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Fund Redemptions No Deterrent to Loan Rally

Surge in new collateralized loan obligations helps push prices to five-month high.

By Sridhar Natarajan, Bloomberg | Updated on June 11, 2014

Not even investors fleeing mutual funds that buy junk-rated U.S. corporate loans is enough to keep Cerberus Capital Management LP from tapping the market to finance its $9.2 billion bid for Safeway Inc.

Cerberus will begin raising $6.7 billion in loans today to fund its buyout of the grocer and merge it with Albertsons. Less than a week ago, mutual funds that invest in the debt posted their biggest withdrawals in almost three years, bringing redemptions since mid-April to more than $3 billion.

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