London-based hedge fund Arini Capital Management has offloaded roughly $800 million in debt holdings following deep losses in its flagship fund. The sales, driven by margin calls from banks it traded with, have prompted bids from major credit investors Pacific Investment Management Co. and Oaktree Capital Management as the firm attempts to manage liquidity in a volatile European market.
Arini Sells Debt to Meet Margin Requirements
Arini Capital Management, a firm founded in 2021 by Hamza Lemssouguer that scaled rapidly from $1 billion in 2022 to a $21.7 billion credit-trading operation, is facing a severe liquidity crunch. The hedge fund has sold approximately $800 million in debt positions in recent weeks to meet margin requirements, according to reports.
Arini has positions in more distressed names, such as telecommunications borrowers like Altice International, Virgin Media, and Brightspeed, plus Aston Martin and Cornerstone Building Brands. Known for making sizable wagers on European debt during his tenure at Credit Suisse, Lemssouguer has reportedly scaled back on initiating fresh purchases to concentrate on handling current holdings, thereby removing a major source of liquidity from the distressed debt sector in Europe.
Pimco and Oaktree Bid for Arini Debt
As Arini retreats, large institutional buyers are moving in to capitalize on the price dislocation. For these buyers, the forced selling creates an opportunity to acquire assets at prices below what an unpressured market would typically demand.
The severity of the discounts is shown by the price of Aston Martin’s bonds sliding from roughly 55 cents on the dollar at the beginning of October down to 47 cents by the end of the month, alongside debt tied to the Ritz-Carlton Yacht Collection tumbling past 75 cents after closing September above 92 cents. This reluctance can make beaten-down debt fall further, creating the bargains a patient buyer wants.
Flagship Fund Suffers Heavy Losses
As of October 23, the flagship fund was down approximately 26% for the year. Having built his reputation at Credit Suisse prior to generating impressive returns at Arini through the acquisition of relatively illiquid debt issued by major lower-rated companies, founder Hamza Lemssouguer, 36, now faces a dramatic downturn with this recent performance. The flagship fund had never lost money in a full year before 2026.
Despite the drawdown, the firm maintains that it still has the capacity to deploy capital. Arini announced earlier this month that it had raised $1.5 billion in new cash for its credit strategy, with more than $400 million already allocated and the remainder scheduled for deployment through February.
European Bonds Extend Losing Streak
With European triple-C rated corporate bonds facing their longest losing streak since 2018, with October potentially marking their worst monthly performance in four years, the pressure on heavily indebted borrowers remains high. The future stability of Arini’s portfolio hinges on the trajectory of asset prices, the extent to which it continues liquidating quality holdings amid escalating losses, and potential bankruptcy filings by Optimum and Brightspeed.