Carlyle closes on $300 million loan CDO

New York, Oct. 6 - The Carlyle Group said it closed on a $300 million leveraged loan fund, its fifth high yield collateralized debt obligation.

The new fund, a cash-flow CDO called Carlyle Loan Opportunity Fund, will invest at least 95% of its assets in liquid, non-investment grade bank loans. The fund has an initial core portfolio of 75% senior secured par loans, which Carlyle will supplement with opportunistic acquisitions of performing loans trading at a 10% to 25% discount to par.

"A focus on bank loans enables us to take advantage of greater price stability, lower historical default rates and higher recovery rates compared to other below-investment-grade asset classes," said Mike Zupon, managing director and head of Carlyle's high yield group, in a news release. "And discounted loans represent an opportunity to purchase loans at lower prices and realize attractive returns on investment through current income and higher ultimate recoveries."

In total, Carlyle's high yield group now manages $2.6 billion of leveraged loans, high yield bonds and special situation investments in five CDOs.

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