Key Takeaways
- • Arini Capital Management's approximately $7bn master fund lost an estimated 6.9% in the first half of October 2026, following a 15.7% decline in the first nine months of the year, pushing year-to-date losses beyond 21% (according to the Financial Times and Bloomberg).
- • Sona Asset Management's flagship fund fell roughly 3.1% over the same October period, erasing its 2026 gains and leaving it down around 0.5% for the year, putting October on course to be its worst month since launching a decade ago.
- • The losses reflect a broad selloff in lower-rated corporate debt, with European CCC-rated credit spreads widening to their highest level since March 2020, according to Bloomberg data.
- • Arini nonetheless secured $1.5bn in fresh commitments, including $425m in early October, and closed its inaugural direct lending fund targeting more than $4bn in deployment through a sourcing alliance with Lazard.
Summary
London-based credit hedge fund Arini Capital Management and Sona Asset Management have posted sharp October losses as a selloff in lower-rated corporate debt weighs on some of Europe's largest credit managers, according to reports by the Financial Times and Bloomberg. Arini's approximately $7bn master fund lost an estimated 6.91% between the start of October and the end of the reporting week, following a 15.7% decline in the first nine months of 2026. The drawdown takes the flagship's year-to-date loss above 21%, which the FT characterized as one of the steepest among major credit hedge funds this year.
Arini's losses stem from concentrated distressed positions in bonds and loans issued by telecommunications groups Altice International and Brightspeed, alongside British luxury carmaker Aston Martin. Securities from all three have continued to decline in secondary markets amid restructuring concerns. The firm also holds a smaller position in German property group Adler, whose bonds have fallen below 60 cents on the euro after political proposals in Berlin to nationalise assets owned by large landlords. Founded in 2021 by former Credit Suisse trader Hamza Lemssouguer, Arini has grown to approximately $22bn in assets, drawing capital from sovereign wealth funds and institutional investors.
Sona's flagship fund declined approximately 3.1% over the same period, erasing its gains for the year. Losses were tied to positions including Virgin Media O2 and newly issued debt from Paramount Skydance, though Bloomberg reported the manager increased its exposure to Virgin Media O2 after the decline. Diameter Capital Partners was also caught in the selloff, with its flagship fund slipping into negative territory in October after gaining 0.34% through September. Both Arini and Sona manage more than $20bn and have not recorded a full calendar-year loss since inception.
The broader decline is attributed to concerns over AI disruption, persistent inflation and elevated interest rates, which are pressuring lower-rated corporate debt. Widening spreads and deteriorating liquidity continue to weigh on distressed valuations, raising concern about further losses among managers exposed to lower-quality borrowers.
Despite the flagship's losses, Arini's asset-backed lending and private credit businesses have performed better. The firm closed its inaugural direct lending fund, operating through a strategic sourcing alliance with Lazard and targeting more than $4bn in deployment. It also secured $1.5bn in fresh commitments for its flagship strategy, including $425m allocated in early October, with remaining capital expected to be deployed by early 2027. In a letter to investors earlier in the month, Arini argued that mark-to-market losses do not signal soured investments: "We do not believe it is an indicator of soured investments, but rather part of the process – being contrarian is a necessary condition for this opportunity set." The firm has also provided clients with additional detail on its valuation methodology, liquidity profile and internal risk controls.
Arini's losses stem from concentrated distressed positions in bonds and loans issued by telecommunications groups Altice International and Brightspeed, alongside British luxury carmaker Aston Martin. Securities from all three have continued to decline in secondary markets amid restructuring concerns. The firm also holds a smaller position in German property group Adler, whose bonds have fallen below 60 cents on the euro after political proposals in Berlin to nationalise assets owned by large landlords. Founded in 2021 by former Credit Suisse trader Hamza Lemssouguer, Arini has grown to approximately $22bn in assets, drawing capital from sovereign wealth funds and institutional investors.
Sona's flagship fund declined approximately 3.1% over the same period, erasing its gains for the year. Losses were tied to positions including Virgin Media O2 and newly issued debt from Paramount Skydance, though Bloomberg reported the manager increased its exposure to Virgin Media O2 after the decline. Diameter Capital Partners was also caught in the selloff, with its flagship fund slipping into negative territory in October after gaining 0.34% through September. Both Arini and Sona manage more than $20bn and have not recorded a full calendar-year loss since inception.
The broader decline is attributed to concerns over AI disruption, persistent inflation and elevated interest rates, which are pressuring lower-rated corporate debt. Widening spreads and deteriorating liquidity continue to weigh on distressed valuations, raising concern about further losses among managers exposed to lower-quality borrowers.
Despite the flagship's losses, Arini's asset-backed lending and private credit businesses have performed better. The firm closed its inaugural direct lending fund, operating through a strategic sourcing alliance with Lazard and targeting more than $4bn in deployment. It also secured $1.5bn in fresh commitments for its flagship strategy, including $425m allocated in early October, with remaining capital expected to be deployed by early 2027. In a letter to investors earlier in the month, Arini argued that mark-to-market losses do not signal soured investments: "We do not believe it is an indicator of soured investments, but rather part of the process – being contrarian is a necessary condition for this opportunity set." The firm has also provided clients with additional detail on its valuation methodology, liquidity profile and internal risk controls.
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