Citigroup closes second generation credit fund for AXA IM

14/02/2007 (www.structuredcreditinvestor.com)

Citigroup closes second generation credit fund for AXA IM
Citigroup has closed the US$475m-equivalent Riveria, a second generation principal-protected long/short credit fund actively managed by AXA Investment Managers. The 7- and 10-year fund-linked transaction is structured in either funded or unfunded format, and is denominated in euros, US dollars and various Eastern European currencies.

Drawing on dynamic portfolio insurance (DPI) technology, the manager has the flexibility to vary leverage within limits. The transaction is linked to a leveraged credit fund exposed to a portfolio of global CDS, indexes and bonds.

AXA IM will actively manage this portfolio using a full spectrum of long/short and relative-value strategies, with the aim of achieving stable returns over various credit cycles. Citigroup marketed the transaction globally, including in Europe, Asia and the Middle East. Erste Bank assisted with the syndication in Central and Eastern Europe.

The first closing delivered more than 40 institutional investors with exposure to the credit fund through 19 individual structures, accommodating investors' choices of issuer, tenor, currency and coupon. The global investor base spans from India and Qatar/Abu Dhabi to Austria, Germany, Italy and Iberia, as well as Hungary, Bulgaria, Croatia and Latvia in Eastern Europe.

Due to the strong interest in Riveria, a second tap of a further US$50m to US$100m is expected in March