied to mortgages, credit-card payments or other kinds of receivables.
SIVs are specialized funds that raise cash by issuing commercial paper and then use the proceeds to buy high-yielding assets, like mortgages. They have run into trouble this year as investor interest has dried up due to fears of exposure to U.S. subprime mortgages.
Legg Mason said that as of Dec. 21 its liquidity business had $164 billion of assets under management.
Another money manager, BlackRock Inc (BLK.N), last Friday suspended cash redemptions in a $1 billion fund for institutional investors. For details, see [ID:nN21263992].
Both BlackRock and Legg Mason have cited unfavorable market conditions for their actions.
(Reporting by Neil Shah; Editing by Diane Craft)
