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Third Avenue Sought Internal Loan Approval Before Fund Shut

  • Fund-to-fund bridge lending helps firms avoid fire sales
  • BlackRock, Legg Mason also requested permission from SEC
Bloomberg business news

Massachusetts Opens Probe of Third Avenue Fund Closure

Updated on

Two months before it froze cash withdrawals from a $788.5 million high-yield bond fund, Third Avenue Management requested approval for interfund lending, a program sought by an increasing number of mutual fund managers to bridge short-term liquidity needs.

Third Avenue’s request, disclosed in an Oct. 14 filing with the U.S. Securities and Exchange Commission, would allow its mutual funds to temporarily borrow money from one another. Investors who are redeeming could get paid with the loans almost immediately, even if it took the firm several days to receive cash from the sale of assets.