PSquared Asset Management, based in Zurich and managing around $750m, takes a targeted approach to credit investing. Rather than chasing scale or passive yields, the firm focuses on event-driven opportunities and mispriced complexities within Europe’s fragmented credit markets to drive returns.
This involves looking at extracting idiosyncratic value through corporate events, in particular – whether announced or unannounced. These include refinancings, M&A transactions, asset sales, and other strategic shifts that can meaningfully reprice debt well ahead of maturity.
“We focus on what we call ‘yield to catalyst’ – not just collecting yield, but positioning ourselves across longs and shorts to capture credit events with asymmetric upside,” says Lino Schaus, who took over portfolio management responsibilities for the firm’s 2021 launched Credit Opportunity Fund at the beginning of 2024. “That’s what allows us to stay decoupled from broader market cycles.”
PSquared also runs a 2013-launched Event Opportunity Fund, which, like the Credit Fund, focuses on Western Europe and Developed Asia – though it can be “flexible,” says Schaus.
Portfolio construction is central to PSquared’s strategy of generating returns with limited market correlation. The team, with experience including Centerbridge Partners, Cheyne Capital, and Houlihan Lokey, focuses on catalyst-driven opportunities to reduce overall market risk by relying on specific events.
The fund favours short-duration positions to limit spread risk and uses low-cost macro hedges. This approach delivered a 15.4% net return in 2024 during a stable credit environment and helped the fund hold steady in 2025 when markets dropped on tariff concerns – staying flat while the European High Yield Index fell 3.3%.
In short
Long positions typically revolve around short-term valuation anomalies backing upcoming or unpriced events. On the short side, PSquared employs outright positions but favours decompression trades within common capital structures to capture fundamentally misaligned credit risk with minimal cost of carry.
An example was the firm’s 2024 short in Altice International.
“We were long sceptical of Altice International,” says Schaus. “The fundamentals were weak, off-balance-sheet liabilities distorted leverage metrics, and management had a track record of creditor-unfriendly behaviour. The market was not pricing this in.”
PSquared initiated a low-cost trade betting on price divergence between Altice’s secured and subordinated bonds. That bet paid off when the company’s shareholder took coercive action at Altice France, triggering a selloff.
The broader PSquared team’s structure compliments its credit research process. With ten personnel split across equity and credit by region and sector, the firm combines top-down insight with specialist coverage. The five-person credit team is supported by a full-time forensic accountant dedicated to short theses.
Schaus describes PSquared’s sweet spot as the “no man’s land” of credit – situations too nuanced for long-only funds, yet not convex or scalable enough for large, distressed players. Markets like Europe, he argues, are a particularly fertile ground: deep, yet fragmented and under-researched.
In practice
In a recent trade, PSquared took a position in the senior secured notes of Cerdia, a Blackstone-owned manufacturer of cigarette filter materials. With a key raw material in short supply following Russia sanctions, PSquared saw rising input costs on the horizon – but the market hadn’t priced the disruption.
They also zeroed in on restrictive bond language that blocked dividends and forced cash toward debt repayment. Purchased at par, with a single-B rating, the bond struck PSquared as severely dislocated.
“The market wasn’t pricing in the impending cost spike or the structural protections,” says Schaus.
When Blackstone refinanced early at a 105.25 call premium, the firm booked a roughly 20% IRR.
“It was a par bond that normal screens wouldn’t flag as particularly attractive,” highlights Schaus. “The convexity was unlocked by understanding the credit documents and in anticipating the sponsor’s response.”
In market
Europe’s current credit environment is playing to PSquared strengths, Schaus says: “Where others see refinancing risk and potential distress, we see opportunity now. The maturity wall just gives us a deadline.”
PSquared’s largest current holding is a German TMT company, where it played a key role in the 2023 restructuring creditor committee.
“We’re not distressed for control investors,” clarifies Schaus. “But on liquid, complex restructurings, you can generate substantial alpha without long operational involvement.”
Since Schaus took over portfolio management, PSquared launched a Founders’ share class for the strategy, allocating $200m of capacity – $60m of which is already invested – with a planned soft close at $500m. The total strategy capacity is expected to cap at $1.5bn to maintain flexibility.
Schaus sees the strategy fitting a range of investor goals, whether as part of a diversified hedge fund portfolio or as a higher-return alternative to traditional credit.
“Credit is inherently a long product,” says Schaus, “but you don’t have to ride the index. If you can price complexity, if you can anticipate corporate behaviour, there’s event-driven alpha to unlock, even at par.”
