BlueMountain Capital Management began trading a new fund designed to take advantage of credit market volatility on August 1.
BlueMountain Defensive Credit Fund, managed by Charles Kobayashi, aims to profit from further decompression of spreads between higher and lower quality assets. The spreads between high- and low-grade assets have recently compressed on technicals as subprime woes spread to the broader credit markets.
The fund will buy secured corporate loans the manager believes are undervalued, while taking offsetting short positions in high-yield credit default swaps.
Investors have committed $160 million to the fund, which has a five-year lock-up and is closed