GSO launches latest credit fund with $835m IPO

Blackstone's credit arm GSO Capital Partners has launched a new strategic credit fund that will invest in loans and fixed income instruments, primarily in the US.

GSO Capital Partners, the credit arm of listed alternatives manager The Blackstone Group, has successfully priced an initial public offering of a new strategic credit fund.

Blackstone / GSO Strategic Credit Fund has begun trading on the New York Stock Exchange under the symbol BGB. Its IPO (of common shares) raised $834.8 million. If overallotment options are taken up by the IPO's underwriters, that amount could rise to $960 million, the firm said in a statement.

“The fund will seek high current income, with secondary objective of preservation of capital”, Blackstone said. It will invest primarily in a diversified portfolio of loans and other fixed income instruments of predominantly US corporate issuers, including first- and second-lien secured loans and high yield corporate bonds of varying maturities, the firm added.

The fund is the third publically-traded closed-end fund to be launched by Blackstone and GSO. It also manages BGX, a long-short fund which has a more aggressive strategy than the new fund, and BGL, which focuses on senior secured floating-rate loans.

Morgan Stanley, Citigroup, BofA Merrill Lynch, UBS and Wells Fargo underwrote the listing.

Dan Smith, a senior managing director at Blackstone, said in a statement: “The Blackstone / GSO Strategic Credit Fund represents the third addition to our family of closed-end funds focused on the leveraged finance asset class. GSO / Blackstone continues to be a strong believer in the long-term opportunity in below-investment grade corporate credit.”