CKC Capital LLC, which will begin operating in January, will focus on high-yield debt including distressed companies, Yanney and Baer said in a telephone interview. The firm, which will be based in New York, is planning to invest through a fund with an initial size of $250 million.
Speculative-grade bonds have gained 12.7 percent this year after a 1.6 percent loss during the same period in 2011, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Master Index. There have been $263.8 billion of high- yield bonds raised this year, according to data compiled by Bloomberg. That compares with $207.3 billion during the same period in 2011 and $210.6 billion in 2010.
“It was a good opportunity for us timing-wise, and something we always wanted to do,” Baer, 44, said. “We have been through several market cycles together, which we think is a benefit.”
The pair, who will co-manage the fund, first met 15 years ago when Baer hired Yanney as a trader at NationsBank, which merged with BankAmerica Corp. in 1998 to form what became Bank of America Corp.
Yanney went on to join Barclays in 2006 to run U.S. high- yield bond and credit default swap trading and his first hire was Baer. When Yanney left to join Morgan Stanley (MS) in 2008, Baer took over as head of U.S. high-yield trading at the British bank. The two worked together again at Citigroup starting in 2011 where Yanney ran high-yield bond and CDS trading and Baer was a senior trader.
“One of our unique attributes is that we have both been heads of trading desks on the sellside,” Yanney, 37, said. “We’ve worked on the buyside and we have worked together at three different firms.”
High-yield average daily trading volume declined to $4.7 billion in the second quarter of the year, from $5.5 billion in the first quarter, according to the second quarter 2012 research quarterly from the Securities Industry and Financial Markets Association.
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