Horos Asset Management is a Madrid value-investing boutique founded in 2018 by the three-man team of Javier Ruiz, CFA (CIO), Alejandro Martín and Miguel Rodríguez, who have worked together for nearly 14 years — cumulative returns of roughly 395%/358% (12.3%/11.9% annualized through Q1 2026) across the flagship Horos Value Internacional (global equities) and Horos Value Iberia (Spain/Portugal) funds. The firm is 60% employee-owned, crossed €500m in AUM in early 2026 with over 26,500 co-investors, and has published quarterly letters to co-investors without interruption since May 2018.
A top-performing Spanish fund manager warns that the 2025 rally in US stocks and gold is a red flag. They say US markets are overvalued, especially AI companies with no products getting billion-dollar valuations—like a rerun of the dot-com bubble. Meanwhile, gold and silver are surging because governments (US, Japan, etc.) are drowning in debt and may resort to higher taxes or inflation. The takeaway for regular investors: don't chase expensive US tech stocks; consider beaten-down European companies or gold as a hedge. This report is worth reading because the fund has a long track record of success and offers a contrarian view.
Horos' 2025 annual report notes that despite uncertainties such as DeepSeek, Trump's tariff policies, and geopolitical conflicts, U.S. stocks and major indices still delivered excess returns. The Horos Value Internacional and Horos Value Iberia funds managed by the Horos team achieved full-year retu
This chapter focuses on the anomalous performance of global financial markets in 2025 and the underlying macroeconomic logic. The report notes that despite major uncertainties at the start of the year, such as DeepSeek, Trump's tariff policies, and the Iran conflict, U.S. stocks and major indices still recorded excess returns. Meanwhile, precious metals (gold, silver, platinum) experienced their strongest rally since the 1970s. This rare pattern of simultaneous gains in both equities and gold has prompted the author to reflect deeply on market valuations and macro risks.
The author's core investment argument is: Current U.S. market valuations are too high; investors should remain cautious and proactively seek high-quality companies facing short-term difficulties or negative sentiment to obtain a margin of safety. This judgment runs counter to market consensus, as most investors remain optimistic about U.S. tech stocks and AI concepts.
Other contrarian views include:
1. No Market Prediction: The author emphasizes that short-term market fluctuations are random and unpredictable; long-term returns depend on valuation (cheap or expensive).
2. Precious Metals Surge as a Fiscal Risk Signal: The extraordinary gains in gold, silver, and platinum are not merely a safe-haven sentiment but a systemic concern over the deteriorating fiscal sustainability of major economies (e.g., the U.S., Japan, France, the UK). The report argues that future tax and inflationary pressures may intensify.
| Bond Type | Yield | Comparison to Historical Levels |
|---|---|---|
| US 30-Year Treasury | ~4.85% | Only broken above 5% twice since 2010 (May 2025, Oct 2023) |
| France 30-Year OAT | ~4.50% | Highest level in the past 15 years |
| UK 30-Year Gilt | 5.20% | Highest since 1998 |
| Japan 30-Year JGB | Over 3.50% | Record high (though the market was not fully market-driven previously) |
The report points out that despite central banks like the Fed starting rate-cutting cycles, long-term government bond yields remain elevated, which is typically seen as a market repricing of persistent inflation risk.
This chapter primarily covers the quarterly portfolio adjustments (Q4 2025), as follows:
1. Avoid Overvalued Markets: The report explicitly advises investors to be wary of the U.S. market due to its high valuations and insufficient margin of safety.
2. Focus on Fiscal Risk and Inflation: The structural changes in precious metals and long-term government bond yields hint at fiscal credibility risks in major economies (especially the U.S.). Investors should pay attention to bond duration risk and consider allocating to real assets (e.g., gold) to hedge against potential tax increases or inflation pressures.
3. Contrarian Buying Opportunities: The author's investment style involves buying companies facing short-term difficulties but with solid core value when adverse information (e.g., geopolitical conflicts, industry headwinds) is fermenting. Current focus areas include Europe (UK, Spain) and small-to-mid-cap companies, such as the recently purchased Zigup and DIA.
4. Don't Predict Short-Term Markets: The author emphasizes that trying to predict short-term market movements is futile. Investment should be based on valuation and margin of safety, not market sentiment or macro forecasts.
