Midas Capital is aiming to improve returns from its fixed-interest holdings by gaining exposure to a fund that invests in debt secured against oil rigs.
The CQS rig finance fund invests mainly in the construction of offshore oil or gas exploration and production infrastructure using secured bonds.
The energy and resources team at CQS, a London-based hedge fund firm, has been involved in the oil rig bond market since September 2005. The fund targets a yield of 8 per cent a year and performance is expected to have low correlation with mainstream markets.
The fund will invest in the latest sixth-generation deep water rigs where demand is strong but supply is constrained because few shipyards have the skills and technology to produce them. The cost of leasing a rig has trebled in five years but the cost of building a rig has not kept pace, which CQS says creates a good investment opportunity.
Midas Capital head of business development David Thomas says: “It is an investment we chose to get a better return from fixed interest. It will provide a good income and the fundamentals for oil sector and infrastructure are strong over the next few years.”