London-based credit hedge fund Arini Capital Management has suffered further losses in October, taking its flagship strategy's decline for the year to more than 21% as positions in distressed corporate debt continue to lose value, according to a report by the Financial Times.

The firm's approximately $7bn master fund lost an estimated 6.91% between the start of October and the end of last week, following a 15.7% decline in the first nine months of 2026, marking one of the steepest drawdowns among major credit hedge funds this year.

Founded in 2021 by former Credit Suisse trader Hamza Lemssouguer, Arini has grown rapidly to manage approximately $22bn, attracting capital from sovereign wealth funds and institutional investors following strong performance in previous years.

The latest losses stem from concentrated positions in distressed corporate debt, including bonds and loans issued by telecommunications groups Altice International and Brightspeed, alongside British luxury-car manufacturer Aston Martin. Securities issued by all three companies have continued to decline in secondary markets this month amid concerns over potential restructurings.

Arini also holds a smaller position in German property group Adler, whose bonds have fallen to below 60 cents on the euro following political proposals in Berlin to nationalise assets owned by large landlords.

Despite the flagship fund's losses, Arini's asset-backed lending and private credit strategies have performed better. The firm announced the closing of its inaugural direct lending fund this week, which operates through a strategic sourcing alliance with Lazard and targets more than $4bn in deployment.

Arini has also secured $1.5bn in fresh commitments for its flagship strategy, including $425m allocated in early October, with the remaining capital expected to be deployed by early 2027.

The firm has sought to reassure investors that recent mark-to-market losses do not reflect a deterioration in its underlying investment thesis, pointing to previous periods when distressed positions recovered to deliver strong returns.

"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," Arini told investors in a letter earlier this month.

The manager has also provided clients with additional information on its valuation methodology, liquidity profile and internal risk controls as it seeks to address concerns surrounding the flagship fund's performance.