REG - NB Global Mthly Inc. - Portfolio Update
16/01/2024 15:00
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RNS Number : 8890Z NB Global Monthly Income Fund Ltd 16 January 2024
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S.
PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.
16(th) January 2024
NB Global Monthly Income Fund
Commentary & Portfolio Update
29(th) December 2023:
Key statistics
NAV (GBP) GBP 0.7656
Current Portfolio Yield* 14.62%
Number of Investments 30
Number of Issuers 25
Portfolio Assets: Applicable Ratings Time To Maturity (years) Market Value %
Private Debt 5.23 48.9
B 5.06 1.5
CCC 5.27 46.7
CC 2.49 0.1
NR 3.21 0.7
Distressed Debt 3.30 12.4
B 3.74 4.5
CCC 2.77 6.6
NR 4.51 1.3
US Loans 3.94 6.8
B 3.92 5.5
NR 4.00 1.3
EUR Loans 4.11 1.4
B 4.11 1.4
The time to maturity and market value percentage table excludes equity
holdings and cash, which represent 0.3% and 18%, respectively, of Market Value
as of 29 December 2023.
Currency Breakdown (excluding cash and FX)
USD 91%
EUR 8%
GBP 1%
Asset Type Asset Type
Secured 100% Fixed rate 12%
Unsecured 0% Floating rate 88%
Market Update
Non-investment grade credit markets finished the month of December and the
fourth quarter with strong returns driven by risk-on sentiment as markets
priced in rate cuts for 2024 despite resilient economic data. For calendar
year 2023, high yield bond and loan market returns were among the highest
since 2019. Yields declined across fixed income during the month and quarter,
primarily driven by a fall in 10-year U.S. Treasury yields. The yield on U.S.
10-Year Treasuries ended December at 3.87%, declining 36 basis points since
the end of November and 71 basis points since the end of the third quarter.
Yields on 10-year U.K. Gilts and German Bunds also declined over the month.
Broadly, non-investment grade issuer fundamentals of free cash flow, interest
coverage and leverage have remained in relatively favourable ranges with most
we believe well-positioned to navigate the current environment, but some
sectors and issuers are coming under pressure from slower growth, and secular
or idiosyncratic challenges. Also, some lower-quality issuers have been
experiencing earnings pressure recently.
In December, U.S. senior floating rate loans-measured by the Morningstar LSTA
U.S. Leveraged Loan Index (the "LLI")-returned 1.65% with the lowest rated
part of the credit spectrum outperforming as the BB, B and CCC rated segments
of the LLI returned 1.23%, 1.79% and 2.70%, respectively. The Leveraged Loans
100 Index-a measure of the largest, most liquid issuers-returned 1.97% in
December and 13.20% year to date. In 2023, CCCs and single Bs outperformed the
overall index with returns of 17.54% and 14.82%, respectively, compared to the
BB rating tier's return of 10.18%. The Morningstar European Leveraged Loan
Index ("ELLI") returned 1.21% (excluding currency) in December as CCC and BB
rated loans underperformed with returns of 0.23% and 1.13% (excluding
currency), respectively, compared to the B index with a return of 1.26%
(excluding currency). The ELLI returned 13.42% year to date (excluding
currency). The second lien loan index returned 3.42% in December and 22.74% in
2023.
The global high yield bond market finished the month, quarter and year with
strong returns. The ICE BofA Global High Yield Constrained Index returned
3.47% in December, 6.68% in the fourth quarter and 12.97% year to date. In
December, the lowest rated credit tier outperformed as the BB, B, CCC &
lower categories of the ICE BofA Global High Yield Index returned 3.22%,
3.42%, and 5.33%, respectively. Year to date, the CCC & below and B rated
credit tiers of the index outperformed with returns of 17.70% and 14.18%, as
compared to the BB rated segment of the index which returned 11.36%.
CLO debt spreads were meaningfully tighter in the quarter, as economic data
and statements from the Federal Reserve indicated a lower probability of
future rate hikes, with the market increasingly gravitating to a "soft
landing" economic scenario. Secondary non-investment grade CLO trading
volumes declined 13% quarter-over-quarter. The CLO BB index gained 7.33%
during the quarter and was up 24.52% for the full year 2023. Returns have
been driven approximately two thirds by coupon income, and one third by price
appreciation.
In our view, non-investment grade valuations are compensating investors for
the relatively benign default outlook; these instruments will continue to
provide durable income and are especially attractive compared to other fixed
income alternatives. While the economy remains resilient, slowing real demand
has helped inflation continue to move downward. The lagged effects of monetary
tightening, higher current interest rates and shifts in consumer behaviour are
likely to keep pushing inflation toward central banks' target ranges. However,
higher interest rates could put more pressure on the consumer and broader
economy. As credit dispersion has been on the rise, our analysts remain keenly
focused on the specific fundamentals of individual issuers in their coverage,
assessing the base and downside cases in the event of a soft-landing or
recession.
