The credit crunch causing worries in the global markets has the potential to cause the collapse of a major hedge fund that could disrupt markets even more Moody’s Investors Service warned, Dow Jones reports.

While there is not specific fund in mind, Moody’s believes that as investors try to unload illiquid investments such as collateralized debt obligations, hedge funds that are unable to exit their positions could run into trouble, said Chris Mahoney, vice chairman of Moody’s, during a conference call with investors yesterday.

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