Legg pumps $630M into money market funds

Baltimore-based Legg Mason Inc. announced today that the firm has entered into agreements to support three money market funds: Citi Institutional Cash Reserves (CILXX); Western Asset Institutional Money Market Fund (INSXX); and a fund for offshore investors, CILF U.S. Dollar Liquidity Fund. The funds are managed by Western Asset Management. Legg amended an existing capital agreement to provide for an additional $350 million for Citi Institutional Cash Reserves and entered a new agreement for $20 million for Western Asset Institutional Money Market Fund, due to the funds’ holdings of troubled asset backed commercial paper securities. To maintain the AAA rating of the offshore fund, Legg acquired two letters of credit that will provide additional $260 million in support for the securities. The funds have no exposure to Lehman Brothers Holding Inc.or American International Group, Inc., both of New York. or Washington Mutual Inc., of Seattle, Legg noted in a statement. “The firm may take additional action if we deem it appropriate,” chief executive Mark Fetting said in a statement. He added that “no guarantees can be given.” The firm expects to incur $318 million in charges in the current quarter as a result of the agreements, which are expected to cut into profits by $1.33 per share. Legg Mason had $923 billion in assets under management as of June 30 and $187 billion in liquid assets as of Sept. 17.