Sona Asset Management’s Credit Master Fund posted a 2024 return of 18.76%, capitalising on a surge in European companies refinancing their debt, marking the fifth year of double-digit returns for the $10.1bn credit manager’s flagship fund, according to a report by Reuters.
The report cites an investor letter seen by Reuters as revealing that the firm’s capital solutions strategy also yielded strong results, with returns ranging from 15.6% to 19.7% across various funds. Additionally, Sona’s collateralised loan obligations (CLOs) platform maintained a top-quartile performance, as ranked by Deutsche Bank, although specific annual returns for CLOs were not disclosed.
European loan issuance in 2024 was nearly triple that of the previous year, while junk bond issuance doubled, driven by companies seeking to refinance at competitive rates, the letter noted, citing Barclays research. This surge created opportunities for Sona, as increased bank competition led to mispriced deals requiring “strategic support.”
Sona’s strategy of taking both long and short positions allowed it to benefit from market inefficiencies. The firm also capitalised on private credit deals, particularly targeting companies that had been funded in 2022 and 2023 but were later reclassified as riskier and forced to refinance in public markets.
While specific deals were not disclosed, Sona identified several sectors of interest for 2025, including: auto suppliers; real estate firms navigating higher borrowing costs; debt collectors; UK water companies; energy and satellite companies; and defence-related industries, potentially benefiting from increased European defence spending.
The letter also expressed optimism about Europe’s broader economic prospects, citing the potential for improved policy direction and the prospect of peace in Ukraine.
