From Bloomberg: BlueMountain Capital Management LLC and Saba
Capital Management LP are leading investors into the debt market’s darker
corners to boost returns, buying securities from collateralized loan
obligations to bonds that seldom trade.
BlueMountain, the $11 billion hedge fund firm in New York,
raised twice the amount it anticipated this month from pension managers for a
credit fund that buys CLOs, asset-backed securities and less liquid corporate
bonds. Saba, founded by Boaz Weinstein, says CLOs are cheap compared with the
underlying loans, while Citi sees banks “getting increasingly
involved” in the securities for higher returns on capital.
Investors are casting a wider net as they face a fifth year
of near-zero interest rates and bond yields at record lows amid Federal Reserve
efforts to boost the economy and lower unemployment. Even the lowest-rated
portions of CLOs, which were shunned after the financial crisis, are making a
comeback…..
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