Morgan Stanley Launches TALF Fund (MS)

Banking, finance, and taxes

Published: July 17, 2009 9:45 am

Last Updated: April 28, 2020 2:00 am

Morgan Stanley (NYSE: MS) is launching a TALF fund. It is slightly larger than its original target. The fund probably won’t make a huge boost for earnings, but it is a further step into investing in some of the asset-backed securities. The firm’s Morgan Stanley Investment Management group raised more than $600 million in capital from qualified high net worth and institutional investors.

The original target was $500 million and the strategy is for investing in securities eligible to serve as collateral under the Term Asset-Backed Securities Loan Facility, a.k.a. ‘the TALF,’ offered by the Federal Reserve Bank of New York.

The New York Fed and the Treasury Department announced the creation of the $200 billion TALF in late 2008 and launched it earlier this year. This will facilitate new issues of asset-backed securities. The fund’s TALF strategy is to capitalize on market disruptions by sourcing undervalued credits and attractive cash flows in TALF-eligible securities. The will mainly be AAA-rated by two agencies in auto, credit card, small business and student loans.

How this program will pan out has yet to be seen.

Jon C. Ogg
July 17, 2009

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