Hedge fund Sona Asset Management is positioning to capitalise on the recent turmoil in European leveraged loans, targeting mis-priced debt and dislocated credit opportunities across the region, according to a report by Bloomberg.
The London-based credit manager, overseeing over $15bn in assets, highlighted the repricing of weaker borrowers as a source of potential upside. In a recent research note, Sona’s head of credit strategy, Craig Nicol, described the price action as “violent and gappy,” creating “meaningful and attractive” opportunities for deployment across multiple strategies.
The selloff follows high-profile defaults such as First Brands and Tricolor, shining a spotlight on credit quality after years of loose lending and record issuance in 2021. Sona estimates that about $100bn of European leveraged loans may struggle to refinance ahead of the 2028 maturity wall.
Sona has already been active in the distressed segment, building stakes in companies like France’s Cerba Healthcare. The firm points to structural pressures – CLO holding limits, whitelists, and increasing liability management exercises – that have amplified volatility and price dispersion, creating potential arbitrage opportunities for hedge funds and credit-focused investors.
