Carlyle High Yield Partners (CHYP), the high-yield investment subsidiary of The Carlyle Group, is planning to launch a hedge fund investing in leveraged loans and high-yield bonds in the fourth quarter. This would be CHYP's first hedge fund, though the roughly five-year-old unit has so far closed six collateralized debt obligations totaling approximately $3 billion. The fund already has a portfolio of loans sourced and the firm has identified long/short bond and credit arbitrage investments, according to a Lehman Brothers prime brokerage document.
It could not be determined why CHYP decided to pursue a hedge fund structure in lieu of a CDO, but one observer noted it would diversify the firm's investor-base as there are many investors who prefer to invest through a hedge fund vehicle. The hedge fund also affords the firm an open-end vehicle, which contrasts with CDOs that exist for a fixed term. A call to a Carlyle spokesman was not returned.