March 7 (Bloomberg) -- Carlyle Group's mortgage-bond fund was suspended in Amsterdam trading after creditors forced the sale of some holdings, jeopardizing shareholders' capital.

Lenders who issued default notices have liquidated some residential mortgage-backed securities held by the fund and may sell more as talks continue, Carlyle Capital Corp. said in a statement today. The fund had ``substantial'' margin calls and additional default notices from lenders yesterday, it said.

Carlyle Capital said yesterday it had failed to meet margin calls, prompting creditors to seek immediate repayment. Started by David Rubenstein in 1987, Carlyle increased its mortgage holdings last year, selling $300 million of shares in Carlyle Capital. The fund used leverage to buy about $22 billion of AAA rated mortgage debt issued by Fannie Mae and Freddie Mac.

``This marks a further savage step in the ongoing credit implosion of recent months,'' Keith Baird, an analyst at Bear Stears Cos. in London, wrote in a note to clients today. ``The liquidation of the fund cannot be excluded nor the potential loss of capital, rendering the shares worthless.''

Carlyle Capital was suspended in the Netherlands at the request of the securities regulator AFM after falling 58 percent yesterday to $5. The stock is halted pending a statement from Carlyle, AFM spokesman Paul van Dijk said. Carlyle sold the shares for $19 in July's initial public offering.

`Impaired Capital' Risk

The fund said today the additional margin calls and increased collateral requirements ``could quickly deplete its liquidity and impair its capital'' as they would be ``well in excess'' of the margin calls received two days ago.

Emma Thorpe, a spokeswoman for Carlyle in London, wouldn't comment beyond the fund's statement.

Carlyle Capital has received a $150 million credit line from Carlyle Group since August. It hasn't said how much of that line remains. The fund's fate may depend on ``the attitude of the Carlyle Group as to the extent of its further support, if indeed there is any,'' analyst Baird wrote.

The effect of the U.S. subprime mortgage market collapse has spilled over into top-rated agency debt, knocking down the value of the residential mortgage-backed securities. The Guernsey, U.K.-based fund said the agency mortgages it holds have the ``implied guarantee'' of the U.S. government.

The agency mortgage-bond market has about $4.5 trillion of securities, according to estimates from UniCredit SpA. The spread between 30-year agency mortgage bonds and 10-year U.S. Treasuries widened to more than 200 basis points this week, the highest since 1986, according to data compiled by Bloomberg.

The Carlyle fund said it missed four of seven margin calls worth more than $37 million. It said today it believed it had sufficient liquidity as of last week.

To contact the reporter on this story: Edward Evans at eevans3@bloomberg.net; Cathy Chan in Hong Kong at kchan14@bloomberg.net

Last Updated: March 7, 2008 06:38 EST