Babson Capital Management LLC is preparing to launch a global closed-end fund to invest in floating-rate assets, including secured loans, a development that promises to channel more money to the leveraged loan market, according to a regulatory filing reviewed by sister service Thomson Reuters LPC.
The Babson Capital Global Floating Rate & Income Fund would invest at least 80 percent of its managed assets in secured loans, secured bonds or other income-producing instruments, including floating-rate instruments, the SEC filing said.
A closed-end fund is a publicly traded investment company that issues a fixed number of shares through an initial public offering. Shares in closed-end funds may trade at a discount from, or a premium to, their net asset value.
Babson Capital is the latest asset manager to raise a fund targeting senior floating-rate debt amid robust investor demand for corporate debt securities. In April,
Babson Capital’s fund would primarily invest in first-lien and second-lien secured loans and secured bonds from North American and Western European corporate issuers. The fund would target instruments that are considered to be high yield, or below investment grade in terms of quality.
The investment strategy aims to take advantage of inefficiencies between geographies, primarily the North American and Western European high-yield loan and bond markets and within capital structures between secured loans and secured bonds, the filing said. It may invest in both floating-rate and fixed-rate instruments, as well as in distressed loans and bonds.
Babson Capital would serve as the fund’s investment adviser, while Babson Capital Global Advisers Limited, an indirect, wholly-owned subsidiary of Babson Capital, would serve as sub-adviser for the fund’s European investments. Babson Capital declined to comment. Common shares are expected to be listed on the New York Stock Exchange.
(Leela Parker is a New York-based correspondent for Thomson Reuters LPC.)