T. Rowe Price Associates Inc., the Baltimore-based mutual fund company, plans to open its second "vulture fund," which will invest in the debt of bankrupt companies, said Herb Stiles, president of the T. Rowe Price Recovery Fund.
Stiles hopes to raise about $100 million by year end from pension funds, wealthy individuals and foundations to start T. Rowe Price Recovery Fund II.
The vulture market, however, has been bone dry because there have been no big bankruptcies this year. But Stiles expects problems because 1993 was a big year for issuing junk bonds.
"We are in about prime time for that crop of bonds to start defaulting," he said. "I'm of the theory that the pipeline is backed up."
The fund will be structured as a limited partnership, so the vast majority of T. Rowe Price's customers won't be able to invest in it, Stiles said.
He expects about 20 investors total.
T. Rowe has been successful with its first vulture fund, which was introduced in December 1988.
The portfolio has returned in the 15 percent range each year since opening, Stiles said.
Pub Date: 8/14/96