CRAFT Fixed Income (A "Risk-Off Capital" Investment)

A "risk-off capital" investment is one with low correlation to systemic market risk, meaning it is expected to be relatively immune to economic market crises.

Across recurring major economic shocks, CRAFT's underlying commodity finance market segment has been the most resilient debt capital market for investors.

CRAFT's underlying asset class performs just as well during economic crises as it does in normal markets. There are very few genuine risk-adjusted investment opportunities available to investors that offer confidence in positive outcomes when markets are in turmoil.

This chart shows why investors can be confident in the performance of CRAFT's underlying assets. It also shows how other asset classes perform during market crises.

The macro data presented here covers all markets (developed and developing) and all market participants (including established and start-up companies and large, medium, and small enterprises).

One of The Lowest Default Risk Credit Markets

Typical risk mitigation measures, such as loan-to-value ratios (LTVs) and credit ratings, are considered reliable under normal, orderly market conditions but become less relevant to investment outcomes during market crises.

Most investments become "risk-on capital" investments when markets are in turmoil. During market crises, asset valuations generally plummet due to panic selling and reduced liquidity. At the same time, credit ratings are downgraded as default risks rise, often following a delayed recognition of deteriorating credit quality.

One of The lowest Default Risk Credit Markets

Across every major economic shock commodity supply chain finance remains the most resilient:

Default Rate Comparisons (GFC High-Band)

CRAFT'S <0.1% historical default rate sits at the very bottom of the private credit risk spectrum - even during global economic crises.

Why? Because essential materials, energy and food must flow in order for societies to continue to function.

The Real Economy Cannot Stop

The last three miles of commodity supply chain finance have historically been among the world's lowest-default-risk lending markets. The asset class is fundamentally and structurally one of the world's safest and most reliable forms of lending, as societies cannot continue to function without the continual flow of essential materials, energy and food.

The real economy begins with the flow of critical materials, energy and food, and CRAFT gives investors access to one of the best risk-adjusted credit markets.

Historically Low Default Rates Ranging 0.1% to 0.5% for CRAFT's Underlying Lending Market

With historical default rates ranging from 0.1% to less than 0.5% even during financial crises, and with write-offs having a low correlation with defaults, CRAFT's underlying lending market compares favourably with other credit, especially during times of economic stress.

For example, real estate-linked lending default rates ranged 6.5% to 10.5% during the Global Financial Crisis, with certain market segments suffering significant write-offs.

Real Estate-linked debt default rates were 35 times higher than CRAFT's underlying credit market during the Global Financial Crisis.

CRAFT Notes are a "Risk-Off Capital" investment delivering a fixed 8.00% annual return paid semi-annually, backed by one of the world's safest and most reliable lending markets.

Investment success is underpinned by the economic success of some of the world's most profitable Tier 1 and Tier 2 commodity supply chain participants in Tier 1 developed markets, ensuring the continued flow of critical materials, energy and food - the real economy.

Unlike traditional private credit, CRAFT has no exposure to property, SME or consumer credit markets and is a good diversifier for portfolio investors. CRAFT Notes are a good risk-adjusted alternative or complement to bank-hybrids or real estate-linked private credit.

Source: ¹ WSJ / S&P Global (2024); ² S&P Default Studies (2023); ³ FRED CRE Loan Delinquencies (2008–09); ⁴ PayNet/Experian SME default trends (2024); ⁵ ICC Trade Register, ADB (2021)

CRAFT issues senior, asset-backed fixed-interest, fixed-term investment notes that offer:

Underlying Asset Class:  

Loan assets and receivables are supported by well-established, profitable Tier 1 and Tier 2 companies in commodity supply chain systems operating in developed Tier 1 economies, with no risks in the Middle East, East Africa, Mainland China, or developing markets. The real economy's macro-fundamental strength and structural reliability, along with the economic activities and the success of some of the world's most profitable companies in it, support Noteholder's fixed-income returns and return of capital.

Gating Redemptions and Income Payments:

CRAFT cannot suspend (or gate) redemptions or income payments, unlike most private credit and income funds, which can voluntarily gate redemptions and income payments if they deem it necessary.

With over 200 bulk vessels, and decades of operational commodity supply chain experience, CRAFT is a specialist private credit business that finances the “last 3 miles” of the real economy — the critical steps of delivering critical materials, energy and food societies must have if they are to continue to function as we know them.

CRAFT delivers risk-adjusted returns for its investors by supporting one of the debt capital market's safest and most reliable forms of lending.

• CRAFT only lends to select well-established Tier 1 and Tier 2 companies (predominantly Australian) that supply critical materials, energy, or food to commodity supply chains in Tier 1 developed markets (predominantly Japan and South Korea).
• Financing large, sophisticated commodity supply chain systems with no history of defaults, even during a market economic crisis.
• Self-liquidating facilities secured by fungible assets with known liquidation values (not theoretical orderly market valuations or appraisals).
• No exposure to commodity market prices or price volatility, upstream production risks, or emerging markets risks.

