BlackRockLegacy Securities Public-Private Trust will be the newest ditressed-asset fund to take advantage of the government’s Public-Private Investment Program (PPIP), according a prospectus filed with the Securities and Exchange Commission on Friday by BlackRock Advisors.
The initial offering expenses for the trust will be paid by BlackRock Advisors. The objective of the fund is to create returns for investors on assets eligible for purchase under PPIP, according to the filing. The size of the fund was not detailed in the prospectus.
The trust will be a closed-end fund to purchase distressed mortgage securities; eligible assets include CMBS and non-agency RMBS issued prior to 2009 that were originally rated 'AAA' or its equivalent by two or more national ratings agencies. The risk for investors lies within the recent damage caused to banks by these same distressed mortgage securities.
The New York Times reported a “tepid response” to the fund, speculating its reason lying in reluctance by banks to sell troubled assets in a market that appears to be turning around.
The Times also mentioned that this is the first program aimed at Main Street investors which, if successful, could end criticism that the financial programs are only applicable to large Wall Street companies.