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BlueMountain to Saba Searching for Yield in Bond Exotica

Bloomberg – BlueMountain Capital Management LLC and Saba Capital Management LP are leading investors into the debt market’s darker corners to boost returns, buying securities from collateralized loan obligations to bonds that seldom trade.

BlueMountain, the $11 billion hedge fund firm in New York, raised twice the amount it anticipated this month from pension managers for a credit fund that buys CLOs, asset-backed securities and less liquid corporate bonds. Saba, founded by Boaz Weinstein, says CLOs are cheap compared with the underlying loans, while Citigroup Inc. sees banks “getting increasingly involved” in the securities for higher returns on capital.

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