Citadel issues $500M of BBB-rated debt in the first-ever hedge fund offering.
Not to diss Ken Griffin, but… what the fuck Citadel? Well it's still a smarter move than the Fortress IPO - at least retail investors won't be buying Citadel debentures. Question for thought - could and should institutional investors in the fund buy debt as a hedge? Better yet - buy protection if we ever have hedge fund credit derivatives. I wouldn't mind doing some curve trades on those in the right climate.
Also, I love how no matter what the PMs think about the issue nobody bought in. Good call, too. Only 190bps over Treasuries for a hedge fund? Come on! At least the rating agencies were kind and gave it a BBB rating. Generous because Citadel's Kensigton fund has $9.5b AUM (that’s ~74% of all assets) is making heavy, and apparently rather volatile, energy bets (Amaranth, Blackrock anyone?). All in all their income this year was about 9.5% of AUM by my back-of-the-envelope calculations, which isn’t bad at all, but not spectacular either.
Anyways – now we have a hedge fund IPO and a bond offering maybe we'll see funds shorting each other... it'll be hedgemonium!
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