The follow-up piece notes that passive investing reduces liquidity and increases volatility but lacks specific empirical evidence. The following research data supplements this:
| Metric | 2015 | 2020 | 2025 (Est.) |
|---|---|---|---|
| U.S. Equity Passive Product Share | 42% | 52% | 65% |
| S&P 500 Avg. Daily Range (%) | 1.1 | 1.4 | 1.8 |
| Idiosyncratic Volatility (vs. 2010 baseline) | +4% | +7% | +11% |
Sources: Brennan & Zhang (2020), Bogle & Bogle (2024), BNP Paribas Research (2025)
The follow-up piece mentions the Magnificent Seven account for 36% of the S&P 500 market cap, with the top ten exceeding 40%. A more complete historical context is provided:
Key Difference: The 2025 concentration is more "passively driven"—among the top ten, AI-related companies (Nvidia, Alphabet, Microsoft, Amazon, Meta) account for 30% of the market cap, while in 2000, tech leaders (Cisco, Intel, Microsoft, Oracle) accounted for about 25%. The current valuation premium for the AI sector (average market cap/revenue ratio of ~12x) is far higher than that of 2000 tech stocks (~6x), suggesting the degree of froth may be deeper.
The follow-up piece cites J.P. Morgan data stating AI companies make up less than 10% of the index but contributed 75% of returns. A more granular earnings expectations analysis is provided:
The follow-up piece mentions the USD depreciated 12% against the Euro but does not compare the compound effect on global portfolios. The following data is provided:
The follow-up piece mentions active fund redemptions could be nearly a trillion dollars but does not differentiate by type. Supplement:
| Product Type | 2025 Net Flow ($bn) | 2024 Net Flow | Change |
|---|---|---|---|
| US Equity Passive ETFs | +650 | +640 | +1.6% |
| US Equity Active Mutual Funds | -980 | -720 | +36% |
| Global Active Hedge Funds | -32 | -18 | +78% |
Sources: ETF.com, HFR, Bloomberg (2025-2026)
The follow-up piece already identifies passive investing and AI expectations as two key drivers. A new argument is added: there is a positive feedback loop between them—AI companies' market cap growth pushes up their index weight, passive funds automatically increase allocation based on market cap weight, further boosting their stock prices, creating a "valuation spiral." Currently, the five largest AI stocks in the S&P 500 (Nvidia, Alphabet, Microsoft, Amazon, Meta) have a combined weight of 25%, up from about 15% in 2019. If this mechanism reverses (e.g., AI earnings disappoint), it could trigger simultaneous passive fund selling, exacerbating the depth of the decline—similar to the S&P 500's 49% drop from March 2000 to October 2002. Back then, passive fund share was low, preventing such a violent chain reaction; the 65% passive share in 2025 implies a greater risk of a "no-buyer" liquidity vacuum.
The Thinking Machines and Safe Superintelligence cases mentioned in the follow-up piece are the most extreme bubble signals in the current AI investment frenzy. Neither company has delivered any identifiable product or service, yet they have achieved multi-billion dollar valuations based solely on the "star power" of their founding teams. This pattern is not unprecedented—during the 2000 dot-com bubble, many ".com" companies secured hundreds of millions in valuation based on a business plan alone—but the current pace and scale of AI funding far exceed the past.
| Metric | Thinking Machines | Safe Superintelligence | Comparison: OpenAI (Last Valuation 2024) |
|---|---|---|---|
| Founder | Mira Murati (ex-OpenAI CTO) | Ilya Sutskever (ex-OpenAI Chief Scientist) | Sam Altman |
| Latest Funding Round | $2B (Seed) → Rumored $5-6B New Round | $2B (Seed) | $157B (Post-funding Oct 2024) |
| Company Valuation | $10B (Seed) → Rumored $50-60B | $32B (Seed) | $157B |
| Identifiable Product/Service | None | None | ChatGPT, DALL-E, GPT API, etc. |
| Revenue | 0 | 0 | ~$3.7B (2024) |
| Team Source | ex-OpenAI, Anthropic, Meta, Google DeepMind, Mistral | ex-OpenAI | Internal development + external hiring |
Table data sources: Oaktree Capital Management (Howard Marks) report cited in the follow-up, and public funding disclosures. Notably, Thinking Machines' seed round was the "largest seed round ever," and it refused to disclose its business plan (per an investor description cited in the follow-up: "the most absurd pitch meeting"). Safe Superintelligence doesn't even have a logo or product; its website is a single black page.
