Zurich-based Alegra Capital will launch a second collateralized debt obligation equity fund in the first quarter of 2005, with a target size of E100 million. The new fund will be closed-ended and marketed predominantly to insurance company investors, according to Daniel Riediker, partner and ceo.
The new fund will be similar in composition to the E20 million Alegra ABS I (Euro) Fund, the firm's first CDO equity fund, which was launched in July and targets high-net worth individuals. It is largely invested in first-loss pieces of collateralized loan obligations. "CLOs offer among the best returns in the current environment and first-loss pieces in particular are attractive because refinancing spreads have come down so much," noted Riediker. That being said, the fund can invest in any subordinated asset-backed securities.
Several buy-side firms are in the process of launching first-loss funds, including UBS Global Asset Management (BW, 11/15) and Faxtor Securities (BW, 11/1).