Arini Capital Management, a London-based fund, is facing significant losses as its $7bn flagship fund is down more than 26% for the year. The fund, which invested heavily in risky junk bonds, is now selling large blocks of debt to manage the sell-off. The credit market has soured due to tightening monetary policy and the Iran war, with the yield gap between risk-free rates and CCC-rated bonds widening to 14 percentage points.
While some private credit managers report low defaults, others warn of growing distress, particularly in the leveraged loan market where 8.3% of loans trade below 80 cents on the dollar. Despite these warning signs, overall economic indicators in the US remain strong, suggesting the credit cycle may not be in full collapse yet.
Source: Financial Times Companies · Summarized by HeadlinesBriefing