Our credit business, GSO Capital Partners LP, is one of the largest credit-oriented alternative asset managers in the world and a major participant in leveraged finance.  In March 2008, Blackstone acquired GSO and combined the two firms’ credit investment businesses.  GSO seeks to generate attractive risk-adjusted returns across a variety of investment strategies.  Fee-earning assets under management totaled $20.7 billion as of September 30, 2009.

Leveraged Loans

GSO is among the largest managers of senior secured bank loans in the world through collateralized loan obligation (CLO) vehicles, separately managed accounts and other levered and unlevered pools of capital.

Collateralized Loan Obligation (CLO) Vehicles

We manage diversified portfolios of senior secured bank loans of non-investment grade companies in structured vehicles.  Of the 24 CLOs managed, 20 are focused on the U.S. market and 4 are focused on Europe.  We also invest in the debt and equity tranches of CLOs managed by selected third parties.

Special Situations Credit Strategies

GSO’s credit strategy is focused on investing in the leveraged finance marketplace. It invests in long/short credit, event driven opportunities and liquid stressed and distressed securities. GSO may invest in both public and private non-investment grade and non-rated securities, including leveraged loans, high yield bonds, distressed securities, second lien loans, mezzanine securities, common and preferred equity securities, and credit derivatives.

Mezzanine Strategies

Drawing upon GSO’s extensive origination capabilities, our mezzanine strategy focuses on providing junior capital to companies in connection with leveraged buyouts, acquisitions, recapitalizations and growth financings.  We focus on investments in “upper” middle market companies with earnings ranging from $25 to $200 million with well-established products or services, defensible market niches and experienced, proven management teams.  We employ a flexible investment approach, investing opportunistically throughout a capital structure, with a focus on principal preservation.

Distressed Strategies

GSO has significant expertise evaluating and structuring investments for financially troubled companies and assets.  GSO focuses on buying portfolios of loans and bonds from distressed sellers in the secondary market and on providing rescue financing to companies facing liquidity constraints.

Secondary Markets

GSO invests in “stressed” loans or high yield bonds trading at below intrinsic value.

Rescue Financing

GSO focuses on providing privately negotiated “capital solutions” to companies in need of liquidity or significant capital structure transformation due to pending covenant violations, debt maturities, cyclical downturns in their businesses or other funding requirements.  This strategy combines GSO’s distressed, credit and trading expertise with Blackstone’s private equity capabilities.

Separately Managed Accounts

GSO manages portfolios of leveraged loans and high yield bonds for select large institutional clients.  A traditional leader in the credit space, GSO has a solid track record of creating value through investments in the credit markets across many cycles.