Asset Realisation Update
The Managed Wind-down of the Portfolio, as described in the Circular of 20th
December 2022, has been in effect since the EGM shareholder approval of 27th
January 2023. In the period between from 27th January 2023 to-date there have
been five compulsory redemptions reflecting the realisation of a total value
of £143.9 million of portfolio assets. This is approximately 79.8% of the NAV
as of 27th January 2023 which exceeds the previously stated target of having
distributed 75% of that NAV in cash by the year-end.
To access the December 2023 Factsheet, please click here
(http://www.nbgfrif.com/pindex.html) .
The Fund's website can be found at the following address: www.nbgmif.com
(http://www.nbgmif.com)
* Current Portfolio Yield is a market-value weighted average of the current
yields of the holdings in the portfolio, calculated as the coupon (base rate
plus spread) divided by current price. The calculation does not take into
account any Fund expenses or sales charges paid, which would reduce the
results. The Current Yield for the Fund will fluctuate from month to month.
The Current Yield should be regarded as an estimate of the Fund's rate of
investment income, and it may not equal the realised distribution rate for
each share class. You should consult the Fund's prospectus for additional
information about the Fund's dividends and distributions policy.
Past performance is not a reliable indicator of current or future results.
-ENDS-
For further information, please contact:
Neuberger Berman Europe Limited (Manager) +44 (0) 20 3214 9078
Elizabeth Papadopoulos
Numis Securities Limited (Broker) +44 (0) 20 7260 1000
Hugh Jonathan
Matt Goss
Sanne Fund Services (Guernsey) Limited (Company Secretary)
Matt Falla +44 (0) 20 3530 3600
Gemma Berry
Background Information
Neuberger Berman, founded in 1939, is a private, independent, employee-owned
investment manager. The firm manages a range of strategies-including equity,
fixed income, quantitative and multi-asset class, private equity, real estate
and hedge funds-on behalf of institutions, advisors and individual investors
globally. Neuberger Berman's investment philosophy is founded on active
management, engaged ownership and fundamental research, including
industry-leading research into material environmental, social and governance
factors. Neuberger Berman is a PRI Leader, a designation awarded to fewer than
1% of investment firms. With offices in 26 countries, the firm's diverse team
has over 2,800 professionals. For nine consecutive years, Neuberger Berman has
been named first or second in Pensions & Investments Best Places to Work
in Money Management survey (among those with 1,000 employees or more).
The firm manages $463 billion in client assets as of December 31, 2023. For
more information, please visit our website at www.nb.com (http://www.nb.com/)
.
The Company is a registered closed-ended investment company incorporated in
Guernsey. It is managed by Neuberger Berman Europe Limited, which has
delegated certain of its responsibilities and functions to the AIFM, Neuberger
Berman Investment Advisers LLC, both of which are indirect wholly owned
subsidiaries of Neuberger Berman Group LLC.
RISK CONSIDERATIONS
Market Risk: The risk of a change in the value of a position as a result of
underlying market factors, including among other things, the overall
performance of companies and the market perception of the global economy.
Risks associated with Managed Wind-Down: The Portfolio will be reduced and
concentrated in fewer less liquid holdings. The Company might experience
increased volatility in its Net Asset Value and/or its Share price as a result
of changes to the Portfolio Structure.
Liquidity Risk: The risk that the fund may be unable to sell an investment
readily at its fair market value.
Credit Risk: The risk that bond issuers may fail to meet their interest
repayments, or repay debt, resulting in temporary or permanent losses to the
Fund.
Interest Rate Risk: The risk of interest rate movements affecting the value of
fixed-rate bonds.
Counterparty Risk: The risk that a counterparty will not fulfil its payment
obligation for a trade, contract or other transaction, on the due date.
Counterparty Risk: The risk that a counterparty will not fulfil its payment
obligation for a trade, contract or other transaction, on the due date.
Operational Risk: The risk of direct or indirect loss resulting from
inadequate or failed processes, people and systems including those relating to
the safekeeping of assets or from external events.
Derivatives Risk: The Fund is permitted to use certain types of financial
derivative instruments ("FDI") (including certain complex instruments) which
can give rise to particular risks, including market risk, liquidity risk and
counterparty credit risk. This may increase the Fund's leverage significantly
which may cause large variations in the value of your share.
Currency Risk: Investors who subscribe in a currency other than the base
currency of the Fund are exposed to currency risk. Fluctuations in exchange
rates may affect the return on investment.
The past performance shown is based on the share class to which this factsheet
relates. If the currency of this share class is different from your local
currency, then you should be aware that due to exchange rate fluctuations the
performance shown may increase or decrease if converted into your local
currency.
IMPORTANT INFORMATION
Source of all data and charts (unless stated otherwise): Neuberger Berman
Europe Limited, Bloomberg and Blackrock Aladdin.
