Advantages of this product
- Satisfactory return: Investors earn returns of 1.5% or 3.0% per annum depending on their risk profile.
- Credit insured: The underlying assets in the “Credit Insured” Bonds are trade receivables that have been credit insured with Euler Hermes against risk of default. This means that if Cypriot debtor defaults, ETFL claims the money from Euler Hermes the world’s largest credit insurance company.
- Recourse: The underlying assets in the “Recourse” bonds are trade receivables of wide customer diversification suppliers and companies with strong financials whereby any potential delays in outstanding amounts are deducted from the available balance of the suppliers.
- Short term duration: The investment is for 6 months only.
- Low investment amount: There is no minimum or maximum amount.
- All Investors are equal: The investment in Bonds is on a first-come-first-serve basis, as Eurivex treats all investors, big or small, equally in line with MiFID rules.
- Easy to invest: Every process has been simplified to make it easier for investors.
- Reinvestment: On maturity of deals, and if you have Reinvest activated, capital plus return will automatically be invested in the bonds of the same characteristics to avoid balances in account earning no return.
- Interests aligned: ETFL also invest in the trade finance deals, based on the same terms and conditions as with investors, aligning its interests with investors.
- No Entry fees: Opening an account with Eurivex is free of charge and there are no evaluation or due diligence compliance fees.
- Low charges: Eurivex applies very competitive 0.05% transaction (brokerage) charges and €15 flat-fee annual custody fee.
- No Exit fees: You can withdraw your money on maturity of the Notes, without any exit fees.
- Diversification: Investors can build up a diversified portfolio of different bonds and reduce exposure from traditional investments in shares, bonds and real estate.
- Regulated: Eurivex, operating since 2010, is an EU investment firm, regulated by Cyprus Securities & Exchange Commission (CySEC), number 114/10, operating in line with EU’s MiFID II rules.
Disadvantages of this product
- Capital at Risk: As with every investment product, your capital is at risk.
- Default risk in Credit Insured Notes: All trade finance facilities in this pool are credit insured with Euler Hermes, which means the risk is shifted from the Cypriot trade debtor to Euler Hermes which is a AA multinational credit insurance firm. However, in case of severe stress in global markets, even global multinationals may not be in position to meet their obligations.
- Default risk in Recourse Notes: All trade finance facilities in this pool are to suppliers with wide debtor diversification and strong financials, which means that in the event of debtor settlement delays/defaults, ETFL recoups its money from the supplier balances available on the invoices of other debtors. However, in case of a major local economic catastrophe, there is a chance that many trade debtors will experience payment difficulties making recovery plans difficult to achieve.
- Identity of suppliers and debtors protected: When you invest in any bond, you have no knowledge of the identity of the suppliers or their trade debtors.
- Assets pledge: The assets are pledged for the benefit of investors, but the pledges do not apply individually and are for the benefit of the pool.
- Investments in bonds: The investments are made in Bonds issued by ETFL and not directly in the invoices assigned to ETFL by the suppliers.
- Liquidity conditions: The Bonds are privately issued and not listed, and there is no market outside of Eurivex platform.
- Costs may seem high for some investors: The 0.05% brokerage fee applied on entry by Eurivex and on maturity in addition to the annual custody fees of €15 may be disproportionate to the return generated for investments below €500.
- Bank charges apply: Eurivex does not apply opening of account, deposit or withdrawal fees, but bank charges apply and are on account of investors.
- Reputational risk: Eurivex and ETFL are based in Cyprus and exposed to country and regional reputational risk.
There is no past performance analysis to report since the trade finance activity commenced in the second quarter of 2019. For records sake, to date, there have been no defaults at all.
Intended Retail investor
The bonds are intended for investors who have knowledge of or are experienced with such products and understand the fact that losses may occur and have the financial means to bear losses.