Morgan Stanley Investment Management raised $956 million for a new fund that invests in corporate mezzanine debt.  The hedge fund, M. Stanley Credit Partners, mainly buys credit sold by mid-sized companies to finance buyouts, refinance existing debt, and pay for acquisitions.  So far, the managers have put $160mn into 5 companies.  All in all, it's a bright spot for alternative investments.

"The market for mezzanine debt investing is benefiting from favorable secular trends resulting from an underlying imbalance between the demand for and the supply of capital, particularly for middle market companies."  -- Henry D’Alessandro, MD of MS Credit Partners.

This middle market on which Morgan Stanley is focusing has been popular with alternative managers, as credit for the segment has dried up.  Earlier this month, FrontPoint Partners announced it had raised over $1 billion for a new fund to make loans directly to companies with revenue of $75mn - $500mn.  FrontPoint managed to attract the money, despite being associated with the insider trading investigation, that prompted investors to pull billions out of the firm last year.    [NYT Dealbook, 1/12]