Pioneer Investment Management and Highland Capital Management have raised a $518.6 million closed-end fund called Pioneer Floating Rate Trust. With leverage the fund will be approximately $850 million. Highland will manage the money, while Pioneer was responsible for selling it through its wholesale force. "It's attractive for Highland because the money is perpetual," said a buyside source, comparing the fund to a prime rate fund where the manager has to be concerned about redemptions.
UBS and Merrill Lynch underwrote the offering, which will invest in senior secured loans, but can also invest in second-lien loans, collateralized loan obligations, credit default swaps and indexes, such as the SAMI. A Highland official declined comment.
Highland acquired a significant retail presence when it bought the bank loan business of Columbia Management Advisors (LMW, 4/14). These funds, which total approximately $1.6 billion, are among the best performing closed-end funds according to Lipper data (11/29). They are showing one-year returns of 7-10%.