REG-M&G Credit Income Investment Trust plc Quarterly Review

M&G Credit Income Investment TrustAnnouncement

Today 16:45

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M&G Credit Income Investment Trust plc (MGCI)
Quarterly Review

21-Apr-2026 / 16:31 GMT/BST

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M&G CREDIT INCOME INVESTMENT TRUST PLC

 

(the “Company”)

 

LEI: 549300E9W63X1E5A3N24

 

Quarterly Review

 

The Company announces that its quarterly review as at 31 March 2026 is now available, a summary of which is provided below. The full quarterly review is available on the
Company’s website at:

 

 1 https://www.mandg.com/dam/investments/common/gb/en/documents/funds-literature/credit-income-investment-trust/mandg_credit-income-investment-trust_factsheet_gb_eng.pdf

 

 

Market Review

 

The conflict in  the Middle East,  and the  accompanying spike in  energy prices,  was the defining  event of the  first quarter  of 2026 and  significantly altered  the
macroeconomic landscape. Prior to the onset of the conflict on 28 February, global economic activity had been resilient and the disinflationary trend remained on  track.
However, as the conflict continued through March, disruption to global oil and gas supplies, caused by the closure of the Strait of Hormuz, raised the prospect of higher
inflation alongside a potential slowdown in economic growth, a so called stagflationary regime or ‘worst of both worlds’ scenario.

 

Government bond markets adjusted sharply over  the quarter as rising oil prices  fed through into higher inflation expectations  and reduced the likelihood of near  term
policy easing. These concerns were reinforced by inflation data from the eurozone, where  annual inflation rose to 2.5% in March from 1.9% in February, driven  primarily
by higher energy costs. Against this uncertain backdrop,  major developed market central banks kept interest rates  on hold. However, this pause was accompanied by  firm
messaging that further policy tightening  remained on the table  should inflationary pressures persist. As  a result, investors began  to anticipate interest rate  hikes
later this year rather than rate cuts, and government bond markets sold off in March, erasing strong year‑to‑date gains up to that point. UK gilts were among the weakest
performers, with the 10  year yield reaching  a post 2008 high  of 5% at  one point during  the quarter. Similarly, UK  credit underperformed both  European and US  debt
markets.

 

Manager Commentary

 

During the opening quarter of 2026, the Company delivered  a NAV total return of +0.41%, compared to  the +1.88% returned by the benchmark. Performance lagged  primarily
due to our  intentionally defensive positioning,  which resulted  in portfolio yield  running below the  target return,  alongside credit spread  widening following  the
escalation of the Iran conflict.

 

Concerns about private credit, predominantly focused on the US sub investment grade loan market, also contributed meaningfully to increased market volatility during  the
period. Sectors with  a high proportion  of intangible assets  sold off over  the quarter, driven  by fears surrounding  Artificial Intelligence (“AI”)  as a  disruptive
technology, particularly within software. Fixed-income markets are  increasingly pricing in an AI-driven risk premium.  Lenders are demanding higher yields from  issuers
most vulnerable to technological obsolescence, particularly where AI is shifting established competitive moats. Against this backdrop, it is important to highlight  that
the majority of the portfolio is invested in investment  grade quality assets and remains predominantly focused on Europe  and the UK, with only a small exposure to  the
US. The private portion of the portfolio has no direct software exposure, while software related holdings across the remainder of the portfolio represent less than 2% of
total portfolio value, including indirect exposure via the M&G European Loan Fund.

 

Demand for share  issuance began the  year strongly, and  the Company issued  an additional 5.8  million ordinary shares  up to the  end of February.  We invested  these
proceeds, alongside surplus cash, across both public (£6.8 million) and private (£5.7  million) markets. The range of new and existing private opportunities invested  in
during the quarter included: a fully operational data centre with long dated leases to blue chip clients (£1.1 million); an existing, well performing RegCap  transaction
(£1.75 million); a senior term loan secured against prime urban logistics hubs in the Benelux region (£1.75 million); and a senior term loan to a UK headquartered  paper
packaging and labels business (£0.75 million).

 

Public market purchases focused on leveraging our in house research capabilities to  identify relative value opportunities where we believe risk is mispriced, either  at
new issue or in the secondary market.  This doesn’t represent a change to our  long held view that public credit spreads  are, in aggregate, expensive (i.e., tight)  and
offer a low premium for taking on risk, leaving markets vulnerable to sharp  corrections from economic or geopolitical shocks. In the near term, investment grade  public
market opportunities offering returns close to  SONIA +4% (the Company’s target  return) without assuming significant default risk  remain scarce. As we have  previously
emphasised, this is not  the stage of  the cycle to  be chasing returns,  as tight credit  spreads actually mask  deep macroeconomic and  geopolitical risks. Amid  these
conditions, we continue to prioritise attractive relative‑value opportunities where we identify potential for further spread compression alongside adequate risk‑adjusted
carry, within businesses demonstrating robust - albeit potentially unspectacular - operating  performance. We remain patient as we await more compelling entry points  to
add risk more meaningfully.

