Arini sells over $2 billion of debt after margin calls

Arini sold more than $2 billion of corporate debt, measured by face value, over the past week after margin calls from its financing banks, according to a Financial Times report.

HedgeCo News reported the figure in addition to roughly $800 million of disposals in prior weeks, which The Wall Street Journal reported on Oct. 30. Arini, founded by former Credit Suisse trader Hamza Lemssouguer, manages about $22 billion, with the flagship credit fund at roughly $7 billion.

The sales leave a more concentrated, harder-to-trade book, and the new October commitments, $1.5 billion, sit alongside the positions that are hardest to sell. For allocators, the due-diligence questions are how much of the remainder can be sold without moving prices and whether prime-broker financing terms hold if marks keep falling.

Arini cut positions in Merlin Entertainments, Claritev and Sabre, along with credit default swaps, according to the FT report. Some rival hedge funds have built short positions against its largest holdings, the report said. About $2 billion of the book is debt issued by Brightspeed, an Apollo-backed broadband operator reported to be weighing a Chapter 11 filing. The fund has also held sizable positions in Altice International, Aston Martin and The Very Group, where restructuring talks and trading restrictions can slow an exit.

Arini raised $1.5 billion of new commitments for the strategy in October, including $425 million deployed at the start of the month, and remains open to further capital, the FT report said. Arini's CLO funds and its recently closed European direct lending fund are separate vehicles, HedgeCo News reported.

Arini has reopened the flagship to existing investors while selling its most liquid holdings, as Alternatives previously reported. Pimco and Oaktree have bid for its debt.

Whether Brightspeed files for Chapter 11, and on what terms Arini's financing banks roll their leverage, will determine how much of the remaining book must be sold.