Carlyle Capital says unable reach deal with lenders

(Corrects paragraph 19 to show Carlyle Group managers and not Carlyle Group have a 15 percent stake in Carlyle Capital) By Yinka Adegoke and Umesh Desai

NEW YORK/HONG KONG (Reuters) - Carlyle Capital Corp , an affiliate of private equity firm Carlyle Group, said late on Wednesday its lenders are likely to take possession of its remaining assets after it was unable to reach a mutually beneficial agreement to stabilize its financing.

The news provided another sign of stress in global credit markets and prompted spreads to widen on the iTRAXX Asia ex-Japan investment grade index.

"The credit angst is back," said Tim Condon, head of Asia research with investment bank ING.

Carlyle said it has defaulted on about $16.6 billion of its debt and said the only assets held in its portfolio as of Wednesday were U.S. government agency AAA-rated residential mortgage-backed securities.

Carlyle Capital said that during the last seven business days the company had received margin calls in excess of $400 million.

It said it was unable to pay the margin calls, so its lenders had proceeded to foreclose on the mortgage-backed securities collateral.

Analysts said the news would deepen the gloom over a global credit crisis that emanated from the U.S. housing downturn.

"Sentiment is broadly negative and news of missed margin calls at large highly leveraged funds only elevates fear of a vicious cycle of more forced selling at deep loss, collateral shortfalls, and more missed margin calls," said Brett Williams, credit analyst with BNP Paribas in Hong Kong.

Shares of Carlyle Capital have lost about 78 percent of their value since February 29 when it said it would retain fourth-quarter earnings and not pay a dividend to preserve the long-term value of shareholder's equity.

On March 6, it said it had not been able to meet some margin calls, which snowballed over the next few days as more of its lenders feared it would default.

The stock fell 20 percent on Tuesday when trade resumed following a suspension last week and was last quoted at $2.80.

FEARS

In Asia, the iTRAXX Asia ex-Japan investment grade index which is dominated by banking credits, was sold off.

It blew out by 10 basis points (bps) to 213 bps on the Carlyle news, market sources said.

"The Fed will remain vigilant that it does not cause systemic problems, but I don't think we can rule out more instances of stress," Condon said.