Bloomberg reported that as the credit crisis worsened in 2008, Merrill Lynch sold $2.4 billion of debt backing takeovers of companies to Ares Management at a discount.

Bloomberg said Greg Margolies, who arranged most of the loans as Merrill’s head of global leveraged finance, followed the portfolio, which included debt backing Caesars Entertainment’s takeover, to Ares six months later. The bet has reaped annualized gains of 19.25%.

Bloomberg notes that Margolies now sees a worsening market for below investment-grade debt as the Fed prepares to raise borrowing costs after six years of near-zero interest rates. He’s preparing to pocket those gains and unwind the portfolio at the end of the month, Bloomberg said.

To read the entire Bloomberg report, clicl here.