 

In March, amid heightened  macroeconomic volatility, the ordinary  share price moved  to trade at a  discount to NAV.  As a result, the  Company recommenced its  buyback
programme in accordance with its Zero Discount Policy, which  seeks to ensure that ordinary shares trade close to  NAV in normal market conditions. This resulted in  the
repurchase of 250,000 shares into Treasury. During the quarter, we also sold £4 million of the portfolio’s exposure to the M&G Secured Asset Backed Credit Fund ahead  of
funding several private opportunities in early Q2.

 

Outlook

 

The conflict involving Iran represents  the most significant risk to  global supply chains since the  Covid 19 pandemic, introducing a  new and potentially long  lasting
shock to the global economy and driving elevated volatility across financial markets. History suggests that geopolitical shocks very rarely leave a lasting dent on asset
prices and are generally followed by rapid market recoveries, which perhaps explains  the market’s rather sanguine outlook. Indeed, at time of writing, the  announcement
of a two week ceasefire has seen a very strong rally in rates and equity markets.

 

However, despite the ceasefire, shipping traffic through the Strait of Hormuz remains constrained. Should the nascent ceasefire hold, the reality is that it is likely to
take months rather than weeks to negotiate a durable and stable peace framework. The global economy’s heavy dependence on the Strait of Hormuz arguably represents Iran’s
most significant bargaining chip, increasing the probability that shipping disruption will  persist for some time. This suggests continued volatility in energy  markets,
inflation expectations, and government bond yields, complicating policymaking for central banks - particularly in Europe, where economic growth remains anaemic and there
is less latitude for policy missteps.

 

It is also worth noting that governments have rarely operated with such  elevated deficit and debt levels. Alongside central banks, policymakers have limited fiscal  and
monetary ammunition available to contain a prolonged economic downturn should one materialise. This creates a high stakes environment that hinges on a swift and credible
resolution to the conflict. To date, equity and credit markets appear to have  priced in only a brief disruption, leaving them particularly exposed to a more  protracted
scenario that could result in a pronounced stagflationary shock. The potential for a global energy emergency-and its associated second and third order effects, including
policy pivots, demand destruction, forced efficiency, and capital reallocation, cannot be ignored. Indeed, European Central Bank President Christine Lagarde has  already
warned that markets may be underestimating the economic fallout from the ongoing Middle East conflict.

 

Paradoxically, despite the heightened macroeconomic  uncertainty and increased geopolitical risk,  credit spreads remain anchored and  continue to appear expensive  when
viewed through a historical lens.  As a result, investors  are not being adequately  compensated for the breadth of  short and medium term  risks, nor for the  plausible
scenario of a sustained energy supply disruption.

 

Given the current market backdrop, we believe it  is appropriate to reiterate our investment philosophy. We  allocate capital based on our assessment of relative  value,
which is underpinned by rigorous fundamental credit research and in depth analysis from  a team of over 100 analysts. When credit appears expensive, as is currently  the
case, we position the portfolio  to be a net beneficiary  of potential credit spread widening  or market volatility by adopting  a cautious stance and enhancing  overall
credit quality. We then remain patient and disciplined, awaiting more attractive entry points to take on additional credit risk, which typically arise during periods  of
macro driven volatility when dislocations emerge between fundamentals and valuations. This approach has historically supported portfolio performance.

 

At present, we maintain a significant allocation  to AAA/AA‑rated ABS funds that are  ready to be reallocated as opportunities  arise, alongside access to a £40  million
credit facility. In our opinion, this leaves the Company well positioned to  respond should heightened volatility create opportunities to add risk and enhance  portfolio
yield.

 

MUFG Corporate Governance Limited

Company Secretary

 

21 April 2026

 

 

 

- ENDS -

 

 

The content of the  Company’s web-pages and the  content of any website  or pages which  may be accessed through  hyperlinks on the Company’s  web-pages, other than  the
content of the Update referred to above, is neither incorporated into nor forms part of the above announcement.

 

For            further             information             in            relation             to             the            Company             please             visit:
 2 https://www.mandg.com/investments/private-investor/en-gb/investing-with-mandg/investment-options/mandg-credit-income-investment-trust

 

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   ISIN:          GB00BFYYL325, GB00BFYYT831
   Category Code: MSCL
   TIDM:          MGCI
   LEI Code:      549300E9W63X1E5A3N24
   Sequence No.:  424621
   EQS News ID:   2312294


    
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