Mortgage woes hit British firm

British investment fund Cheyne Finance said Wednesday that losses had forced it to sell assets and draw down all three of its credit lines, becoming the latest investor to dump U.S. mortgage-backed securities that have withered in value.

“We have been actively selling assets and reducing the size of the portfolio and have raised sufficient cash to cover projected liabilities for the next few months,” Cheyne said.

The $6-billion fund is a unit of Cheyne Capital Management, one of Europe’s largest hedge fund managers. Like many other funds of its kind, it has borrowed using short-term debt to invest in long-term securities, such as mortgage bonds. Those bets have gone awry this summer amid a global credit crunch.

The news raised fresh concerns over the potential for forced sales of securities into an already jittery credit market.