Hedge Fund Redemption

"The big picture is the economy is just starting to deteriorate,'' said Mark Kiesel, executive vice president at Pimco, who runs $180 billion in corporate bonds. ``We still think there are a lot of redemptions and hedge fund liquidations coming.''

Hedge funds may be forced to dispose of half their $135 billion in high-yield loans to fund redemptions, Stephen Antczak, a UBS credit analyst in Stamford, Connecticut, wrote in an Oct. 10 report to clients. That may send loan prices as low as 60 cents, he said.

``The de-leveraging that we're witnessing will probably continue,'' said Paul Scanlon, team leader for U.S. high yield and bank loans at Boston-based Putnam Investments LLC, which manages $55 billion in fixed income. ``My sense is that's not turning around in the very near term.''

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