The Balqis bond is a fixed-income investment that provides access to the litigation finance market.
Due to the increasing number and value of class action lawsuits, particularly in the UK, this sector has grown significantly in recent years.
The United Kingdom has emerged as a major force in the litigation finance industry.
From 2018 to 2022, England reportedly made up 48% of all class action lawsuits filed in Europe.
The legal system and the increase in group lawsuits in the UK make it a perfect location for pre-settlement funding.
However, it is a high-risk investment that should be approached with expert advice and due diligence.
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Some facts might change from the time of writing. Nothing written here is financial, legal, tax, or any kind of individual advice or a solicitation to invest.
You must know that loan notes and bonds involve high risk, and in the event of default, you could lose your entire investment.
Litigation Finance Investment
Before we talk about the Balqis bond, let me first discuss litigation financing and the note issuer Balqis Capital.
Balqis focuses on pre-settlement financing, a form of legal funding that helps plaintiffs.
While awaiting the resolution of a legal matter, plaintiffs frequently incur significant personal or business expenses. Through the financing, Balqis allows them to concentrate entirely on their case.
Plaintiffs can use the funds to pay for living expenses, operating costs, and legal fees.
When providing funding, Balqis considers the merits and possible outcome of the case, as opposed to traditional loans that take into account a person’s creditworthiness.
Large organizations, governments, or corporations are involved in the majority of settlements. If the case is successful, these organizations have the financial means to repay the bonds.
Balqis Bond Overview
These bonds are basically asset-backed securities, with expected settlements and court claims serving as the underlying assets.
Balqis aggregates various funded lawsuits to diversify investor exposure.
Given its alternative nature and associated risks, this bond offers a fixed return of 10.25%. It is comparatively high vs traditional bonds, but this return is dependent on the outcome of a legal case.
The type and amount of returns may vary from one case to the next; proceeds may come from court decisions, negotiated settlements, or similar processes.
Pros and Cons of Balqis Bond
With litigation assets supporting it, this bond has lower sensitivity to market volatility.
It offers higher yields than conventional fixed-income products.
Also, its multi-tier capital protection framework enhances investor protection.
The fact that litigation finance investments are typically illiquid should not be overlooked, though.
The outcome of the underlying legal cases still carries some risk, even though the bond has capital protection features.
Since returns are typically reliant on a successful legal outcome, investors may lose all or a portion of their money if a funded lawsuit fails.
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