Carlyle issues $100m loan to mortgage market vehicle

The Carlyle Group has moved to shore up its Euronext Amsterdam-listed vehicle Carlyle Capital Corporation, following rival Kohlberg Kravis Roberts’ $500 million bail-out of its investment vehicle for the mortgage market.

US buyout firm The Carlyle Group has made a $100 million (€74 million) loan to its Euronext Amsterdam-listed vehicle investing in mortgage-backed bonds. 

The Carlyle Capital Corporation which was floated last month has been hit by difficulties in the loan markets. Carlyle said in a statement the loan would be at an interest of 10 percent and would be subordinated to the company’s other debts.

John Stomber, the head of Carlyle Capital Corporation, said the funds would help the company meet margin calls and take advantage of new opportunities. “Despite the fact that nearly 95 percent of the underlying assets are AAA mortgage-backed securities with the implied guarantee of the US government, the fair value of these assets has declined due to diminished demand for these securities in the market,” he said.

The loan comes after Kohlberg Kravis Roberts moved to shore up its real estate investment arm KKR Financial with a $270 million rights issue and $230 million share sale. The move came after KKR said last week it had lost $40 million through the sale of $5.1 billion in mortgage loans. It is also possible it will lose a further $250 million as it looks to sell out of residential mortgages.

The Carlyle Group’s founder David Rubenstein has also told Financial Times Deutschland the buyout firm does not intend to float the company this year after it had mooted doing so earlier in the year.

The buyout firm’s spokesperson said: “We’ve been looking at a flotation but it is unlikely this year. It may come in the next two to three years although this is not guaranteed.”

Separately The Carlyle Group has opened an office in central and eastern Europe based in Poland and headed by Ryszard Wojtkowski. Wojtkowski leaves his position as managing partner at Enterprise Investors.