The scariest costume in credit this week was a forced seller. Alphabet lost about $500 billion of value in a day, and on Friday the Nasdaq had its worst session since June, Intel fell 29% and bitcoin slid after the biggest crypto heist on record. The 10-year touched 5.05%, and some Brazil macro funds lost 18% in a single session. The crazy part: the index barely noticed. HY came in 14bps. Underneath, Europe's biggest distressed buyer turned into a forced seller, a storied restructuring law firm moved to close its doors and begin a formal wind down, and CCCs are still 437bp wider on the year.

The index got the treats. The bottom of the market got the tricks.

If you read nothing else:

Junk caught its breath. HY OAS tightened 14bps on the week to 326bp on Oct 29, and the HY effective yield fell to 7.99% from 8.14%. BBs led, 16bp tighter at 194bp.

CCCs barely flinched. CCC & lower OAS came in just 15bp to 1,325bp, still a 17.83% yield. That's 437bp wider than the first trading day of the year. BBs are only 23bp wider.

Loans are where the stress is piling up. About $131 billion of loans in the Morningstar LSTA index now trade below 80, 8.3% of the index and the most since May 2020, per Axios. Software is 32% of the distressed pile but only 12% of the index.

Anthropic's $63 billion chip loan. Bank of America, Citi and Morgan Stanley are arranging the first lien and Blackstone is doing the second lien on $63 billion of Broadcom chip financing through Northstar Compute, with Broadcom backstopping the roughly $43.5 billion first lien after an 11th-hour rescue led directly by the CEO. Lenders are taking Broadcom risk as much as Anthropic risk.

Bending Spoons upsizes. The app roll-up priced about $1.8 billion of 2032 secured notes, up from $1.5 billion, at 9.625% in dollars and 8.625% in euros. Single-B buyers still show up, for close to 10%.

What's happening: Arini's flagship fund, about $7.5 billion at the end of July, lost 12% in October through Oct 23 and is down about 26% for the year, Bloomberg reported. It was down 15.7% through September, per Hedgeweek. The WSJ reported the firm sold about $800 million of debt in recent weeks, partly to meet bank margin calls tied to CDS indexes and other leveraged positions. Pimco and Oaktree have put in bids on some of its more liquid, performing holdings, such as Sabre. The unspoken truth: the volatility is not over yet, which means there is more to come on the Arini saga.

Who's behind Arini: Hamza Lemssouguer, 36 and known for his love of breeding exotic parrots, studied applied math at École Polytechnique and ENSAE and did a stint on Goldman Sachs's structured credit desk. He then ran European high-yield trading at Credit Suisse. His desk made about $220 million in 2020, Bloomberg reported. That year he nearly left for Citadel, and Credit Suisse kept him by promising him his own fund. After Archegos and Greensill, it scrapped that plan in June 2021. He went independent with Squarepoint as seed investor and back office, per the firm's announcement, and launched in early 2022 with about $1 billion to run long/short European credit. The fund made 5.7% that first year, and Hedge Fund Research called Arini the fastest-growing new hedge fund manager since then. Four years in, Bloomberg says he's in the "unprecedented" position of licking his wounds.

Arini’s book, marked to market:

Why now: Arini's concentrated bets sit in the part of the market getting hit hardest. European CCCs are on their longest losing streak since 2018, and October could be their worst month in four years. It’s not just Arini: Sona and Diameter are hurting too. Arini, though, has never had a losing year: it returned 25.8% in 2023, 20.8% in 2024 and 8.6% in 2025.

What's at stake: Arini grew from $1 billion in 2022 into a $21.7 billion firm and became the marginal buyer in a lot of European and US junk debt. It has now cut back on new purchases, and some investors are reluctant to buy names where Arini is said to hold size. When the biggest bid in a name becomes the seller, the price doesn't have anywhere obvious to go. The firm told investors this month that the markdowns are not "an indicator of soured investments" and that "being contrarian is a necessary condition for this opportunity set." That may very well be true, but margin clerks don't grade on thesis.

What to watch: The full October number, more block sales, and the roughly $1.5 billion of new money it raised, more than $400 million of which went in at the start of October, with the rest scheduled through February. About a third of Arini's assets sit in CLO funds that are still performing, but forced sellers will think about managing their book very differently than those that are not.

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What's happening: Weil, Gotshal & Manges said Wednesday that its management committee has recommended an "orderly wind-down". The 95-year-old firm has about 1,200 lawyers and brought in more than $2 billion of revenue last year.