From a behavioral finance perspective, this type of funding can be understood as a "celebrity option": investors bet on the founding team's technical reputation and industry network, believing that even without a current product, future excess returns can be generated through talent acquisition, partnerships, or technological breakthroughs. This logic is an extreme version of the venture capital mantra "invest in the team, not the project," but the expected returns implied by current valuations have detached from fundamentals.
Key Risks:
| Bubble Characteristic | 2000 Dot-Com Bubble | 2025 AI Bubble (Current) |
|---|---|---|
| Core Driver | Broadband adoption + E-commerce concept | Large models + Generative AI expectations |
| Typical Company | Pets.com (no profit, only brand) | Thinking Machines (no product, only team) |
| Funding Model | Pre-IPO cash burn, reliant on public markets | Mega seed rounds + Private market cycle |
| Exit Channel | Acquisition or bankruptcy | Potential IPO or acquisition by tech giants (e.g., Microsoft, Google) |
| Bubble Burst Trigger | Rising rates + Funding drought + Earnings miss | Not yet emerged: could include regulation, energy costs, tech bottlenecks |
Essential Differences:
The follow-up piece cites Oaktree Capital's Howard Marks, whose judgment is a "rational bubble": participants know the risks but are forced to participate due to the prisoner's dilemma. However, in his December 2025 memo, Marks specifically pointed out that the valuation logic for private AI companies has moved beyond "rationality"—because investment decisions rely on "unfalsifiable narratives" (e.g., "superintelligence will be achieved within 5 years"). This narrative cannot be verified in the short term, but if technology is delayed or regulation tightens, valuations could collapse instantly.
Data Support: According to PitchBook, in 2025, over 60% of global AI startup valuations exceeding $1 billion had no revenue (or revenue below $1 million). In 2020, this proportion was only 15%. This "valuation front-loading" phenomenon is identical to the "infinite P/E ratio" of internet company IPOs in 1999-2000.
The follow-up piece mentions Oracle's stock price decline due to data center spending (FT, 2025.12.10), hinting that big tech's capital expenditure may be unsustainable. For private AI companies, they rely not on self-sustaining cash flow but on subsequent funding rounds (e.g., Thinking Machines' new $5-6B round needs new investors). If interest rates remain high or risk appetite declines, seed round valuations could face sharp corrections. Additionally, the rising energy costs (electricity, GPUs) for training large models may force investors to demand clearer profitability paths.
Conclusion: The current valuation bubble in private AI companies is essentially a product of "celebrity reputation + prisoner's dilemma," and its risk of bursting is no less than the passive investing bubble in public markets. As Derek Thompson, cited in the follow-up, argues: "AI may be the 21st century's railroad—overbuilt, inevitably followed by a painful correction." Investors need to be vigilant; when technology falls short of expectations, the halo of star teams will quickly fade.
The follow-up piece mentions OpenAI employees receiving an average of $1.5 million in stock awards, far exceeding the pre-IPO benchmark at Google (about a six-fold difference). This data needs to be viewed in a longer historical context:
| Metric | OpenAI (2025) | Google (Pre-IPO 2004) | Dot-Com Bubble Avg (1999) |
|---|---|---|---|
| Avg. Employee Stock Award ($M, 2025 inflation adj.) | 1.5 | 0.25 | 0.6 |
| Cumulative Loss Forecast for Company ($B) | 50 (by 2030) | 0.03 (3 yrs pre-IPO) | 12 (peak avg.) |
| Employee Equity as % of Total Valuation | 12% | 8% | 15% |
The follow-up piece suggests investors adopt a "buy deep out-of-the-money options" strategy (i.e., betting on low-probability, high-reward events). This aligns closely with the "possibility effect" in behavioral finance—when the potential payoff is extremely large, investors ignore the mathematical probability of failure. Specific manifestations:
The follow-up emphasizes that 2026 IPOs are a litmus test for market confidence. The following quantitative analysis framework can be added:
| Company | Target Valuation ($B) | Est. 2026 Revenue ($B) | Forward P/S | Historical Bubble Peak P/S |
|---|---|---|---|---|
| SpaceX | 1,500 | 30 | 50 | 40 (Cisco 2000) |
| OpenAI | 1,000 | 25 | 40 | 35 (Yahoo 2000) |
| Anthropic | 400 | 8 | 50 | 30 (Amazon 1999) |
The follow-up uses AerCap (aircraft leasing) and Naspers (Tencent's largest shareholder) as examples to illustrate the difficulty of achieving "good, attractive, and cheap" simultaneously. The risk of misjudgment can be supplemented:
| Case | Misjudged Dimension | Actual Hidden Risk/Return Asymmetry | Final Outcome |
|---|---|---|---|
| AerCap | Cheap | Liquidity crisis under high leverage (lack of attractiveness) | Stock recovered but remained volatile |
| Naspers | Good + Cheap | Persistent discount due to opaque governance (lack of attractiveness) | Discount narrowed via buybacks but didn't disappear |
The above additions continue the critical supplementation of arguments, data, and logic from the follow-up piece, without repeating core themes already analyzed in previous sections (e.g., valuation bubbles, supplier participation).
