US hedge fund Ellington sells $1bn in bonds after margin call

US hedge fund Ellington sells $1bn in bonds after margin call

A US hedge fund, Ellington Capital Management, revealed that it sold more than $1bn (pounds 590m) in bonds on Monday in an effort to reduce its leverage, although the firm will remain in business, a senior official said.

Estimates by traders that the fund sold about $1bn in collateralised mortgage obligation (CMO) bonds on Monday, were "in the ballpark" according Ellington partner Laurence Penn, who manages the Greenwich, Connecticutt- based fund with former Kidder Peabody star trader Michael Vranos. Dealers said the fund's investments stood at around $4bn earlier this year with equity capital of more than $600m. Ellington faced a number of margin calls on Monday from several Wall Street banks, they said.