Pimco seeks $5 bln to buy distressed debt-Bloomberg

Aug 27 (Reuters) - Pacific Investment Management Co, the manager of the world's biggest bond fund, is seeking as much as $5 billion to buy mortgage-backed debt that has plunged in value due to the subprime crisis, Bloomberg reported, citing two investors familiar with the matter.

The Distressed Senior Credit Opportunities Fund, a new Pimco fund, would invest in senior and super-senior securities backed by commercial and residential mortgages, Bloomberg said.

The fund would focus on commercial loans and residential debt that does not carry explicit government guarantees or the backing of securities issued by companies such as Fannie Mae or Freddie Mac , the news agency said.

It would also seek investments in securities backed by home equity, credit card and auto loans, and can invest in debt secured by collateral outside the U.S, the news agency reported.

Pimco was not available for comment.

Fund managers like BlackRock Inc and Pimco have launched distressed debt funds, betting that mortgage security and corporate debt prices have fallen enough to warrant interest, even though further declines are possible. (Reporting by Sweta Singh in Bangalore; editing by Sue Thomas)