Hedge Funds Credit Market

Hedge Funds Credit Market

Hedge Funds Ride Year-Long Rally in Credit Markets

A surge in the credit markets helped many hedge funds post strong gains in the first quarter of 2010.  Junk bonds and risky debt have rallied over the last year since the near-zero interest rates imposed by the U.S. Federal Reserve.  For those hedge funds that shifted focus from equity to credit, the rewards are becoming clear in the first quarter.  The hedge funds benefiting from the credit market rally include: BlueMountain, Marathon, Pershing, Third Point, Perry and Owl Creek. 


The BlueMountain Credit Alternatives fund, run by Andrew Feldstein, and the Marathon Special Opportunities fund, managed by Bruce Richards and Louis Hanover, were up more than 4.5% through March 26 this year, according to data gathered by HSBC's private banking unit.

Owl Creek Overseas, headed by Jeffrey Altman, gained almost 8%, while King Street Capital, a big credit-focused hedge fund overseen by O. Francis Biondi and Brian Higgins, was up 2.7% through March 26, according to HSBC.

Junk bonds and other risky debt have surged in the past year as near-zero interest rates in the U.S. helped stabilize the U.S. economy and sent investors hunting for higher yields.


Some hedge fund firms that often focus on equity markets shifted into credit last year because such investments offered equity-like returns with the added protection of being more senior in companies' capital structure.  Source

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Tags: Hedge Funds Credit Market, Hedge Funds Markets, Credit Markets, Credit, Debt, Bonds, Short-term treasury bonds, Federal Reserve, Treasury, Hedge Funds Bonds, Junk Bonds