24 September 2024
CQS New
City High Yield Fund Limited
("NCYF" or the "Company")
Monthly
Fact Sheet as at 31 August 2024
The Company's Fact Sheet as at 31
August 2024 has been submitted and is available for inspection on
the Company's website, https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/.
The investment manager updates on
the wider macro-economic environment and on key changes to the
portfolio positions as at 31 August 2024.
Ian 'Franco' Francis, Investment
Manager at New City High Yield Fund comments:
Economic data in the UK showed signs
of growth, lower inflation and improved job prospects at the
forefront. This was referenced as "in the rear-view mirror" at the
Number 10 garden speech, where the Prime Minister discussed the
coming Autumn Budget set for 30th October. He talked
about the possible capital gains tax rises, inheritance tax changes
and alterations to pension tax allowances within the private
sector. This may have a negative sentiment on investments and money
entering the UK's savings sector.
While unfunded public sector
pensions look to remain untouched, we may reach a worrying point
for the UK deficit in the not-too-distant future. According to
the Office of National Statistics, 18.1% of the workforce is
currently in the public sector, with the latest Office of Budget
Responsibility forecasting that the net extra cost of funding it
will be £7.9bn this year - a total cost of £53.1bn after £45.3bn in
contributions. As an example, the UK's National Health Service
(NHS) contributes 23.7% of a member's salary and the member
contributes between 5.2% and 12.5%. One can compare this to the
private sector where employers are likely to pay 10% or less into a
defined contributions scheme, which has become the more common
private scheme since the mid-1990s. This may need addressing as the
economy is unlikely to afford unfunded final salary pensions. The
Autumn Budget is potentially the most important one for UK
individuals and companies since the Thatcher era, though we believe
is unlikely to be as positive for the economy.
European data was skewed by the
Paris Olympics, with the HCOB Flash Eurozone Services Activity
index at 53.3, up from 51.9 in July. German
manufacturing remained in recession with no sign of recovery on the
horizon; a slump that started in mid-2022 and even the hope of
short-term interest rate cuts does not seem to have affected future
sentiment. Meanwhile, the Olympic games had a hugely positive
effect on the French Services sector, with the activity
index at 55.0 up from 50.1 in July. This may be sustained for
another month with the Paralympics in early September but should
normalise downwards after.
US economic growth looks positive,
with strength mostly in the service sector, although it does have
problems hiring enough staff, adding to wage inflation further
whilst manufacturing remains in the doldrums. We believe this
imbalance is the main risk to the US economy and there is danger of
it slowing. With the TV debate between Kamala Harris and Donald
Trump imminent, we will see how the Presidential election is
panning out.
It has been a busy month for the
company, with Transocean 11.5% called on the last day of July.
Mangrove Luxco 7.775% 2025 and Bidco Relyon Nutec 11.42% 2026 were
also called, while Stonegate 8% and 8.25% refinanced. In equities,
we reduced our holdings in Diversified Energy and Frontline Ltd
early in the month. We reallocated our funds into Tullow Oil
10.25% 2026, Aston Martin Capital 10.375% 2029, Bluewater
Holding Bv 12% 2026, Stonegate 10.75% 2029 Bellis Acquisition
8.125% 2030 (Asda), Lifefitgroup 10.53% 2029, 3tGlobal 11.25%
2028 and Cruise Yacht 11.875% 2028. It was certainly busier
than a normal August, but necessary when some of the company's
major holdings were refinanced or called away from
us.
-ENDS-
For
Further Information
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CQS
New City High Yield Fund Limited
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T: +44 (0) 20 7201 6900
E: contactncim@cqsm.com
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Singer Capital Markets
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T: +44 (0) 20 7496 3000
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Cardew Group
Tania Wild
Henry Crane
Liam Kline
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T: +44 (0) 20 7930 0777
M: +44 (0) 7425 536 903
M: +44 (0) 7918 207 157
M :+44 (0) 7827
130429
E: ncyf@cardewgroup.com
https://www.cardewgroup.com/
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Company Secretary and Administrator
BNP Paribas S.A., Jersey
Branch
Edward Kazibwe
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T: 01534 813 913
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About CQS New City High Yield Fund
Limited
CQS New City High Yield Fund Limited
aims to provide investors with a high dividend yield and the
potential for capital growth by investing in high-yielding, fixed
interest securities. These include, but are not limited to,
preference shares, loan stocks, corporate bonds (convertible and/or
redeemable) and government stocks. The Company also invests in
equities and other income-yielding securities.
Since the Fund's launch in 2007, the
Board has increased the level of dividends paid every year. As at
31 December 2023, the Fund's dividend yield is 9.13%. In addition
to quarterly dividend payments, the Fund seeks to deliver investors
access to a high-income asset class across a well-diversified
portfolio with low duration to help mitigate interest rate
risk.
Further information can be found on
the Company's
website at https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/