Flat Rock Opportunity Fund Secures $100 Million Nomura Repo Line at SOFR Plus 305 Basis Points
Shareholders buying into the fund’s continuous offering now face counterparty and collateral risks set out in a newly added prospectus disclosure.
October 9, 2026
Flat Rock Opportunity Fund has lined up as much as $100 million of repurchase financing from Nomura Securities International. The facility gives the continuously offered fund a new source of leverage, priced at a fixed spread over three-month Term SOFR.
The fund signed a master repurchase agreement with Nomura on August 26, 2026. A confirmation dated September 30 then set the facility's economic terms. The facility runs for an initial term of 24 months. Nomura provides the financing through repurchase transactions, in which the fund sells securities to the bank and agrees to buy them back at a set price and date.
Pricing and Term
The fund pays 305 basis points over three-month Term SOFR. The benchmark has a zero floor, so the fund's borrowing cost can't fall below the 305 basis point spread even if the reference rate turns negative.
The fund disclosed the facility in an October 6 supplement to its June 29, 2026, prospectus. That prospectus covers an offering of an unlimited number of common shares, so investors entering the continuous offering are now buying into a fund that can draw on the Nomura line.
New Risk Disclosure for Shareholders
The fund also added a risk factor on reverse repurchase agreements to the debt financing section of its prospectus. It says the transactions create leverage, expose the fund to the risks of leverage, and can increase volatility. It then lists specific ways the arrangement could cost shareholders:
- Counterparty failure: the counterparty could fail to return the securities on time or at all. The fund could lose money if it can't recover them and the collateral it holds, including investments made with cash collateral, is worth less than those securities.
- Collateral value: the market value of the securities could fall well below the price the fund must pay to buy them back.
- Liquidity and cost: the fund must keep enough cash on hand to complete repurchases when required, and the agreements add to fund expenses.
- Insolvency: if the buyer of the securities becomes insolvent or files for bankruptcy, the fund's use of the sale proceeds could be restricted. That restriction would last while the counterparty, or its trustee or receiver, decides whether to enforce the fund's repurchase obligations.
