Posted by Debitum has launched a new liquidity product called Flow. The product is advertised with 8% per year, daily interest accrual, a minimum investment of €10, and no exit fee. Withdrawals of up to €1,000 are supposed to be processed on the next business day, with a maximum of €5,000 per week.
For now, the money is invested in LFDF II Senior Notes. So, exactly the same structure for which I have been calling for an independent review of the transaction prices for more than six months. Nothing has happened to date, apart from excuses as to why such a review supposedly cannot be carried out.
An important point for context: The underlying notes have a five-year maturity. According to Debitum, an early exit can only be requested and depends on available liquidity. In the worst-case scenario, this means being locked in for 60 months while earning an 8% return.
Withdrawal requests are placed in a queue and processed on a first-come, first-served basis, funded by new Flow investments. This is supported by a buffer that is provided by their financing partner, which according to Debitum amounts to around €335 for every €1,000 invested. In plain terms, this means that roughly three-quarters of the available withdrawal capacity depends on fresh money from other investors.
Conclusion: Debitum Flow is a product with the appearance of an instant-access savings account from €10, but which is essentially a five-year bond backed by a portfolio with unresolved valuation issues. As long as the LFDF review remains outstanding, wrapping the product under MiFID II does not change that. Accordingly, I will neither promote Debitum Flow nor invest in it myself.