How it got here: This is about people, not debt. More than 30 partners left this year, including members of the executive committee, according to Reuters. Its top dealmaker left for Cravath with five partners, and other partners, including a London co-managing partner, went to Paul Weiss, Simpson Thacher and Sullivan & Cromwell, according to Law Gazette. Skadden picked up two regulatory partners. Merger talks with Willkie Farr came to a halt in recent weeks, and Ramona Nee, who was named in March to succeed longtime leader Barry Wolf, turned down the job. Weil brought in Davis Polk’s Brian Resnick for restructuring advice.

Who went where: The exits started two years ago in restructuring. In November 2024, Latham hired co-chair Ray Schrock to run its global restructuring practice, with Candace Arthur and Alexander Welch. That same week, litigation co-chair Elizabeth Weiswasser and IP partner Anish Desai left for Paul Weiss. In February 2025, litigation co-chair Jonathan Polkes, a management committee member, left for White & Case with Adam Banks and Stacy Nettleton. This year the deal side went. Private equity co-head Chris Machera left for Paul Weiss, and private funds partners Stephanie Srulowitz and Brian Parness went to Simpson Thacher. Corporate chair Michael Aiello took five M&A partners to Cravath. In October, management committee members Drew Tulumello and Chantale Fiebig left for Davis Polk, and Caroline Zalka and PE co-head Doug Warner went to Paul Weiss. London co-managing partner David Avery-Gee went to Sullivan & Cromwell, per the Law Gazette.

Why it ended this way: From 2008 to 2025, Weil grew revenue at half the annual rate of its competitors, and last year its partners averaged a little over $5 million, against $8 million to $10 million at rivals. Strom reports partners were split over whether to build out private equity, as many partners wanted, or to stick with public-company M&A, as Aiello preferred. Meanwhile, longtime leader Barry Wolf was nearing mandatory retirement. Ramona Nee, picked to succeed Wolf, told leaders in August she wouldn't take the job. Aiello resigned in September, and the Willkie merger talks ended in October. Reuters called it a "spiral of defections." With no successor, no merger and a pay cut coming, partners "couldn't trust each other to stay loyal to the firm."

The wind-down: Davis Polk and AlixPartners are advising, and Weil intends to wind down outside of bankruptcy. An adviser told Bloomberg Law the firm believes it can do it solvent. Associates and staff were told they'll be paid for 90 days and get year-end bonuses if they stay. The copy-paste template is Stroock, which dissolved in 2023 and settled with its major creditors two years later without a court case. To follow that path, Weil needs a payment plan its creditors accept. If they don't, they can push the firm into court, where payments to ex-partners can be clawed back. Nobody wants that.

The scramble: Paul Weiss hired Weil juniors right after the announcement, and Simpson Thacher has added over a dozen Weil people in recent weeks, per Bloomberg Law. Nee, the would-be leader of Weil, is in advanced talks to join Kirkland & Ellis with a group of 40 or more Weil professionals, Bloomberg Law reported. Nearly 600 associates are now on the job market, and with the demand for big-law professionals, we are optimistic they all find homes. Even the Weil brand has a bidder: AI law firm Crosby bid for Weil's name, trademark and some data, in a deal Axios put in the "low double-digit millions."

What it means for distressed: Weil more or less built the modern Chapter 11 practice. Under Harvey Miller it ran Texaco, Enron, Lehman and GM, and its alumni now run restructuring groups across the Street, per Bloomberg Law. About 200 restructuring, bankruptcy and capital solutions lawyers have changed firms over the past year, Latham poached Weil's restructuring co-chair Ray Schrock in 2024 to chase the No. 1 spot, and Weil's remaining bench is now the biggest prize in that war. 9fin calls it a run on talent. The work has also shifted from long court cases to out-of-court liability management. It will be interesting to watch how existing clients maneuver the change.

What to watch: The partner vote, where the restructuring group lands, the Kirkland talks, and whether creditors accept a Stroock-style plan.

Binance: $6.3 billion out, withdrawals back on. Hackers took about $6.3 billion of tokens from Binance's hot wallets Thursday, the largest crypto theft on record. Binance first blamed a compromised engineer's laptop, then said the attack was more complex. The FBI said Saturday that North Korea was behind it, naming the TraderTraitor group it also blamed for the $1.5 billion Bybit theft last year. The money hasn't come back. Binance replaced it, tapping its user protection fund, part of its futures insurance fund and its corporate treasury to restore backing for about 90% by Saturday and about 95% by Sunday, when withdrawals reopened in phases. Customers are whole. The exchange's buffers took the hit, and anyone lending to or holding collateral at a crypto venue just saw how fast those buffers can be spent.

