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Derivatives

Credit Arbitrage Hedge Fund Prepares Launch

Etolian Capital, a fixed income hedge fund founded by derivatives honcho George Handjinicolaou, is gearing up to start pre-launch trading next month with an eye to going live in January. Handjinicolaou, former managing director and head of global fixed income emerging markets at Merrill Lynch in New York, said the fund will pursue a quantitative options model to invest in relative-value credit plays, such as capital structure arbitrage.

Corporates fund themselves through a variety of instruments, such as bonds, loans and equities, but all these trade in different markets and the traders rarely talk with each other, according to Handjinicolaou. He added that the source of the risk is the same and this fund plans to exploit the arbitrage opportunities.

Handjinicolaou has teamed up with Larry Hirshik, ceo of Derivatives Exchange Network and former head of derivatives trading at First Union, and Anthony Katsaras, director of technology at New York hedge fund Millgate Capital. Handjinicolaou and Hirshik are co-chief investment officers and Katsaras is coo. Credit Suisse First Boston is the fund's prime broker.

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