BlueMountain Credit Opportunities Master Fund I closed with $1.4 billion of commitments mostly from institutional investors, confirmed Stephen Siderow, president and co-founder of credit specialist manager BlueMountain Capital Management.
Mr. Siderow said current credit opportunities have been at least partially created by institutional investors’ voracious appetite since 2008 for liquid hedge fund strategies. That preference has pumped up prices for liquid securities, while making more complex, less liquid credit instruments comparatively cheaper and a better value, albeit over a longer time frame.
Regulatory changes also have forced many banks out of secured, asset-backed and structured credit lending markets, Mr. Siderow said.
The fund will focus on opportunistic investments in complex and less-liquid credit instruments, including collateralized loan obligations, synthetic collateralized debt obligations, asset-backed financing transactions and securities, and single-company corporate credit.
The credit opportunities fund’s lockup period is five years. About 20% of the commitments will be drawn down before the end of this year with the balance likely being invested by the end of next year, Mr. Siderow said.
Mr. Siderow said BlueMountain Capital’s fundraising for its first credit opportunity fund exceeded the company’s target by $400 million and he did not rule out launching a second fund if global credit markets remain promising.
BlueMountain Capital manages $11 billion, including the capital commitments from the new fund.