NEW YORK (Reuters) - Four months ago, hedge fund manager Ralph R. Cioffi, a veteran with two decades of experience, warned of a "catharsis" and coming collapse in the bond market — just not his own.Now Blackstone Group, the private equity giant, is presenting a plan to rescue Cioffi's Bear Stearns Cos. hedge fund that is on the brink of collapse, and Bear Stearns is infusing $1.5 billion of its own capital to save the fund, according to people familiar with the situation yesterday.

The fund already has sold off $4 billion in mortgage-backed securities to raise money that could pay redemptions and margin calls after the Bear Stearns High-Grade Structured Credit Strategies fund won a reprieve from creditors on Monday, gaining one more day to present a rescue plan.

"We're looking at somewhat immature markets that are going through a growth phase," Cioffi, senior managing director of Bear Stearns Asset Management, said at a bond conference in New York in February. "There is a catharsis and a cleaning-out process."

What is striking about the troubled Bear Stearns fund is the vast experience of the team assembled in 2003 to create a hedge fund with $25 billion in managed assets.

Collateralised Debt Obligations are pools of bond securities that are grouped together to help diversify risk. Cioffi warned investors attending a CDO and Credit Derivatives conference about inexperienced managers who may not understand the risks of the market.

"Up until now, any CDO manager, primarily new CDO managers with light staffing, very little technology and unbalanced capability was able to get a CDO done," Cioffi said at the time. "I don't see that going forward."

Cioffi didn't return a phone call seeking comment.

Creditors, including Merrill Lynch, Citigroup and JPMorgan Chase & Co., were to be briefed Tuesday on a plan to keep the fund going, including a $500 million capital infusion and a year-long freeze on collateral calls, people familiar with the situation said. Citi would lead the recapitalisation.

Blackstone, the private-equity investment giant that is also an active restructuring adviser, and Merrill declined to comment.

Officials at Bear Stearns and JPMorgan did not return phone calls seeking comment.