Man Investments, the world’s largest hedge fund, with $67 billion in assets under management, believes the subprime crisis will worsen as large investors look to sell off large positions, The Australian reports. But solvent lenders will be make for good investments, said John Morrison, CEO of a division of the Australian arm of Man Investments.“After a month like August, or October 1987, you see the problems very close, and then you see the opportunities,” Morrison said.

“Is it over yet? I don’t think so, but let’s see how things unfold,” Morrison said. “A lot of people have got some very large positions that need to be unwound. Who is going to unwind these positions?”

In fact, now that interest rates have risen and credit is so tight, global investment banks are said to be trying to syndicate $300 billion in private equity loans and refinance $120 billion in short-term debt.

“There will be very tight liquidity over the next few months until the end of the year,” said Jamie Castan, a research chief at Man. “You can hide skeletons in the closet as long as you don’t have redemptions. There are a lot of clouds on the horizon.”

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