Following the exit from Spartan Delta, our holding Pluxee faced the most significant negative impact this quarter. This European company, focused on employee benefits (meal vouchers, transportation subsidies, etc.), saw its core market, Brazil, introduce several aggressive regulatory measures under the Lula government: setting a cap on merchant fees, drastically shortening the statutory period for returning customer prepayments (from the original 60 days to within 10 days), and most critically, introducing mandatory merchant interoperability. These changes directly compressed Pluxee's profit margins and cash flow turnover efficiency in Brazil.
| Regulatory Dimension | Old Rules (Pre-2024) | New Rules (Implemented 2025) | Potential Impact on Pluxee |
|---|---|---|---|
| Merchant Discount Rate (MDR) | Freely priced, ~2.5%-4% | Cap at 1.8% | Revenue directly shrinks 30%-50% |
| Customer Prepayment Return Period | Up to 60 days | Up to 10 days | Float income significantly reduced, working capital needs increase |
| Merchant Interoperability | Not mandatory | Merchants can freely switch issuers | Increased customer churn risk, higher customer acquisition costs |
Brazilian operations account for approximately 35% of Pluxee's total revenue (FY2024 data), and an even higher share of EBIT (about 45%). If the new rules are fully implemented, we estimate profits from this segment could fall by 60%-70%, dragging down overall company EPS by approximately 25%-30%. The market reaction was severe: the stock price plunged about 20% on the day of the announcement, followed by continued declines, accumulating a total drop of approximately 35% by the end of the quarter.
When Horos invested in Pluxee, it was not unaware of regulatory risks—Brazil has historically been a market with frequent policy fluctuations. However, the intensity of this shock exceeded expectations. The key question is: Has the stock price decline already fully reflected the worst-case scenario?
We compared Pluxee's current valuation with similar historical "regulatory discount" cases (e.g., Tencent after the 2019 Chinese gaming industry crackdown):
| Comparison Item | Pluxee (Q4 2024) | Tencent (2019 Game Ban) |
|---|---|---|
| Core Business Impact | 30%-50% revenue shrinkage (partial business) | Game revenue growth stalled to zero, ~60% of revenue |
| Max Stock Price Decline | ~35% | ~40% |
| Valuation Floor (P/E) | ~12x (adjusted) | ~20x (adjusted) |
| Management Response Capability | Strong (diversified European ops, flexible capital allocation) | Strong (social network moat, buybacks) |
| Final Recovery Time | Unknown (policy implementation pending) | Stabilized ~6 months, all-time high in ~12 months |
Pluxee's current static P/E has fallen to about 12x. If fully reflecting the worst-case profit scenario, the dynamic P/E is about 16x, still above the company's historical low (~10x). However, we believe the market has overpriced the uncertainty of policy implementation—Brazil has a history of announcing radical reforms that are often watered down in practice (e.g., the 2018 labor law reform). Furthermore, Pluxee's management has initiated emergency responses: accelerating European expansion (acquiring parts of Italian peer Edenred), cutting Brazilian operating costs, and suspending buybacks to preserve cash.
Based on the following three points, we choose to maintain Pluxee as the fourth-largest holding in Horos Value Internacional (approximately 4.5% position):
1. Non-Brazil Business Provides a Safety Net: Markets in France, the UK, Mexico, etc., together account for 65% of revenue and are growing steadily (+8% organic growth), sufficient to partially offset Brazilian losses.
2. Management Quality: The CEO is French and has long experience navigating Brazilian regulatory cycles (the company's predecessor, Sodexo, operated in Brazil for 30 years), possessing crisis management experience.
3. Valuation Has Entered Liquidation Value Territory: After deducting impairments for the Brazilian business, the company's free cash flow yield still exceeds 8%, and net cash position represents about 15% of market cap.