CRAFT delivers fixed income returns that are uncorrelated to other credit markets without the typical risks associated with lending to SMEs, consumers or real estate.

CRAFT Commodity Supply Chain Finance: Lower-Risk, Specialised Lending for Essential Global Trade “..the last 3 miles”

CRAFT is Not Traditional Private Credit

CRAFT Fixed Income Notes are not equity or growth assets and provide a fixed interest return over a fixed term; therefore, they might form part of an investment portfolio's fixed income allocation.

CRAFT Fixed Income Notes are fixed-term, asset-backed debt securities issued to wholesale investors seeking reliable income from one of the lowest-risk credit sectors in global lending markets — commodities supply chain finance.

What Is a “Note”?

A Note is a debt obligation with a maturity greater than 1 year and less than 10 years and sits between:

• Bills – debt maturing in 1 year or less
• Bonds – debt maturing in 10 years or more

This naming convention is used globally — for example, U.S. Treasury Notes (2 to 10-year maturities), Treasury Bills (under 1 year), and Treasury Bonds (over 10 years).

CRAFT Fixed Income Notes vs. Other Debt Products

Unlike traditional debt fund products that offer target returns with discretionary terms (meaning the manager can suspend redemptions and distributions), CRAFT Fixed Income Notes offer:

• A fixed return
• A fixed maturity term
• No ability for the issuer to gate or suspend interest or return of capital

CRAFT Fixed Income Notes underlying are senior, secured, and self-liquidating – meaning that the underlying debt obligations are repaid through contractual, asset-backed transactions involving the world’s most reliable Tier 1 and Tier 2 commodity producers and supply chain systems that are the basis of the real economy.

Transferable and Tradable

CRAFT Fixed Income Notes are Over-the-Counter (OTC) tradable, allowing one investor to sell their position to another at any time before maturity — subject to prevailing market demand.

In addition to lending into one of the lowest-risk segments of global credit markets, CRAFT Notes offer a superior investor experience compared to holding a direct corporate note from a single commodity company. CRAFT’s model includes multiple layers of structural protection, credit diversity, and active oversight, providing investors with greater certainty about income performance and capital preservation.

1. Diversified Loan Pool vs Single Corporate Exposure

CRAFT Notes:
Investor exposure is to a growing, diversified pool of carefully underwritten commodity supply chain loans. No single borrower or supply chain determines the outcome. The structure ensures that investor returns are underpinned by the performance of the entire lending program, not just one issuer.

Direct Corporate Notes:
Investor returns depend solely on the ongoing solvency and performance of a single corporate borrower. Any deterioration in that company’s performance directly impacts the note.

2. Off-Balance Sheet Lending vs On-Balance Sheet Risk

CRAFT Notes:
CRAFT primarily engages in off-balance-sheet, self-liquidating structures, giving it the right to enforce and liquidate the security independently of any corporate events at the borrower level. In the event of non-performance, CRAFT can exit through pre-agreed commercial terms and market-based collateral values.

Direct Corporate Notes:
Exposure is to the company’s full balance sheet. If the company appoints a receiver or administrator, the investor is treated as just another creditor—facing court-led processes, long recovery timelines, and potential capital loss.

3. Continuous Oversight vs Point-in-Time Underwriting

CRAFT Notes:
CRAFT’s loans are short-term and self-liquidating, allowing for frequent credit cycling and real-time performance monitoring. CRAFT underwrites risk not only at the financial level but also at the operational and logistical levels, drawing on decades of commodity supply chain experience to identify risks that may not be visible in financial statements.

Direct Corporate Notes:
Typically underwritten once at issuance, with limited ongoing monitoring. Non-performance often comes as a sudden shock, only becoming visible when the company publicly announces financial stress or insolvency.

This Invitation to Invest is restricted to Wholesale and Sophisticated Clients only, as defined by the Corporations Act 2001.

Craft Commodity Services Pty Ltd and Craft Bond Issues Pty Ltd  ( collectively, Craft) are Corporate Authorised Representatives ( CAR No 1314349 and 1314359) of Novus Capital Limited (Novus),  AFS License No. 238168 and authorise this document.

Neither Craft nor Novus, nor any of their officers or agents, make any representations or warranties as to the accuracy, completeness, or reliability of any estimates, opinions, conclusions, or other information contained in this document. Any opinions or projections are based on information available at the time of preparation and are subject to change without notice.

This document may contain forward‑looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors—many of which are beyond the control of Craft. Past performance is not a reliable indicator of future performance.

To the maximum extent permitted by law, Craft and Novus disclaim all liability and responsibility for any direct or indirect loss or damage arising from reliance on the information contained in this document. Investors must obtain independent legal, financial, and professional advice to assess the suitability of any investment opportunity and to understand the associated risks.