Market Report - Merrill Writedown Hits Asia

ZHANG:
Late Monday, Merrill Lynch announced a debt writedown of $5.7 billion and plans to raise $8.5 billion in capital. The news renewed investor concerns in Asia, and sent the markets tumbling.

Merrill agreed to sell more than $30 billion of collateralized debt obligations to an affiliate of a private equity fund for about 22 cents on the dollar.

Singapore's state-owned investment fund Temasek, meanwhile, pumped an additional $900 million into Merrill Lynch as part of Merrill's capital-raising effort.

Temasek had invested a total of $5 billion in Merrill earlier, although Merrill shares have fallen by about half since then.

But Korea Investment Corporation, South Korea's sovereign wealth fund, has converted $2 billion of preferred Merrill stock into common shares, more than two years ahead of schedule, in a move to cut losses from its first investment in a U.S. bank.

The continued financial woes weighed on Asian stocks. Investors worry that financial sector troubles will further undermine the global economy.

Asia has already seen its own writedowns from credit-related losses, with Australian banks continuing to decline Tuesday.

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