Halcyon said Mandis would focus on the high yield debt of mid-market companies. John Bader, co-chairman of Halcyon, said: "Some of the greatest inefficiencies in the credit markets exist in companies that have difficulty in issuing high yield debt. Steven had an incredible track record making these types of investments at Goldman Sachs."
Mandis, who was at Goldman Sachs for 12 years, will become a managing principal of Halcyon. He will also become vice-chairman and chief investment officer of its special credit and select opportunity products.
Mandis said: "I will be looking at assets such as trade claims on insolvent companies, which may only become interesting if you aggregate them. It is labour intensive, but that's why the returns are attractive."
Halcyon, with 19 investment specialists, also manages merger arbitrage and convertible arbitrage funds. Mandis said his strategy would complement the others.
Mandis is the fifth top trader to leave Goldman Sachs since June. Christian Siva-Jothy and Geoffrey Grant, co-heads of the bank's London-based global foreign exchange proprietary trading desk, said last month they would retire at the end of this year.
Eric Mindich and Dinakar Singh separately announced their intention to depart in June. Mindich and Singh, both based in New York, said they were going to set up hedge funds, with Singh subsequently teaming up with Texas Pacific Group, the US private equity firm.
Goldman Sachs was unavailable for comment.
A former Goldman Sachs banker said: "The bank trains people very well. The departure of a trader just creates an opportunity for more junior people."