Sankaty Advisors (Bain Capital) - highly secured corporate loans

The WSJ recently reported that two Sankaty Advisors (the credit affiliate of Bain Capital) funds have "lost between 40 and 50%."

The specific funds affected are Sankaty's Special Situations and Prospect Harbor, which the WSJ article notes "had roughly $4 billion in assets just a few weeks ago" (The article was published on October 23, 2008).

Regarding the funds, the WSJ writes:

The Sankaty funds averaged about a dollar of leverage, or borrowed money, for each dollar of capital that belonged to investors. That level of borrowing was relatively low compared with many other investors, but it shows how even seemingly low-risk bets have suffered as the credit markets have virtually frozen.

Sankaty -- named after a lighthouse in Nantucket, Mass. -- was co-founded by Bain managing director Jonathan Lavine in 1997 after a stint in Bain's private-equity unit. The group now employs 150 professionals with commitments of some $33 billion across a range of fixed-income strategies. Along with a handful of Bain executives, Mr. Lavine is a co-owner of the Boston Celtics National Basketball Association team.

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