Brazil: out of court, and short on patience. Out-of-court restructurings covered a record 174.5 billion reais of debt by late August, nearly 89% of it Raizen and Braskem, per Valor. Raizen's shareholders approved its plan for about 65 billion reais Friday, per Reuters. Braskem's bondholders, including Elliott and PGIM, want $3.7 billion of new equity and debt conversion on about $11 billion of debt, and the deadline for an agreement in principle was Friday. We haven't seen one announced. After the Oct 25 runoff, the "Brazil trade" unwound in a session, with Vista Macro down 18%, per Valor. Higher local rates for longer mean more borrowers testing the out-of-court route.

Arbor Realty: the dividend goes to the lenders. Arbor suspended its common dividend "to address upcoming debt maturities," posted an $85.4 million Q3 net loss and now has 32 non-performing loans totaling $647.6 million, up from $428.8 million in June, per its results. When a REIT stops paying shareholders to pay creditors, the repo lenders are in charge.

JetBlue: the stock believed it. JetBlue posted a $257 million net loss, with $2.2 billion of liquidity and about $7 billion of unencumbered assets. CEO Joanna Geraghty told Reuters "we are not in talks with our creditors" and told CNBC it has "no intention, no plans" to file. The shares jumped 20% Tuesday. The TrueBlue-backed notes due 2031 were about 47 on Oct 26, down from about 80 at the start of the month (LSEG via Reuters). The 2029 wall is $1.8 billion, and bondholders will want a plan for it, not an interview.

AI credit: the S-1 and the swaps. Anthropic's S-1 shows $16.3 billion of first-half revenue and an $80.7 billion net loss, mostly a non-cash charge on convertibles. The bigger credit number sits in the footnotes: nearly $900 billion of off-balance-sheet commitments, against $112 billion of cash. Tech CDS hit records Thursday: Broadcom, the backstop on the chip loan, at 175.4bp and SpaceX at 266.5bp. Credit is pricing the capex bill before equity does.

Xerox: the exchange didn't calm anyone. Xerox cut its free cash flow guide to $50-100 million from $250 million and suspended its dividends. It also swapped $174 million of 5.5% 2028s into $690 of new first-lien 2030s plus $60 of stock per $1,000. The 8.875% unsecured 2029s fell about 17 points Thursday and Friday to 18, and the 10.25% first-lien 2030s dropped 19 points Thursday to 69, per Bloomberg. Unsecureds at 18 say the market thinks this is the first exchange, not the last.

Character.AI. A Delaware judge approved bidding procedures with Disney's $20 million opening bid, and the sale should wrap by early December.

Cable One was cut two notches to B- from B+ by S&P, and it stays on CreditWatch negative. About $2.3 billion comes due within 18 months, including a fully drawn $1.25 billion revolver, and a court fight with lender CoBank is holding up the refinancing.

Thames Water was cut to CCC- by S&P as it seeks another £2.4 billion of emergency funding.

Liberty Communications of Puerto Rico went to CCC at S&P, with about $1.2 billion due October 2027.

Defaults hit a record. Fitch's US private credit default rate rose to 6.3% on a trailing 12-month basis in Q3, from 6.0%, with 91 defaulters over the period. Most were extensions and PIK switches, not missed payments.

The money still comes in. Ares raised $31 billion in Q3 and is sitting on $173.8 billion of dry powder. Blue Owl's OCIC redemption requests fell again last quarter.

A banker runs a law firm practice. Sidley Austin hired PJT Partners restructuring partner William Evarts to lead its liability management practice, a rare move from banking into a law firm leadership role, the FT reported. Sidley is betting clients want someone who can run the model and draft the indenture. Between that and Weil, the restructuring talent market had its busiest week in years.

The Fed held at 3.75-4.00%, with two dissents for a hike. The 10-year ended the week at 4.94%, down from 5.00%, after touching 5.05% Wednesday, and the 2-year fell 13bp to 4.56%. Next week: ISM on Monday, the quarterly refunding on Wednesday and October payrolls on Friday (consensus +55K). With hike dissents on the table, a hot print matters more for CCCs than a cold one.

Two markets wearing one index. Since the first trading day of 2026, CCC spreads have widened 437bp to 1,325bp, while BBs are 23bp wider and Bs 30bp. The HY index, at +43bp, hides where the losses are. That gap is where Arini, Xerox and the sub-80 loan pile live.

Source: ICE BofA via FRED, as of Oct 29, 2026.

That’s the week. See you next week.

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