Inside a Long/Short Credit Hedge Fund | Frits Lieuw-Kie-Song (Ironshield Capital) #18
A fifteen-billion-dollar credit manager's European analyst can look at three or four situations before the rest fail his liquidity screen. Frits Lieuw-Kie-Song runs a few hundred million and can look at hundreds of them. This episode is a full walk through how a long/short credit hedge fund is actually run: which credits are eligible in the first place, how positions are sized from the downside before conviction is discussed, when a short is worth the borrow and the carry, and where the tail hedge sits.
📖 For the full written analysis and charts, read the Substack here: https://open.substack.com/pub/fixedfl...
Frits Lieuw-Kie-Song runs the HY Alpha / Market-Neutral strategy at Ironshield Capital, a European leveraged finance boutique in London founded by David Nazar around twenty years ago. He spent over two decades running absolute return high yield portfolios, including eleven years at Allianz Global Investors, before joining Ironshield in 2025. Ironshield's flagship is a special situations fund with restructuring experience across most European jurisdictions; the strategy Frits runs sits deliberately upstream of that, in performing credit with a spread sweet spot of 300 to 500 basis points.
📊 KEY INSIGHTS FOR CREDIT INVESTORS:
Liability management exercises now bring the median company back within roughly a year, because the fee-driven process fixes the balance sheet without fixing the business.
Being in the co-op group is not the same as sitting on the committee, and Frits will pass on a situation where he cannot influence how the pie is divided.
A 400 million single-bond capital structure is too small to matter for a fifteen-billion manager, which is where in-depth research still earns its keep.
Position size is dictated by the downside case, with a loss budget of roughly 50 basis points of the fund per position.
The tail hedge is put spreads 5 to 15% out of the money, six months out, rolled regularly, written for the event where correlation goes to one.
⏱️ TIMESTAMPS:
00:00 Long/Short Credit and the Wine Analogy
00:24 One-Year Median Return to LME
01:13 Frits Lieuw-Kie-Song and Ironshield Capital
04:58 Orphan Bonds: Why Large Managers Skip 400 Million Issues
07:18 Defining Value in Credit: The Sail-Around-the-World Test
09:10 Credit Research Process: Website Red Flags Before the Model
12:20 Scenario Modelling and Probability-Adjusted Returns
15:10 Virgin Media Case Study: Two Products, Four Competitors
18:27 Liberty's Four-to-Five Turn Leverage Playbook
22:03 Fibre Migration, Altnet Consolidation and BT Pricing Risk
24:55 LMEs vs Pre-COVID Restructuring: A Plaster on the Wound
26:38 One-Year Median Return to LME
29:02 Position Sizing From the Downside
31:11 The 50 Basis Point Loss Budget and the Risk Committee
34:54 WorldCom: Margins Too Good to Be True
37:54 Shorting Credit Without a Catalyst
41:33 Global High Yield Since 1989 and the Equity Put Tail Hedge
45:20 Market Neutral Mandate: 6% Net, Flat in a 10% Equity Drawdown
46:56 Bank QIS Tail Overlays and Structuring Fees
48:39 Evoke Trade: UK Gaming Tax, 70 LTV and a Takeover Catalyst
53:26 Volta Grid Trade: Factory-Built Generators and Delay Risk
56:16 CoreWeave Issuance and the AI Credit Technical
57:51 Tech Winner-Take-All: The Intel Lesson From 2000
01:01:36 2008 Counterparty Risk and the Morgan Stanley Trade
01:05:45 TARP, the Fed and the Price-Insensitive Buyer
01:08:22 Packaging Credits: Pass-Through Pricing and Excess Capacity
🎙️ ABOUT THE GUEST:
Frits Lieuw-Kie-Song, Portfolio Manager, Ironshield Capital, London. 25+ years in global high yield, event-driven and distressed credit, including eleven years at Allianz Global Investors. Joined Ironshield in 2025 to run the HY Alpha / Market-Neutral (UCITS) strategy. Ironshield is a European leveraged finance boutique founded by David Nazar with restructuring experience across European jurisdictions, and publishes long-form research on software credit and private credit marks.
Ironshield Capital: https://ironshieldcapital.com/
LinkedIn: / frits-lieuw-kie-song | [email protected]
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