New York-based hedge fund manager BlueMountain Capital Management is wasting no time in trying to capitalize on the sub-prime driven credit market woes, launching a new $160 million long-term credit fund.
The BlueMountain Defensive Credit Fund will seek to buy undervalued corporate secured loans, which it will hedge by shorting high-yield credit default swaps. The strategy is designed to take advantage of the compression of risk premium between high- and low-quality debt, which BlueMountain expects to decompress “as the credit cycle moves from technical pressure to fundamental deterioration.”
“We have witnessed a significant sell-off across credit markets in recent weeks and are excited that we have the ability to put new investor capital to work in this space,” Jeff Kushner, managing director, said. “We have a long-term commitment to high-yield, leveraged loans and [collateralized loan obligations], all of which are core parts of our business.”
The new fund has a five-year lockup.