SuperSIV to be $75 bln-$80 bln: investor

By Neil Shah

NEW YORK (Reuters) - A U.S. Treasury-backed plan to support troubled funds called structured investment vehicles is likely to be $75 billion to $80 billion in size, an executive at Federated Investors who has been involved in the plan said on Monday.

"There's probably less of a need for size," with SIV assets in need of emergency support dropping to around $110 billion recently, Deborah Cunningham, chief investment officer for taxable money markets at Federated, said at the Reuters Investment Outlook 2008 Summit in New York.

Recent media reports have suggested that the fund, dubbed the "SuperSIV," would be closer to $60 billion than the originally expected $100 billion.

Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz) and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) are launching the fund to prevent the fire sale of billions of dollars of securities held by SIVs.

SIVs are off-balance sheet funds that banks use to invest in high-yielding assets, often U.S. mortgages. The funds, which held more than $300 billion in assets earlier this year, raise cash by issuing short-term debt called commercial paper.

Cunningham said draft term sheets for participants could be available "any time" now.

Investors are likely to demand a 25 basis point premium to buy any securities issued by the SuperSIV fund, she said.

The SIVs have run into trouble this year as investor interest dried up on fears of exposure to subprime mortgages.  Continued...