[ by Melanie Gretchen ] Is Hedge Fund's Borrowing a 'Harbinger' of a Dead End Ahead? Harbinger Capital Partners Master Fund I endured a horrific 2011, losing nearly half its value over, but that doesn't appear to be as bad as what the fund is experiencing in early 2012.  Like having to pay 15% interest on a $190 million loan - and receiving just $160 million after netting out fees. Falcone had little choice but to accept on behalf of the hedge fund such outrageous terms on a loan from the Jefferies Group after the billionaire paid off a $400 million loan from UBS at the end of January.  To reiterate, he received $160 million from Jefferies after fees, and reportedly will have to make monthly interest payments computed at an annualized rate of 15% on $190 million.  The loan matures on 10/31/12, but in between, the fund will make a prepayment of $47.5 million on 4/30 and a 2nd prepayment of $47.5 million on 7/31. While it's a positive that Falcone reduced his borrowing by half, the rate he is paying is almost triple what the riskiest corporate borrowers must pay.  Junk-rated companies paid 5.15% above the 3-month Libor interbank offered rate - that benchmark was 0.39% today.  The average annual rate for credit card borrowers is 14.9%, according to a 2/1/12 report published by CreditCards.com. Hitting the Depths on a Risky business. The premium Harbinger must pay demonstrates what risky lenders think of his biggest wager - a high-speed data service named LightSquared Inc.  Falcone has $3 billion invested in the project - some $2.4 billion from Harbinger Capital Partners Master Fund I - or more than 60% of its assets. And what are the chances of success for this Reston, Virginia-based firm that seeks to build out a network offering high-speed data service to up 260 million people?  Some would say slim to none. The project has faced significant obstacles - the most significant one from the FCC.  This government agency has not given final clearance because of concerns that the LightSquared's signals disrupt global-positioning system equipment used by cars, tractors, boats, and planes. Regulators are weighing the latest test results. Perhaps the company should be renamed, "RiskSquared." For more details, go to [Bloomberg, 2/9/12].