This document has been issued by NB Global Monthly Income Fund Limited (the
"Company"), and should not be taken as an offer, invitation or inducement to
engage in any investment activity and is solely for the purpose of providing
information about the Company. This document does not constitute or form part
of, and should not be construed as, any offer for sale or subscription of, or
solicitation of any offer to buy or subscribe for, any share in the Company or
securities in any other entity, in any jurisdiction. This product is only
suitable for institutional, professional and professionally advised retail
investors, private client fund managers and brokers who are capable of
evaluating the merits and risks of the product and who plan to stay invested
until the end of the recommended holding period and can bear loss of capital.
An investor with reasonable knowledge of loans and alternative credit would
need to be assessed by the advisor or distributor to establish suitability for
this product.
Full product details, including a Key Information Document, are available on
our website at www.nbgmif.com (https://www.nbgmif.com/) .
Due to the inherent risk of investment in the debt market particularly related
to alternative credit, it is expected that a qualified investor would be able
to understand the risks in such security types and the potential impact of
investing in the product. This product is designed to form part of a portfolio
of investments.
The Company is a closed-ended investment company incorporated and registered
in Guernsey and is governed under the provisions of the Companies (Guernsey)
Law, 2008 (as amended), and the Registered Collective Investment Scheme Rules
2008 issued by the Guernsey Financial Services Commission ("GFSC"). It is a
non-cellular company limited by shares and has been declared by the GFSC to be
a registered closed-ended collective investment scheme. The Company's shares
are admitted to the Official List of the UK Listing Authority with a premium
listing and are admitted to trading on the Premium Segment of the London Stock
Exchange's Main Market for listed securities.
Neuberger Berman Europe Limited is authorised and regulated by the Financial
Conduct Authority and is registered in England and Wales, at The Zig Zag
Building, 70 Victoria Street, London, SW1E 6SQ.
This document is presented solely for information purposes and nothing herein
constitutes investment, legal, accounting or tax advice, or a recommendation
to buy, sell or hold a security. We do not represent that this information,
including any third-party information, is complete and it should not be relied
upon as such. Any views or opinions expressed may not reflect those of the
Company as a whole. All information is current as of the date of this material
and is subject to change without notice. No part of this document may be
reproduced in any manner without prior written permission of the Company.
An investment in the Company involves risks, with the potential for above
average risk, and is only suitable for people who are in a position to take
such risks. No recommendation or advice is being given as to whether any
investment or strategy is suitable for a particular investor. Each recipient
of this document should make such investigations as it deems necessary to
arrive at an independent evaluation of any investment, and should consult its
own legal counsel and financial, actuarial, accounting, regulatory and tax
advisers to evaluate any such investment. It should not be assumed that any
investments in securities, companies, sectors or markets identified and
described were or will be profitable. Investment in the Company should not
constitute a substantial proportion of an investor's portfolio and may not be
appropriate for all investors. Diversification and asset class allocation do
not guarantee profit or protect against loss.
Past performance is not a reliable indicator of current or future results. The
value of investments may go down as well as up and investors may not get back
any of the amount invested. The performance data does not take account of the
commissions and costs incurred on the issue and redemption of units.
The value of investments designated in another currency may rise and fall due
to exchange rate fluctuations in respect of the relevant currencies. Adverse
movements in currency exchange rates can result in a decrease in return and a
loss of capital.
Tax treatment depends on the individual circumstances of each investor and may
be subject to change, investors are therefore recommended to seek independent
tax advice.
This document, and the information contained therein, is not for viewing,
release, distribution or publication in or into the United States, Canada,
Japan, South Africa or any other jurisdiction where applicable laws prohibit
its release, distribution or publication, and will not be made available to
any national, resident or citizen of the United States, Canada, Japan or South
Africa. The distribution of this document in other jurisdictions may be
restricted by law and persons into whose possession this document comes must
inform themselves about, and observe, any such restrictions. Any failure to
comply with the restrictions may constitute a violation of the federal
securities law of the United States and the laws of other jurisdictions.
The Company's shares have not been and will not be registered under the US
Securities Act of 1933, as amended (the "Securities Act"), or with any
securities regulatory authority of any state or other jurisdiction of the
United States. The shares may not be offered, sold, resold, pledged,
delivered, distributed or otherwise transferred, directly or indirectly, into
or within the United States, or to, or for the account or benefit of, US
persons (as defined in Regulation S under the Securities Act). No public
offering of the shares is being made in the United States.
The Company has not been and will not be registered under the US Investment
Company Act of 1940, as amended (the "Investment Company Act") and, as such,
holders of the shares will not be entitled to the benefits of the Investment
Company Act. No offer, sale, resale, pledge, delivery, distribution or
transfer of the shares may be made except under circumstances that will not
result in the Company being required to register as an investment company
under the Investment Company Act. In addition, the shares are subject to
restrictions on transferability and resale in certain jurisdictions and may
not be transferred or resold except as permitted under applicable securities
laws and regulations. Any failure to comply with these restrictions may
constitute a violation of the securities laws of any such jurisdictions.
The "Neuberger Berman" name and logo are registered service marks of Neuberger
Berman Group LLC.
© 2024 Neuberger Berman Group LLC. All rights reserved.
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