Angelo Gordon & Co. has raised a new fund that will invest in corporate-debt securities that have dropped in price amid ongoing volatility in credit markets.
The investment management firm said it has closed on $1.3 billion in commitments for its second Annex Dislocation Fund, which will invest in public debt securities whose prices have dislocated from long-term projections.
"There is a fertile ground to go looking for companies that we don't think are going to default, but whose traded debt has seen price declines and offer high current yields," said Ryan Mollett, global head of distressed and corporate special situations at Angelo Gordon. Mr. Mollett will be the new fund's portfolio manager.
FED SIGNALS MORE INTEREST RATE HIKES NEEDED TO FIGHT STICKY INFLATION
Corporate bond and loan prices are falling again as investors brace for steeper rate increases by the Federal Reserve. New economic data suggests the economy isn't cooling, leading to a continuation of the reappraisal in financial markets.
Last year was a difficult year in debt markets as investors digested rising interest rates that slashed the value of lower-yielding bonds already in the market and managed the impact of a potential recession on their portfolios. ICE's high-yield and investment-grade Intercontinental Exchange indexes lost 11% and 15%, respectively, last year.
US DEBT DEFAULT DEADLINE LOOMS THIS SUMMER OR EARLY FALL, ‘URGENT NEED’ FOR CONGRESS TO ACT: BPC
Bond markets recovered in the first two months of this year as traders began to hope for the Fed to stop raising rates. However, prices have started to fall again, offering investors more opportunities across credit markets.
"If you're good at picking these credits, it's a really good opportunity to make money," Mr. Mollett said.
