Legg jettisons $1.7B in SIV holdings

Baltimore-based Legg Mason now has overall exposure to SIVs amounting to $1.4 billion.

Legg Mason Inc. reduced its exposure to structured investment vehicles by 43% yesterday in a sale of Axon Financial Funding Ltd. holdings worth $1.7 billion.
Baltimore-based Legg Mason now has overall exposure to SIVs amounting to $1.4 billion.
In October 2007, Legg Mason’s exposure was $10 billion.
The transaction, coupled with other efforts to support money market funds, will likely cost Legg Mason $1 billion in quarterly operating results, or $4.48 a diluted share, according to the company.
SIVs are funds that issue short-term securities at a low interest rate in order to purchase long-term securities that pay higher rates.
“With the sale of Axon, our single largest position, we are meaningfully reducing our downside risk in a persistently uncertain economic and market environment,” Mark R. Fetting, the company’s chairman and chief executive, said in a statement.
Axon Financial is based in Wilmington, Del.