Centerbridge Credit Partners, a private investment firm with offices in New York and London, will return $500 million to investors, the Financial Times reported on Sept. 30, calling the return of funds, "an illustration of the double edged effect that easy money policies are having on the debt market."
Founded in 2005 by Jeffrey Aronson and Mark Gallogly, Centerbridge is a multi-strategy investment firm that specializes in leveraged buyouts and distressed securities. It is one of the fastest growing private equity firms.
The article points out that while cheap debt created by the Fed's policies allows alternative investment firms like Centerbridge to make money easily by investing in the debt of over-leveraged companies, the over-leveraged companies also benefit from the same policies, enabling them to buy time as they restructure and recover much of their debt.
This and other factors have resulted in Centerbridge having between 20 and 25 percent of its $8.3 billion net asset value sitting in cash, the FT reported, adding, "That cash is earning virtually nothing as a result of that same monetary policy, which has depressed interest rates."
Investors in Centerbridge's hedge fund reportedly received a notice on Sept. 28 informing them that, "While we have been selectively adding to new positions in the U.S. and particularly in Europe, we continue to generate substantial amounts of cash. Consequently, we have decided to return a portion to investors."
The news came just over two weeks after Federal Reserve Chairman Ben Bernanke's Sept. 13 announcement that the Fed would implement what could be its last-ditch effort to save the economy: QE3, Quantitative Easing 3, and buy back $40 billion a month of mortgage-backed securities while continuing its extremely low-rates policy.
The term alternative investment is used loosely and to refer to an investment product other than the traditional investments of stocks, bonds, cash and can include commodities, private equity, hedge funds, venture capital, film production and financial derivatives.
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https://www.ivcpost.com/articles/5938/20120928/mortages-low-interest-rate.htm
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