Arini faces mounting margin calls as credit losses exceed 26%
Arini is facing mounting pressure from lenders and rival traders as losses at its flagship hedge fund exceed 26% this year, forcing the credit manager to raise fresh capital and sell billions of dollars in debt holdings, according to a report by the Financial Times. The $22bn investment firm, founded by former Credit Suisse trader Hamza Lemssouguer, has been hit by a sharp selloff in distressed…
Arini, a $22 billion hedge fund established by former Credit Suisse trader Hamza Lemssouguer, is grappling with mounting margin calls and significant credit losses. The firm's flagship fund, which manages around $7 billion, has faced calls from lenders providing leverage, leading to asset sales worth over $2 billion in the past week.
The losses stem from a sharp decline in distressed corporate debt, exacerbated by concentrated positions in heavily indebted companies. Arini has reduced holdings in companies like Merlin Entertainments, Claritev, and Sabre, as well as complex credit default swap exposures. Firms such as Brightspeed, backed by Apollo, are considering filing for Chapter 11 bankruptcy, adding to Arini's challenges.
The fund's substantial exposure to distressed borrowers, including Altice International, Aston Martin, and The Very Group, complicates efforts to mitigate losses. Despite securing $1.5 billion in new investor commitments in October, Arini remains vulnerable to liquidity issues and forced selling, underscoring the risks inherent in leveraged, concentrated distressed debt strategies during market turmoil.
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