by Tanta on 6/22/2007 03:33:00 PM

I kiddeth you not. "Fitch Places Bear Stearns' 'CAM2' CDO Asset Manager Rating on Watch Negative":

Fitch Ratings-New York-22 June 2007: Fitch has placed Bear Stearns Asset Management's (BSAM) 'CAM2' CDO Asset Manager Rating on Rating Watch Negative following recent reported adverse developments associated with BSAM's High Grade Structured Credit Strategies hedge funds, and the resultant uncertainties related to the on-going business strategy and capacity of the High Grade Structured Credit Strategies team.

Depending upon the resolution of recent developments with BSAM's High Grade Structured Credit Strategies hedge funds, BSAM's capacity to maintain its level of Structured Finance CDO collateral management may change. Fitch is continuing to monitor developments at BSAM and its hedge funds.

UPDATE:

22 Jun 2007 3:55 PM (EDT)

Fitch Ratings-New York-22 June 2007: The credit ratings of The Bear Stearns Companies Inc. (Bear Stearns) will not be affected by today's announcement to provide up to $3.2 billion in secured financing to The Bear Stearns High-Grade Structured Credit Fund (High-Grade Fund), according to Fitch Ratings.

The High-Grade Fund is a hedge fund managed by Bear Stearns Asset Management (BSAM). The Bear Stearns facility is a collateralized repurchase agreement, which can be readily funded with existing internal cash sources. The provision of repo financing is a product offered in Bear Stearns' usual commercial activity and does not constitute an equity investment. The Rating Outlook is Stable. A complete list of ratings is detailed at the end of this release.

The High-Grade Fund and The Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund (Enhanced Fund) have incurred redemption requests and margin calls which exerted severe pressure on fund liquidity following further deteriorating conditions in select subprime instruments. By replacing the current secured financing, Bear Stearns improves prospects to facilitate an orderly de-leveraging of the fund. Fitch views this action by Bear Stearns as a deliberate effort to optimize asset values and investor returns in this particular fund. However, Fitch does not believe this specific action sets a precedent for other funds managed by Bear Stearns. A case in point: BSAM will continue to work with creditors and counterparties of the Enhanced Fund to reduce leverage in an orderly manner and improve liquidity, but the company has not offered to provide any debt or equity. To proffer debt and/or equity across the BSAM fund universe could indeed have adverse rating implications.