Dec. 13 (Bloomberg) -- Blackstone Group LP, manager of the world's biggest buyout fund, raised $1.3 billion to invest in debt securities hurt by this year's credit-market turmoil.

Blackstone Credit Liquidity Partners LP will buy collateralized debt obligations, leveraged-buyout loans, bridge financings and other securities, the New York-based firm said in a statement today. Blackstone's corporate debt group now manages more than $11 billion.

``We're confident we can benefit our new fund's investors by capitalizing on current conditions in the credit markets,'' President Hamilton James said in the statement.

Oaktree Capital Management LP in Los Angeles and Boston- based Eaton Vance Corp. also raised money to buy some of the $300 billion of loans that banks arranged to finance a boom in leveraged buyouts. Those loans are now being sold at a loss.

Deutsche Bank AG, based in Frankfurt, and New York-based Citigroup Inc. are among firms saddled with the debt after a surge in delinquencies on U.S. subprime mortgages drove investors away from all but the highest-rated securities.

Dean Criares, head of Blackstone's corporate debt group, will oversee the fund, spokesman John Ford said in an interview. He declined to comment on the fund's targets.

Blackstone is broadening its range of investments beyond the leveraged buyouts that founders Steve Schwarzman and Peter Peterson pioneered. The firm manages hedge and real-estate funds, and in August raised a $21.7 billion LBO fund, the world's largest.

In addition to the credit liquidity fund, Blackstone runs seven U.S. CDO funds valued at $4.7 billion, four European counterparts worth $2.9 billion and two private mezzanine debt funds with assets of $2.1 billion.

To contact the reporter on this story: Edward Evans in London at at eevans3@bloomberg.net

Last Updated: December 13, 2007 12:54 EST