How It Works
1. Monitoring Phase
We track financially sound companies under temporary stress, often from high capex, missteps, or macro shocks.
2. Trigger Event
We enter only after balance sheet events like:
-
Capital increase
-
Asset sale
-
Debt refinancing
Government support or strategic investor entry
3. Positioning Phase
Once the credit profile is visibly improved but the bond is still priced at a discount, we invest with high risk/reward asymmetry.
4. Exit
Positions are closed when the bond realigns with its relative credit curve.
Examples (Case Studies)
Highlighting returns after major credit repair events:
-
Saipem 2026: Entered post €2B recap + $550M asset sale → Return +18.44%
-
Navistar 2025: Entry post-Volkswagen stake and restructuring → Spread tightened from +1000 to +450
-
Bombardier 2034: After CSeries divestiture and Airbus partnership → Significant CDS compression
High Yield Risk Arbitrage
A credit-focused strategy that targets bonds whose perceived credit risk has not yet fully adjusted following a transformational event - such as a capital increase, asset sale, or strategic refinancing.
Rather than betting on distress recovery, we invest after the event, when the balance sheet has been repaired - but before the market fully reprices the bond. This approach results in a greatly reduced binary risk.
Why This Strategy Matters
Captures overlooked re-ratings:
Bonds often lag equities and CDS in repricing improved credit conditions.
Acts post-deleveraging:
Only enters positions after cash events have materially strengthened the company’s profile.
Effective in recovery phases:
Especially powerful when spreads are wide and the economy is healing post-recession.
Low correlation to markets:
Historical performance shows strong diversification benefits vs. traditional HY and IG indices.
Liquidity-conscious:
Strategy focuses on large-cap issuers and bonds with either imminent demand catalysts or structural curve visibility.
What Makes It Different
-
Post-event entry only: No anticipation of outcomes — reduces binary risk
-
Data-driven CDS tracking: Average CDS compression of ~350bps post-entry
-
Optionality without equity risk: Fixed income payoffs with event-driven upside
-
Portfolio overlay: Can sit within a broader fixed income sleeve or event-driven bucket
Ideal for:
Family offices and private investors looking for yield with downside awareness
Allocators seeking event-driven fixed income exposure without distressed entry risk
Professional credit investors wanting diversified alpha sources
This strategy is not delivered on a fixed schedule, but is event-driven and updated when high-conviction opportunities arise.
Subscribers receive full access to this strategy, including:
Opportunistic case study reports, delivered when qualifying credit events occur
Commentary on bond pricing vs. credit curve evolution
Analyst notes tracking spread compression and exit criteria