Carlyle closes on new $400 million bank loan fund

By Sara Rosenberg

New York, July 16 - The Carlyle Group closed on a new $400 million fund, Carlyle High Yield Partners VI, on Thursday that will invest a minimum of 95% of its assets in bank loans and a maximum of 5% in high yield bonds.

"The excellent track record of our existing loan portfolio drove strong demand for our sixth high yield fund, leading to an upsizing of the fund size to $400 million," managing director and head of the leveraged finance group Michael Zupon said in a company news release. "The fund's liabilities priced lower than any collateralized loan obligation since 1998 due to the low default rate in our high yield loan portfolio. Our equity investors will benefit from this favorable cost of capital and the increase in returns as interest rates rise."

This fund will be the second Carlyle fund to employ the APEX structure. Wachovia Bank will provide a $32 million APEX revolving credit facility to advance against credit losses.

"The APEX revolver preserves the principal collateral value of the fund and provides greater management flexibility. APEX results in more stable returns for preferred share investors than traditional CLO structures," managing director and leveraged loan portfolio manager Linda Pace said in the release.

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