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BK Opportunities
Fund 7
Quarterly Report | 30th June 2026
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The final N.A.V. and distribution of BK Opportunities Fund-7 (Euro) as of June 30, 2026, are:
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NAV
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46.31%
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Current Distribution
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8.25%
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Distributions Since Inception1
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Payments will be made on or around August 3rd, 2026.
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BK Opportunities Fund-7 final net performances
as of 30th June 2026
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| Monthly Return (non-annualized) |
0.3% |
| Year-to-Date (non-annualized) |
0.3% |
| Annual Return since inception2 |
+13.1% |
| Cumulative Distributions since inception/October 20211 |
+98.6% |
| Cumulative Return since inception/October 20211 |
+47.9% |
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1 — Weighted average distribution of all classes.
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2 — Based on the weighted average internal rate of return (“IRR”) of all classes from their respective closing date at their respective entry price.
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Market Commentary & Portfolio Overview
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The eurozone's early-2026 momentum was interrupted by the Middle East conflict, which pushed oil toward $90/bbl and forced a policy pivot: growth was revised down, inflation up, and the ECB moved from hold to its first rate hike since September 2023. Corporate earnings finally returned to growth in Q1, thanks to the energy windfall. Bank lending standards tightened further, while loan demand continued to recover. Leveraged loan issuance stayed heavy but remained refinancing-led rather than new-money. CLO issuance rebounded strongly in May after a volatile spring, though the arbitrage stays squeezed by tight loan spreads. Across the board, the market still needs M&A activity to return to provide fresh supply.
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The Economy: Still Growing
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The eurozone's early-2026 momentum — a 51.9 PMI in February and a recovering manufacturing sector — faded through Q2 as the Middle East conflict drove oil prices toward $90/bbl and PMIs slipped back into marginal expansion territory. GDP growth decelerated from 0.3% in Q4 2025 to 0.2% in Q1 2026. Spain remained the strongest performer while France stagnated at 0.0% and Germany held up at +0.3%. Full-year 2026 GDP is now seen around 1.0%. Critically, the ECB reversed course: on 11 June 2026 it raised the three key rates by 25 basis points — the first increase since September 2023 — lifting the deposit facility to 2.25%, as policymakers judged the energy shock no longer temporary and grew wary of second-round effects. Euro area inflation for 2026 is now forecast at 3.0%, up from 2.6%.
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Corporate Markets: Margin Discipline
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European Q1 2026 earnings grew around 4%, a sharp rebound from Q4's ~2% decline. Energy sector profits surged 24.9% on the oil spike, while all other sectors delivered just around 1.5% growth on average. The war didn't rescue European profits so much as redistribute them. The persistent gap between 4% earnings growth and just 1.7% revenue growth reflects the structural story of cost-cutting and margin discipline. Sectoral dispersion stayed sharp: autos struggled with tariffs, currency headwinds, and the EV transition; chemicals faced weak demand and overcapacity, while AI-exposed names like ASML raised guidance. Balance sheets remain resilient on high cash reserves and inflation's erosion of real debt. Europe's limited exposure to private credit (~1.5% of total corporate credit vs ~7% in the US) still provides a structural buffer against contagion — a point underscored by continued US stress headlines (First Brands, Tricolour, and regional bank fraud cases).
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European Corporate Credit: Tightening Credit
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The ECB's Bank Lending Survey continued to show a net tightening of corporate credit standards, driven by rising risk aversion in Germany and France amid the energy shock and a shift toward a tightening bias. Despite stricter standards, loan demand kept rebounding — particularly in Germany and Italy — as firms sought financing for working capital and refinancing, and hoped for M&A. With the ECB now hiking rather than cutting, funding costs are less supportive than the market had assumed entering the year. Non-Performing Loan ratios are still forecast to edge up only modestly and remain well below crisis-era peaks; European speculative-grade defaults are projected to improve to around 2.4% by late 2026 from 3.8% a year earlier.
