Arini re-underwrites two-thirds of flagship and cuts leverage

Arini Capital Management re-underwrote the five largest positions in its flagship master fund, about two-thirds of net asset value, and cut gross leverage to its lowest level since early 2022. It trimmed selected holdings, Hedgeweek reported, citing an investor letter seen by Bloomberg.

The fund reported $389 million of inflows over the past week, part of a broader $1.5 billion fundraising effort, according to Hedgeweek. Arini launched in 2022 with about $1 billion and expanded into a $21.7 billion credit-trading platform.

An allocator committing today buys a book mid-rebuild: two-thirds of NAV has been re-underwritten and $389 million of new money is arriving while the fund remains concentrated in CCC-rated debt. The open diligence question is how much of those five positions was sold rather than re-marked, and what the planned diversification replaces them with.

The letter acknowledged that the fund underestimated how far CCC-rated debt, the majority of its exposure, would dislocate. Arini said it plans greater portfolio diversification after a period in which concentrated lower-rated credit left it vulnerable to market volatility. It attributed the pressure to technical factors: collateralized loan obligations approaching limits on CCC holdings and what it described as targeted short-selling at uneconomic levels. "As for our core positions, let us be clear: Our conviction remains firm," the letter said, adding that the fund had the structural duration of capital to hold positions to their catalysts.

Arini has begun selling selected positions in large speculative-grade issuers, with further disposals under consideration and previous reports naming Pimco and Oaktree among prospective buyers, Hedgeweek said. As Alternatives previously reported, Arini sold more than $2 billion of debt after margin calls.