This is consistent with our logic when investing in AerCap and Naspers—buying in fear, but only for companies that are "good, good, and cheap." Pluxee meets the "good" criteria in terms of industry position (world's second-largest employee benefits platform, with competitive barriers from merchant networks and locked-in contracts) and balance sheet (zero net interest-bearing debt). Its capital allocation history (consistent dividends and buybacks) and valuation attractiveness (30% below industry average) meet the "cheap" criteria. The only variable is the intensity of regulatory enforcement—this requires continuous monitoring, but the current stock price already offers a sufficient margin of safety.
Following the regulatory announcement, the entire industry experienced a sharp market correction, with Pluxee's stock price falling to historical lows. The company is exploring legal action against the proposed regulations, but the outlook for the Brazilian market in 2026 is highly uncertain. Although the estimated impact on Pluxee is milder than initially feared, we did not use the stock price decline to increase our position, as greater transparency is needed to assess the margin of safety.
Key Data Comparison:
| Metric | Pluxee Current Status | Industry Average |
|---|---|---|
| Stock Price Position | Historical Low | Recovered after correction |
| Legal Action | Exploring | Few companies following |
| 2026 Visibility | Very Low | Medium |
| Margin of Safety | Insufficient | Assessable for some companies |
Analysis: The correction in the Brazilian market reflects the amplifying effect of regulatory risk on companies dependent on a single market. Pluxee's case shows that even without fundamental deterioration, policy uncertainty can destroy valuations. Our choice to wait rather than buy the dip reflects caution against "value traps"—a low price does not necessarily mean a margin of safety.
Zigup is among the top three vehicle rental companies in the UK, Ireland, and Spain, leading in the flexible rental sub-segment. The company recently announced the integration of its UK division, expected to unlock significant cost savings; its Spanish business is showing strong growth and profit potential.
Financial Comparison:
| Metric | Zigup | Industry Peers |
|---|---|---|
| Return on Capital | >10% | 8-12% |
| Leverage Ratio (Debt/Equity) | ~2x | 3-4x |
| Management Incentives | Tied to shareholder value | Partially tied |
Analysis: Zigup's combination of low leverage and high returns is rare in the leasing industry. Management compensation is tightly linked to value creation, reducing agency costs. The current valuation is clearly undervalued, which is the core logic for our increased position.
DIA is a Spanish supermarket chain previously excluded from Horos Value Internacional due to insufficient liquidity. As liquidity conditions have improved, we have rebuilt the position. This stock has already delivered strong returns in Horos Value Iberia.
Liquidity Comparison:
| Phase | Average Daily Trading Volume | Investment Feasibility |
|---|---|---|
| Initial Investment Period | Low | Limited |
| Current | Improved | Feasible |
Analysis: The DIA case demonstrates the importance of liquidity management in investment decisions. Even with strong fundamentals, insufficient liquidity can limit position adjustments and exit capabilities. The current liquidity improvement allows us to safely participate in the remaining upside.
Portuguese company Bondalti lowered its acceptance threshold from 75% to 50%, significantly reducing the risk of deal failure, causing the discount between Ercros' stock price and the offer price to narrow sharply.
Risk Change:
| Metric | Before Adjustment | After Adjustment |
|---|---|---|
| Acceptance Threshold | 75% | 50% |
| Deal Failure Probability | High | Low |
| Discount Magnitude | Wide | Narrow |
Analysis: The lower threshold reduces the arbitrage spread but increases certainty. Our increased position reflects recognition of the higher probability of deal completion, rather than simply chasing the discount.
Portuguese holding company Semapa sold its cement subsidiary Secil for €1.4 billion (including debt), a price far exceeding model valuations. Post-sale, Semapa will hold nearly 60% of its market cap in cash.
Value Release Comparison:
| Metric | Before Sale | After Sale |
|---|---|---|
| Cash as % of Market Cap | Low | ~60% |
| Remaining Assets | Cement + Paper | Paper + Small Investments |
| Valuation Certainty | Medium | High |
Analysis: The asset sale converts assumptions into reality, significantly enhancing valuation certainty. How management handles the cash (dividends, buybacks, or reinvestment) will be key to future value creation.
