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Legg Mason Purchased LOCs To Support SIVs In Its Citi Inst Money Funds. A late Monday Bloomberg.com article says that Legg Mason has taken action to support its money market funds. Legg's Western Asset unit becomes the fourth money fund advisor to publicly disclose support over troubled securities -- Evergreen, Credit Suisse, and SEI have come forward to date. (Visit tomorrow to read about No. 5, SunTrust Bank's STI Classic funds.) Legg Mason's Nov. 9 10-Q quarterly filing says it manages $167 billion in liquidity assets with approximately 6% invested in ABCP issued by SIVs. "The investments have not affected the $1 per share net asset value of the funds and Legg Mason does not expect that they will, although no guarantees are given.... In November 2007, in order to support the [fund's] AAA/Aaa credit ratings, Legg Mason elected to procure letters of credit (LOCs) ... of approximately $238 million," says the filing. Legg Mason "has provided approximately $178 million in cash collateral" and "estimates that, unless the LOCs are terminated during the quarter without being drawn, it will incur a $4.7 million charge to its net earnings in the December 2007 quarter ... representing the net impact of decreases in the fair value of the underlying ABCP through the date hereof."
