Possible deal seen for Cheyne SIV creditors: report

NEW YORK (Reuters) - A deal that would give Cheyne Finance creditors the ability to avoid booking hundreds of millions of dollars of potential losses is in the works, the Wall Street Journal reported in its online edition, citing sources familiar with the situation.

Cheyne Finance, now known as SIV Portfolio Plc, is a structured investment vehicle with about $7 billion, managed by British hedge fund Cheyne Capital Management.

Though the structure of the proposed deal remains unclear, one option would be to move assets into a new vehicle with senior creditors refinancing their debt, the Wall Street Journal said.

SIVs have been particularly hard hit by the credit market turmoil. It has been more difficult to value illiquid assets that rely on the "mark to market" pricing that these SIVs use.

They also rely on a risky strategy of short-term funding to invest in longer-term securities.

(Reporting by Lisa Lee; Editing by Braden Reddall)