BlueMountain Capital Management has launched the Blue Mountain Corporate Loan Fund which began trading on 16 March 2009.
BlueMountain Capital Management has launched the Blue Mountain Corporate Loan Fund which began trading on 16 March 2009.
The fund is designed to capitalize on opportunities in senior secured loans of high yield issuers, also known as leveraged loans, and will have a US geographical focus. It is the first in a series of new vehicles that BlueMountain plans to launch in 2009 to take advantage of opportunities presented by the current credit market environment.
‘In today’s extremely stressed market conditions, deleveraging and redemptions have resulted in higher quality assets trading below fundamental value due to indiscriminate liquidations – creating outstanding opportunities in asset classes such as corporate loans and bonds,’ says Stephen Siderow, president. ‘While the market dislocation may not be resolved soon, with patient capital and careful credit selection, these asset classes will generate superior returns over the next three to five years.’
BlueMountain will seek to unwind the fund when the opportunities presented by the current market uncertainty have ebbed. Investors may, however, choose to exit the fund at any time after a two year initial commitment.
The fund will manage redemptions though a segregation and liquidation process that combines the reduced co-investor risk of a managed account with the scale benefits of a pooled investment.
Leveraged loans have been a core part of BlueMountain’s strategy since it launched its flagship multi strategy Credit Alternatives Fund in 2003.
In addition to the Credit Alternatives Fund, BlueMountain manages significant loan assets across 3 CLOs with total assets under management of USD1.4bn as well as the Defensive Credit Fund, a long term separately managed account that manages approximately USD800m of loans.
BlueMountain’s fundamental credit team is led by Derek Smith, formerly head of US and European investment grade and high yield trading at Deutsche Bank, and before that head of US investment grade credit trading at Goldman Sachs.
The fund is being seeded by clients of Cardano, the solvency manager, as well as by BlueMountain principals and directors.
BlueMountain plans to launch other funds in 2009 to exploit opportunities presented by the current market environment. Subsequent products are being designed to encompass a variety of long only and relative value strategies, including bond basis and capital structure arbitrage, with underlying instruments spanning corporate loans, bonds, and ABS.
