Looking to take advantage of the credit crunch, Blackstone Group LP has closed a new fund with $1.3 billion in capital commitments to buy debt on the cheap. Blackstone Credit Liquidity Partners LP will invest in debt and debt-related securities including bank debt, publicly traded debt securities, bridge financings, securities issued by collateralized debt obligations and other debt instruments.
Blackstone is not the only firm looking to turn the credit market's lemons and into lemonade. Goldman, Sachs & Co. and Lehman Brothers Inc. are reportedly raising funds to buy leveraged loans that trade at discounts in the secondary market. Both banks and private equity firms recognize that one of the side effects of the the tightened credit markets is that buyout-related loans can be purchased at steep discounts from banks' trading desks, based on the belief that much of this debt is undervalued and offers attractive yields. But what is ironic about these funds is that the investment banks and LBO shops raising them are also among those that underwrote or issued much of the debt.
Full coverage will come later in The Daily Deal and on TheDeal.com. — George White
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