Newport Beach-based bond manager Pacific Investment Management Co. is in talks to handle funds bought by the government’s $700 billion bailout package.
Pimco, along with New York-based BlackRock Inc., submitted proposals to manage the mortgage-backed securities, according to Bloomberg.
Treasury is expected to pick its managers by next week and could announce it as early as this week.
The two companies, along with Baltimore-based Legg Mason Inc., are the biggest bond managers in the country.
The bailout, which was signed into law by President Bush last Friday, calls for buying troubled loans from banks to free them to resume lending.
It is not clear if Pimco would receive a fee if selected, Chief Investment Officer Bill Gross has said it would do it for free.
Pimco manages $830 billion in assets as part of Munich-based insurer Allianz SE.
Details of the how the government will go about buying the troubled loans have not been released, but are widely believed to involve a reverse auction where the lowest asking prices of holders will be bought.
Pimco is also in talks with the New York Federal Reserve Bank over handling the management of the central bank’s corporate bonds it plans to buy, according to Bloomberg.
The corporate bond market has been frozen as a result of the credit crisis, leaving companies shut out of the short-term borrowing they depend on to get by.
