(Bloomberg) -- Former Credit Suisse trader Hamza Lemssouguer’s hedge fund suffered its second-biggest monthly loss in March as some of his credit bets soured.

His Arini Credit Master Fund lost 6.6% in the month, according to an investor letter seen by Bloomberg. The decline erases almost all his gains for this year with the $2.6 billion money pool up 0.5% during the first quarter, the letter showed.   

“The performance was primarily driven by significant moves in three very large capital structures (-30% to -70% move in some cases) where Arini built positions into the weakness,” the letter said. “These were unrealized mark-to-market losses, and we used this volatility to increase our higher conviction positions. We expect catalysts in the portfolio to materialize over the next few quarters, and more specifically, in 9-12 months for these recent large movers.”

A representative for London-based Arini declined to comment.

The losses follow gains of 32.4% last year and 5.7% in 2022. The flagship fund has seen monthly gains as high as 17.1% along with losses as great as 10.8% since its launch. 

Lemssouguer, 33, made a name for himself at Credit Suisse with stellar returns from large, risky bets on high-yield debt and credit default swaps. He is one of the most closely followed credit traders in the world. 

The letter didn’t name the companies but said bets on a debt collector, a packaging company and a telecom firm helped drive the decline. 

Arini owns bonds of troubled Swedish debt collector Intrum AB, whose prices fell sharply last month after the firm hired advisers to restructure almost $6 billion of its debt. As well as holding bonds, Arini has sold credit-default swaps, insurance contracts used to protect investors against a default, Bloomberg reported last month.

The hedge fund is also an Altice France creditor and is part of a group of bondholders in discussions with advisers ahead of debt talks with the telecoms firm, Bloomberg reported. Those bonds dropped sharply in value in March

“Our conviction in the downside protection built into these positions and in the return potential of our portfolio is high, and we believe this will continue to be a fruitful environment, despite the very tight headline spreads,” the firm wrote.

European high-yield bonds returned 1.8% this year, according to the Bloomberg Pan-European High Yield Index. Meanwhile, credit hedge funds have gained around 2.5%, according to data compiled by Bloomberg.

Arini started in 2022 with about $1 billion from investors including Squarepoint Capital. Firm-wide assets have since grown to $3.9 billion.

(Updates with Arini’s bets from the eighth paragraph)

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