Barclays is offering to underwrite the $1 billion rescue of another highly geared fund that got into trouble because of the liquidity squeeze.

Mainsail II, a $4.5 billion (£2.2 billion) structured investment vehicle designed by Barclays Capital and managed by the hedge fund group Solent Capital, had been forced to start selling assets as it struggled to roll over finance in the commercial paper market.

Mainsail said last night that its security trustee regarded the Barclays restructuring plan as “credible”.

The plan is to pay out commercial paper investors at par through a liquidity facility underwritten by BarCap. The bank is in “well advanced” discussions to buy credit protection to hedge against defaults in the underlying mortgage assets.

If the rescue goes ahead, BarCap will have to stump up just over $1 billion in the coming months as the short-term commercial paper issued by Mainsail comes due.

In a similar rescue last week, it threw a $1.6 billion lifeline to another so-called SIV-lite fund, Cairn High Grade Funding I. Problems at a further SIV-lite created by BarCap, Sachsen Funding I, led to the rescue of the German savings bank Sachsen LB last month. According to sources close to the matter, BarCap was no longer under any obligation to finance the restructuring.

At worst, BarCap has estimated its maximum losses from SIV-lites at £75 million. Ed Cahill, the head of BarCap’s collateralised debt obligations division, which created the SIV-lites, resigned last month.

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