Opertun Loan Notes and Senior Secured Listed Notes Review

In this article, we will assess the senior secured listed notes and loan notes associated with Opertun Environment.

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Who is Opertun Environment?

Swedish investment firm Opertun Group formed Opertun Environment as a renewable energy business focused on ownership and management of various firms in the environmental industry.

Currently, Opertun Environment owns and operates specialist energy firms EnergyKey and Northern Lights Energy Solutions.

What are senior secured notes?

Senior secured notes, also known as senior notes, are a type of debt security issued by a company or corporation to raise capital. They are called “senior” because they have a higher priority than other types of debt in the event of the issuer’s bankruptcy or default.

Senior secured notes are secured by specific assets or collateral of the issuing company, such as property, equipment, or inventory. This means that in the event of default or bankruptcy, holders of senior secured notes have a higher claim on the assets used as collateral compared to other unsecured creditors. This reduces the risk of default and provides investors with some protection against loss.

What are the terms of investment on Opertun senior secured notes?

This listed green bonds target asset managers, family offices, and institutions as investors, with a minimum investment of 125,000 US dollars or 100,000 euros. The bonds have a term of four years and bear a yearly interest of 8.5% that is paid out twice a year.

The offering aims to raise 50 million USD or 30 million euros.

How secured is this investment?

Under a senior secured deal, Opertun pledged to the holders of the notes that they will repay the debt owed by the issuer of such securities in case of default. The guarantee of shares and debentures by Opertun provides an additional layer of security to the holders of the notes.

The collateral include cash held with Northern Lights Energy, energy acquired in megawatt hour (MwH), as well as invoices of end consumers and electricity retailer contracts.

What are senior secured loan notes?

Senior secured loan notes are another type of debt security issued by a company to raise capital. Unlike senior secured notes, which are typically sold to investors in the public markets, senior secured loan notes are usually sold to a limited group of investors in a private placement.

Senior secured loan notes are also secured by specific assets or collateral of the issuing company and are considered senior to other unsecured debt. This means that holders of senior secured loan notes have a higher priority claim on the collateral compared to other unsecured creditors in case of default. However, senior secured loan notes are often subordinated to other senior debt, such as bank loans, which means that they may have a lower claim on the assets compared to these other types of debt.

What are the terms of Opertun senior secured loan notes?

The senior secured loan notes offered have a three-year term and are intended for sophisticated investors and high net worth individuals. This provides an opportunity for those who wish to invest a lesser amount, with a minimum investment worth 10,000 USD, euros, or pounds.  

The loan notes bear a yearly coupon of 8.5% that is paid out on a semi-annual basis. The offering targets to raise 8 million euros.

How can investors access the offerings?

Interested investors can subscribe to the offerings via Capital International Group, Custodian Life, TIP, Gravitas, and directly through major stockbrokers and private banks. They can also request a direct subscription form for the loan notes.

What are the upsides and downsides of investing in Opertun senior secured notes and loan notes?

Upsides

• Priority: Senior secured notes and senior secured loan notes are senior in the capital structure, so they have priority over other forms of debt in the event of bankruptcy or default. This can provide a measure of security for investors.
• Fixed income: These investments offer a fixed rate of return, which can be attractive to investors who prefer a predictable source of profit.
• Diversification: Senior secured notes and senior secured loan notes can provide diversification in a portfolio, as they are not directly tied to the performance of the stock market.
• Potential for higher returns: Compared to other types of fixed income investments, such as government bonds, senior secured notes and senior secured loan notes may offer higher returns.

Downsides

• Risk: Like all investments, senior secured notes and senior secured loan notes carry a degree of risk. The issuer may default on the debt, resulting in a loss for investors. Although in this case, the risk is somehow mitigated since Opertun secured the notes with collateral.
• Illiquidity: These investments may be less liquid than other types of securities, which can make it difficult to sell them quickly if needed.
• Credit risk: The creditworthiness of the issuer is a key factor in determining the risk associated with investing in senior secured notes and senior secured loan notes. If the issuer’s creditworthiness deteriorates, the value of the investment may also decline.
• Limited upside potential: Unlike equity investments, senior secured notes and senior secured loan notes typically offer limited upside potential.

Final Thoughts

Investing in senior secured notes and loan notes have its own attractiveness, with the offerings discussed catering to large investors who can invest a huge sum as well as individual investors who can allot a smaller fund. The notes are also secured by Opertun, which gives an additional layer of security to noteholders.

However, it is important to note that the value of the collateral can fluctuate and may not always fully cover the amount of the investment. Always bear in mind the risks involved with investing in these securities as well and diversify your holdings. Don’t put all your eggs in one basket – it’s an often repeated adage in the investing world for a reason.

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.