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Loan Market: Refinancing-Led
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European leveraged loan issuance topped €235bn in 2025, a post-GFC record excluding 2021, yet net supply remained thin — the bulk was refinancings, resets, and repricings rather than new-money deals. Loans returned 4.0% for the year, driven by carry rather than price gains, as secondary prices drifted ~100bps lower and spreads held around 470bps. The market kept its spread premium over the US, but the same story dominates into 2026: without an M&A pickup, CLOs and other buyers are competing for a static pool of paper.
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CLO Market: Record Issuance
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The European CLO market has grown to roughly €294bn, with the market expected to reach €300bn by end-2026. After a subdued March and volatile April, issuance rebounded strongly in May 2026 — the second-best month of the year for Europe — as AAA spreads tightened from April's highs and refinancing/reset volumes hit multi-year highs. Full-year forecasts remain robust: Deutsche Bank projects €65bn of gross new-issue supply (an 8% uplift on 2025) and €45bn net, with around €53bn of potential resets/refinancings, while BNP Paribas expects roughly €60bn. Benchmark European reset AAA spreads dipped to around 123 bps earlier in the year, though participants expect modest widening amid geopolitical risk. Structurally, the market is evolving toward larger deal sizes and CLO ETFs as a new liquidity channel, supported by record warehouse creation (around 202 vehicles). The headwinds persist: the market's full potential still hinges on stronger new-loan supply and lower AAA funding costs to restore CLO equity arbitrage.
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BK Opp. Fund 7: Performances
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BK Opportunities Fund 7 (BK-7) was launched in Q2 2021. Over the years, we have actively traded BB and B-rated tranches of European CLOs. Our portfolio has remained very diversified across all sectors, with a very low idiosyncratic exposure. In addition to capturing the usual extra return of CLOs from its niche market, we have employed various structural arbitrage strategies, in some cases linked to the duration of our positions.
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This quarter, BK Opportunities Fund-7 is making a weighted average distribution of 8.25% (non-annualised, based on number of shares). Payments will be wired on 03 August 2026. The cumulative distribution of the fund is 98.60% (non-annualized, based on the weighted average distribution of all classes), and the annual return since inception is +13.1% (net), materially exceeding our expectations at the fund’s launch.
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The fund has exited its reinvestment phase and is now amortising, so we are focusing on monetising our positions. As we collect coupons & principal and now distribute all proceeds, the fund’s performance should continue to strengthen, and distribution will accelerate.
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Fund and Market Performances as of 30th June 2026
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Monthly Performances
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Cumulative and Quarterly Distribution
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Top 10 Industry Exposure
| Industry |
% of Portfolio |
| Healthcare & Pharmaceuticals |
13.0% |
| Services: Business |
9.3% |
| High-Tech Industries |
7.9% |
| Chemicals, Plastics & Rubber |
6.9% |
| Construction & Building |
5.7% |
| Banking, Finance, Insurance & Real Estate |
5.6% |
| Telecommunications |
5.5% |
| Beverage, Food & Tobacco |
5.2% |
| Capital Equipment |
4.6% |
| Services: Consumer |
4.4% |
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Top 10 Issuers Exposure
| Issuer |
% of Portfolio |
| Liberty Global |
2.0% |
| Ineos Ltd |
1.9% |
| Vmed O2 UK |
1.0% |
| 3I Group |
0.8% |
| Ion Platform |
0.8% |
| Kantar Global |
0.8% |
| IVC Acquisition |
0.8% |
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0.8% |
| Flamigo Lux |
0.8% |
| TK Elevator Topco |
0.7% |
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Fund’s Summary
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| Currency |
EUR |
| Fund’s Inception |
October 2021 |
| Distribution |
Quarterly |
| Investment Manager |
Oristan Ireland DAC |
| Administrator |
Apex Funds Services |
| Custodian |
CIBC Bank & Trust |
| Counsel |
Dillon Eustace |
| Auditor |
Deloitte |
| Bloomberg Page |
BKOPP7A KY <Eqty> |
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Portfolio Manager
Olivier Gozlan
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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.
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