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BK Opportunities
Fund 7
Quarterly Report | 31st December 2025
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The final N.A.V. and distribution of BK Opportunities Fund-7 (Euro) as of December 31, 2025, is:
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NAV
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60.85%
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Distribution
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10.00%
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Payments will be on February 3rd, 2026.
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As part of our ongoing efforts to enhance communication with investors, the Crystal Fund newsletter, previously distributed exclusively by email, is now also available in PDF format. You can access the latest edition here.
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BK Opportunities Fund-7 final net performances
as of 31st December 2025
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| Monthly Return (non-annualized) |
+1.3% |
| Year-to-Date (non-annualized) |
+10.7% |
| Annual Return since inception1 |
+14.0% |
| Cumulative Distributions since inception/October 20212 |
+83.3% |
| Cumulative Return since inception/October 20212 |
+48.0% |
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1 — 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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2 — Weighted average distribution of all classes.
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Market Commentary & Portfolio Overview
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The Eurozone ended 2025 with resilient 1.4% GDP growth and inflation at the 2.0% target, fueling record equity gains (STOXX 600 +17%). In credit markets, a sharp bifurcation emerged: while formal loan defaults remained low at 1.08%, "dual-track" distress hit higher due to out-of-court restructurings (LMEs) in sectors like Media and Healthcare. This stress was balanced by a structural shift in the CLO market, where the 2025 Solvency II Reform slashed capital charges for senior AA tranches from 37.5% to 8.1%, unlocking massive liquidity from European insurers.
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The Economy: Resilience
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The Eurozone economy concluded 2025 with a resilient performance, characterized by stabilizing prices and a pause in the aggressive rate-cutting cycle of previous years. Real GDP growth in the final quarter remained steady, contributing to an upgraded annual average of 1.4% for 2025. Headline inflation successfully reached the European Central Bank's target, easing to 2.0% in December, while core inflation remained slightly stickier at 2.4%. In its final meeting on December 18, 2025, the ECB maintained a "data-dependent" stance by holding key interest rates steady, leaving the deposit facility rate at 2.00%.
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Corporate Markets: Solid Year
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European equity markets finished 2025 on a high note, with the STOXX 600 reaching fresh record highs. The market was buoyed by resilient corporate earnings—specifically in the financials and healthcare sectors —benefiting from the ECB's plateauing interest rates. Despite geopolitical trade tensions, the STOXX 50 and STOXX 600 ended the year with total gains of roughly 18% and 17%, respectively, marking their strongest annual performance since 2021. The market was also significantly impacted by a 13.4% appreciation of the Euro against the USD, which acted as a headwind for exporters but boosted returns for domestic Euro-denominated portfolios.
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Loan Market: Bifurcation
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The European leveraged loan market concluded 2025 with a "two-track" default narrative, a bifurcation. While the headline payment default rate for the Morningstar European Leveraged Loan Index (ELLI) remained historically low at approximately 1.08% by principal amounting to November 2025, this figure masks significant underlying stress. When including Liability Management Exercises (LMEs) and distressed exchanges—where borrowers restructure debt out of court to avoid formal bankruptcy—the "dual-track" default rate rose to 2.15% that is still low by historical standards. This gap highlights a growing trend of "shadow defaults" in sectors like Media and Healthcare, which together drove nearly 30% of restructuring activity as firms grappled with the lagged effects of elevated interest rates.
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CLO Market: The AA Demand Shift
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The European CLO market saw record-breaking activity in Q4 with €33 billion in issuance, but the most significant trend was the surge in demand for AA and High-A tranches. This was driven by the Solvency II Reform (2025 Overhaul), which drastically lowered the capital charges for insurers investing in "Senior" tranches of non-STS securitizations like CLOs. For example, the spread risk capital charge for a AAA/AA CLO fell from levels comparable to equity (37.5%) to just 8.1%, making these tranches a highly capital-efficient alternative to traditional corporate bonds for European insurance giants.
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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 10.0% (non-annualised, based on number of shares). Payments will be wired on the 3rd February 2026. The cumulative distribution of the fund is 83.34% (non-annualized, based on the weighted average distribution of all classes), and the annual return since inception is +14.0% (net), materially exceeding our expectations at the fund’s launch.
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The fund has exited its reinvestment phase and is now amortizing, so we are focusing on monetizing 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 31st December 2025
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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 |
14.7% |
| Services: Business |
9.1% |
| High-Tech Industries |
7.1% |
| Chemicals, Plastics & Rubber |
7.0% |
| Telecommunications |
6.2% |
| Construction & Building |
5.8% |
| Beverage, Food & Tobacco |
5.4% |
| Banking, Finance, Insurance & Real Estate |
5.4% |
| Capital Equipment |
4.5% |
| Services: Consumer |
4.0% |
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Top 10 Issuers Exposure
| Issuer |
% of Portfolio |
| Ineos Ltd |
2.0% |
| Liberty Global |
1.8% |
| Vmed O2 UK |
1.2% |
| Lorca JVCO |
1.1% |
| 3I Group |
1.0% |
| Quimper Ab |
0.8% |
| Althea Acq |
0.8% |
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0.8% |
| Laboratoire EIMER |
0.8% |
| Altice NV |
0.8% |
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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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