LONDON (AP) — Carlyle Capital Corp. Ltd is in talks with creditors to prevent the liquidation of some $16 billion in securities, the listed mortgage-bond fund said yesterday.

Carlyle Capital shook financial markets last week after missing margin calls from banks on its $21.7 billion portfolio of residential mortgage-backed bonds. It said some $5 billion in securities held as collateral may have already been sold.

The fund, an affiliate of the US-based private equity firm Carlyle Group, warned that if it fails to reach an agreement with remaining lenders, all of its securities may be liquidated.

"While these talks continue, the company has discussed and requested a standstill agreement whereby its lenders would refrain from foreclosing and liquidating their collateral, and we are awaiting responses," the fund said in a statement.

The trouble at Carlyle Capital has raised fears that their assets will flood the market, further depressing prices on fixed-income securities. The securities have dropped sharply in recent weeks as banks pull back on lending to funds and investment vehicles, leading to forced asset sales.

Shares in the fund, which trade on Euronext Amsterdam, were suspended on Friday. The stock fell nearly 60 percent to $5 on Thursday when Carlyle Capital revealed it had failed to meet margin calls with four banks the day before.

Shares will not be reactivated until Dutch stock markets watchdog AFM receives more information from Carlyle Capital, said Paul van Dijk, a spokesman for the regulator.

Yesterday, Carlyle Capital said it had received more than $400 million in margin calls. The company leveraged its $670 million equity 32 times to finance a $21.7 billion portfolio of AAA-rated residential mortgage-backed securities issued by US housing agencies Freddie Mac and Fannie Mae.

To do this, it enters into repurchase agreements with banks, in which it posts the mortgage securities as collateral in exchange for cash.

If the value of the security held as collateral falls, the lender has the right to ask for more collateral — a "margin call" — to secure the loan. If the borrower does not meet the margin call, the lender may sell the security.