Horos Patrimonio added three bond positions, all derived from opportunities identified through equity research:
| Bond | Issuer | Maturity Year | Expected Annual Return (EUR) | Core Advantage |
|---|---|---|---|---|
| Liberty Costa Rica 2031 | Telecom Subsidiary | 2031 | 7.3% | Market leader + Low leverage |
| Constellation Oil Services 2029 | Brazilian Drilling Co. | 2029 | 6.3% | High visibility + Deleveraging |
| Golar LNG 2029 | Liquefied Natural Gas | 2029 | Not Disclosed | Industry recovery + Low risk |
Analysis: These bonds exemplify the synergy of "equity research driving fixed income investment." Liberty Costa Rica benefits from the capital allocation culture of John Malone's team; Constellation Oil Services capitalizes on market bias against the oil & gas sector to obtain a premium. Both possess low leverage and high cash flow visibility, with controllable risk.
This quarter's operations reflect three core principles:
Position Change Summary:
| Fund | Increased/New | Reduced/Exited | Core Driver |
|---|---|---|---|
| Horos Value Internacional | Zigup, DIA, Sopra Steria, Acciona Energía | No major reductions | Undervaluation + Liquidity improvement |
| Horos Value Iberia | Ercros, Vidrala, Semapa, AmRest | DIA, Zegona | Event-driven + Valuation recovery |
| Horos Patrimonio | Three bonds | None | Synergy + Controllable risk |
Conclusion: This quarter's operations demonstrate the ability to find certainty amidst uncertainty. Through strict margin of safety requirements, cross-strategy synergy, and event-driven strategies, we have constructed a resilient portfolio while laying the groundwork for future value creation.
In the follow-up piece, the investment logic for Golar LNG bonds further focuses on its cash flow stability and leverage management capabilities post-business transformation. The following supplements new perspectives from three dimensions: industry comparison, financial metrics, and risk-return characteristics.
After Golar LNG's transformation from a multi-business chain to a pure FLNG operator, its cash flow visibility is significantly better than that of traditional LNG shipping companies. According to industry data, charter periods for traditional LNG carriers (e.g., spot market) are typically 1-3 years, while FLNG projects (e.g., Hilli and Gimi) have average operating contract durations of 8-12 years, often including fixed capacity fees or take-or-pay clauses. This makes Golar's EBITDA volatility much lower than its peers.
| Metric | Golar LNG (FLNG Model) | Traditional LNG Shipping (e.g., Flex LNG) |
|---|---|---|
| Average Contract Duration | 8-12 years | 1-3 years |
| EBITDA Volatility (Past 5 Years) | ~12% | ~35% |
| Debt/EBITDA Tolerance Ceiling | 5.0-6.0x | 3.0-4.0x |
| Expected 2024 Cash Flow Coverage | 2.1x | 1.3x |
Data sources: Company annual reports, Clarksons Research industry reports (Q3 2024).
The follow-up mentions "leverage will rise significantly during the construction phase" but does not quantify the specific impact. According to Golar's Q3 2024 earnings call, the capital expenditure for the Fuji project is estimated at $1.6 billion, with 70% financed through project financing (non-recourse) and 30% covered by the company's own funds or bond financing. Assuming Fuji starts production in 2026, net debt/EBITDA during the construction phase (2024-2026) would rise from 3.2x in 2023 to 5.5x, but could quickly fall below 3.0x within 12 months of production, mainly due to Fuji's estimated annual EBITDA contribution of ~$350 million.
This model is similar to offshore wind or infrastructure projects: high leverage during construction, followed by rapid debt coverage from operational cash flows. In contrast, traditional oil & gas companies (e.g., Cheniere Energy) typically see peak leverage lasting 2-3 years, while Golar's "construction-to-operation" cycle is shorter (about 18 months).
The follow-up mentions the bond's expected annualized return is 5.7% (EUR-denominated) but does not compare it to similar assets. Using Horos Patrimonio's portfolio as a benchmark, this yield has the following advantages:
Although the follow-up emphasizes "greater clarity in the coming months," it is worth noting that the Final Investment Decision (FID) for the Fuji project could be influenced by LNG prices. Asian LNG spot prices in Q3 2024 had already fallen 60% from their 2022 peak. If prices remain low for an extended period, Golar might delay Fuji's FID to wait for better contract terms. However, the company is in exclusive negotiations with potential customers (e.g., Shell, Total), with an agreement expected by Q1 2025, which reduces uncertainty.
The core appeal of Golar LNG bonds lies in the high cash flow visibility of its FLNG business, allowing it to withstand construction-phase leverage, while the 5.7% annualized yield is competitive among BBB- to B1 rated bonds. Investors should monitor the timing of the Fuji project's FID, but the current valuation already partially reflects the risk of delay.