Bond Investment Opportunity
Issuing A$57M Structured Note
Looking for investors who want an interest return of 4.5%pa.
Invest in Trade Logistics Bond
The underlying strategy allocates capital into pre-booked self-liquidating physical commodity-backed trade finance transactions.
- Access to unique investment grade opportunity in short-term trade financing normally provided by banks.
- Banks have withdrawn from small-medium size transactions due to Basel III requirements.
- Use of proprietary innovative technology allows for analysing, selecting and monitoring transactions supporting stable returns.
- Cargo is owned by the Fund and has a 100% all risks marine insurance for all trades by an A rated or better insurer.
- The Fund always owns the Cargo at a discount and can resell at the destination port if the end buyer defaults (The buyer’s up-front fee is non- recourse).
- The underlying Bond is BBB Investment Grade rated by Kroll – USA commodities ratings expert.
- Bond holders are Senior to unit holders in the underlying Fund.
- Interest Return 4.5% hedged p.a. paid quarterly.
- Complements existing fixed income portfolios by generally significantly reducing volatility without impacting overall annual returns.
- Researched by Bond Adviser with recommendation to SUBSCRIBE
Returns are made by entering a simultaneously executed buying and selling contract which the Fund will have previously onboarded to its panel of approved counterparties.
- The trade generates profit by taking a positive margin between the contracted buying and selling price of the Physical Commodity.
- Transactions are executed via standard trade finance instruments.
- The Strategy secures its title and control of the underlying commodity asset in the transaction by various means including the control of the Bill of Lading, warehouse receipts/warrants, and other instruments controlling the movement/on-sale or giving title over the underlying commodities in the transactions invested in.
- Bond holders are senior to unit holders in the underlying Fund and will hold cash or own the underlying cargo, one or the other.
The Strategy will invest in but not limited to the following Commodity sectors:
- Agriculture (Non-perishable);
- metals and mining;
- energy; and
- semi-finished and finished industrial products.
Why is there an Opportunity?
- The introduction of the Basel Accords has seen major global banks move away from their trade financing businesses.
- On top of regulatory pressure, banks are also facing competition over pricing in traditional trade financing contracts which has prompted them to abandon deals that may be unprofitable, and the banks have subsequently reigned in exposure.
- This is where the underlying Fund has developed innovative technology that compliments its unique non-credit, non- lending, asset backed approach to cost effectively support the under-banked shippers, suppliers, buyers, and intermediaries in the Bulk Commodity space using its superior risk management methodology which transforms unrated transactions into AA+ equivalent managed transactions.
Safety of Funds
- Underlying Bond is rated BBB Investment Grade by Kroll and is senior to the underlying fund unit holders with US$43,000,000 of subordination (Bond holders get paid first).
- Transactions for the Notes are via Austraclear.
- The underlying transactions have protection from an all risk marine insurance policy and by owning the Cargo at a discount until it is delivered.
- FHIM Trade Logistics Overview
- Trade Logistics – Investment Research – Alternate Credit
- Trade Logistics – Quantitative Research
- FHIM Trade Logistics FAQs
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FHIM Trade Logistics
- Issue Size: A$57M
- Coupon Type: Fixed 4.5% p.a.
- Coupon Frequency: Quarterly
- Currency: AUD Hedged
- Investment Minimum: A$50,000