BK Opportunities Fund 5 - Crystal Fund

BK Opportunities
Fund 5

Quarterly Report | 30th September 2022

BK Opportunities Fund-5 (Euro) will make its quarterly distribution to its investors for the 30th September 2022 quarter-end of 1.00% (cash on cash, non-annualized) of its capital contribution. Payments will be wired on the 3rd of November, 2022.

Furthermore, the N.A.V. of BK Opportunities Fund-5 (Euro) as of the 30th of September 2022 after the distribution is 76.40%.

BK Opportunities Fund-5 (Euro) updated performances are:
September 2022 Monthly Return (non-annualized): -4.6%
September 2022 Year-to-Date (non-annualized): -19.1%
September 2022 Annual Return since inception1: +3.3%
Cumulative Distributions since inception/July 20182: +35.3%
Cumulative Return since inception/July 20182 (Distributions + NAV gain): +11.65%
(1) Based on the weighted average internal rate of return (“IRR”) of all classes from their respective closing date, at their respective entry price
(2) Based on the number of shares (or the capital contribution) in the fund i.e. assuming an entry price of €1,000 per share or 100.0%

Market Commentary & Portfolio Overview

The continuing war in Ukraine, combined with Russia's weaponization of energy, keeps Europe in a challenging situation. Corporations overall still have a buffer to cope with those challenges. We still expect to find new opportunities.

The Economy: Sticky inflation & ECB independence

Even as gas prices drop, European inflation is stubbornly high, with a 10.9% level in September 2022, up from 10.1% in August. Aside from energy, the strong US dollar makes imports more expensive, leading to imported US inflation. As a reaction, the European Central Bank doubles the deposit rate to 1.5% despite the significant risk of recession, implementing its price stability mandate independently from EU governments. This rate decision is not a very popular move for many businesses and EU governments. For example, Finnish Prime Minister Sanna Marin posted on Twitter that something is "seriously wrong with the prevailing ideas of monetary policy when central banks protect their credibility by driving economies into recession."

Corporate Markets: Stayin' Alive

The current business environment is complex across Europe, but there is much variation among the different countries. Germany is the most exposed country to energy shock due to its dependency on Russian gas and the size of manufacturing – a sector sensitive to energy supply problems – as a proportion of its economy. German growth is sluggish, with anticipation by the OECD that it will suffer a recession in 2023. France, Italy and Spain, the eurozone's other most significant economies, are expected to escape recession with a growth of 0.6%, 0.4%, and 1.5%, respectively. The winter temperature will determine this evolution, as a cooler temperature will require higher energy consumption. In the worst-case scenario, the manufacturing sector will be impacted most by its energy consumption.

Corporate Loans & CLO: Opportunities

According to Credit Suisse European Loan index, the default rate over the last 12 months is 2.00%, and the forecast for the next 12 months is in the range of 3.0% to 4.0%. This default rate is significantly lower than the European Corporate Loan 12-month implied default rate of [7.4%]. Market prices are already reflecting a moderate recession scenario. While refinancing is not an immediate concern for most, a recessionary outlook and falling valuations will sharpen the focus of owners and creditors on the viability of more vulnerable businesses.
In parallel, the current environment has created large price various in the CLO space, and many holders (including some recent new entrant) has decided to materially reduce or cut their positions, giving rise to a large flow of buy opportunities. Cautiously, we have bought some very short-duration paper before our end of reinvestment period (in October 2022).

BK Opp. Fund 5: Performances

This quarter, BK Opportunities Fund-5 is making a distribution of 1.00% to its investors. Payments will be wired on the 3rd of November, 2022. Before entering into amortization mode towards the end of October 2022, we bought various short-duration positions that presented an attractive profile, hence the reduced distribution. From now on, all the coupons and principal received will be distributed. The total distribution since inception at 35.25% of the Capital Contribution. The cumulative return as of 30th September 2022, which blends distributions and NAV profits, is 11.6 % or 3.3% on an annual basis. Recent price movement has negatively impacted the mark-to-market of the fund, but our anticipations for the fund’s overall return are unchanged.

Fund and Market Performances as of 30th September 2022


Monthly Performances


Quarterly Distribution


Cumulative and Quarterly Distribution


Fund’s Summary

Currency EUR
Fund’s Inception August 2018
Last Closing October 2019
Maturity(5) October 2024
Distribution Quarterly(6)
Investment Manager Oristan Ireland DAC
Administrator Apex Funds Services
Custodian CIBC Bank & Trust
Counsel Dillon Eustace
Auditor Deloitte
Bloomberg Page BKOPP5A KY
(5) Excluding the possible 2‐year extension
(6) First quarterly distribution made on 30th June 2019

Portfolio Manager
Olivier Gozlan


+44 208 089 11 35
This is not for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to law or regulation. The information contained herein is for information only and does not constitute an offer regarding any product. The document has been prepared by Oristan Ireland DAC and the data have not been audited nor verified. Past performance cannot indicate future performance. There is no assurance that the investment objective will be achieved and investment results may vary.