Aramid offers 9% yield bond

The Aramid Bond, marketed by the £6bn alternative investment boutique Future Capital Partners (FCP), is a convertible redeemable bond offering investors a 9 per cent net return paid quarterly in arrears.

The bond issue will be limited to 15 per cent of the fund's net asset value (NAV), equal to a current offering of £15m.

The bond is expected to be listed on the Cayman Islands Stock Exchange.

The Aramid Entertainment fund, which provides low to medium-term debt finance to producers and distributors of film, television and other media, has returned more than 40 per cent since its launch in September 2006, according to FCP.

Over the past year, it has posted a return of more than 8 per cent.

The fund is currently invested in more than 40 loans secured against a wide variety of assets, with the loan book valued on a quarterly basis by Grant Thornton.

FCP said typical transactions by the fund included discounting film tax credits, pre-production bridge financing, lending against pre-sales distribution contracts and providing secured loans on unsold distribution rights.

Tim Levy, chief executive at FCP and a director of the Aramid Entertainment fund, said investors were increasingly demanding products that offered cash-plus return in a low-risk environment.

He said: "The Aramid Entertainment bond does both and is an exciting and risk-averse offering. The fund commits to retaining a cash balance equal to two coupon payments, so the chances of bondholders not earning their expected return are slim."

Mr Levy said the firm had further enhanced the risk profile of the investment by limiting the bond issue to 15 per cent of the NAV of the fund.

He added: "The fund's loan book is secured against hundreds of credit positions with a wide variety of financial institutions, all of which would need to fail for bondholders' capital to be at risk."

The bond has a minimum investment of £47,000.