The Blackstone Group
(NYSE:BX) announced this morning that it has closed the Blackstone
Credit Liquidity Partners to new investments after securing more than
$1.3 billion in capital. The vulture fund was created to capitalize on
the recent dislocations in the credit markets by investing in a broad
range of debt and debt-related securities. The move comes amid the
mortgage and credit crisis that has crippled the economy of the past
few months.
Blackstone said it was considering the purchase of
various distressed securities, including bank debt, publicly traded
debt securities, bridge financings, securities issued by CDOs and other
debt instruments on a global basis. Blackstone has announced plans to
do this before and they aren't the only ones - Chimera Investment
(NYSE:CIM) also announced its vulture REIT last month, which aims to
take advantage of the same opportunities.
Many hedge funds and
private equity firms that are well capitalized can take advantage of
the situation because they don't have to worry about illiquidity in the
short-term. Many of the securities they are purchasing for pennies on
the dollar are worth close to face value; however, the firms holding
them are losing value so quickly that they cannot afford to own them.
As a result, there is a fire sale and many opportunities.
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