Blackstone Raises $1.3b CLO Fund

NEW YORK, May 6 (Reuters) – Private equity and real estate firm Blackstone Group LP (BX.N: Quote, Profile, Research) said on Tuesday it raised $1.3 billion to invest in high quality loan assets.

The group said it closed three collateralized loan obligation funds which were created over the past month.

Collateralized loan obligations, or CLOs, are a type of collateralized debt obligation — which are essentially funds that issue debt to finance their investments in other debt.

Blackstone recently merged its CLO management group with a team from GSO Capital Partners LP, a hedge fund it bought in January. With the $1.3 billion just raised, Blackstone said its CLO group now manages $14 billion across 26 funds in the U.S. and Europe.

The head of Blackstone's GSO division, Bennett Goodman, said in a statement the funds had been established to buy high quality loan assets with an expectation for stable returns to all investors in the CLO's capital structure.

“This is in contrast to the majority of CLOs issued since last summer, which were established primarily to move risky assets off banks' balance sheets,” he continued.

Blackstone cited figures from credit agency Standard & Poor's that said just 11 new CLOs with volume of $6 billion were created in the first three months of 2008, a drop from the 48 CLOs of $24.8 billion created the same time a year ago.

By Megan Davies (Additional reporting by Dan Wilchins; Editing by Tim Dobbyn)