Troubled private equity shop Whitney & Co. last week priced a $322 million mezzanine debt CDO, a follow-up to its first structured debt fund, the $650 million Whitney Mezzanine Fund LP, raised in 1998.

Despite rumors that the 1998 fund's performance lagged behind its peers after sinking millions into ill-fated junk issues, the new Whitney Private Debt Fund promised investors it would avoid the high-yield sector. While its predecessor allocated up to 15% of its capital base to junk bonds and leveraged loans, the new CDO will invest in mezzanine debt and institutional bank loans, but maintain a "typical CDO structure," said a spokeswoman for Stamford, Conn.-based the firm. Press-weary Whitney would not comment for this story.

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