Net Asset Value as at 31 May 2023
Volta Finance Limited
(VTA / VTAS)
– May
2023
monthly report
NOT FOR RELEASE, DISTRIBUTION,
OR PUBLICATION, IN WHOLE OR PART, IN OR INTO THE UNITED
STATES
***** Guernsey, 13 June 2023
AXA IM has published the Volta Finance Limited
(the “Company” or “Volta Finance” or “Volta”) monthly report for
May 2023. The full report is attached to this release and will be
available on Volta’s website shortly (www.voltafinance.com).
PERFORMANCE and
PORTFOLIO ACTIVITY
The performance of Volta Finance for the month
of May was +1.88%. This strong performance does find its roots in
the strong carry of the CLO asset class indeed, but it is above all
the testimony that CLOs successfully managed to withstand the
volatility induced by the recent troubles of the banking sector. On
a year-to-date basis, Volta’s performance reached +11.0% which we
believe is a very decent start for the year.
Volta’s underlying sub asset classes monthly
performances** were as follows: -2.5% for Bank Balance Sheet
transactions, +1.6% for CLO Equity tranches, +0.8% for CLO Debt
tranches and -8.5% for Cash Corporate Credit and ABS (which
represent slightly less than 2.0% of the fund’s NAV). Unlike the
last couple of months, being long USD against Euro was the right
positioning and it contributed to circa 1% of the monthly
performance.
The fund’s performance is mainly driven by the
solid cash flows paid by Volta’s assets on a quarterly basis. May
is usually a relatively quiet month in terms of payments as only
€2.4m equivalent were collected although on a rolling-6-month basis
Volta received the equivalent of €23.7m, ie. a 20.4% annualized
cash flow to NAV.
The high pace at which interest rates hiked
through the last 12 months generated some volatility regarding CLO
Equity cash flows, especially for USD CLO during Q4 2022. Since
rates are expected to stabilize, we believe cash flows should
remain at a relative high level and eventually set a new record for
Volta in the coming quarters.
These high cash flows are the consequences of
our executive decision to increase our allocation to CLO Equity a
few years ago as the cost of leverage was low. They are also a
consequence of the current financial context as Loans trade at
discount since the Ukrainian invasion and the start of the rapid
rates-hike cycle. For instance, new loans have been issued sub-par
with higher spreads while the pace of defaults remained relatively
modest. As a result, CLOs fundamentals did not materially
deteriorate, subordination levels were maintained (default costs
being offset by the benefits of buying discounted Loans) and CLO
equity benefited from a modest uptick in WAS (Weighted Average
Spread of the underlying loan pools). We believe that those factors
combined with higher interest rates may produce higher cashflow
generations in the coming quarters.
Regarding default rates, our central prediction
for 2023 is to close the year with higher but manageable default
rates. They were at 0.6% in Europe and 1.6% in the US as of the end
of May and we expect them to trend in the 1-1.5% context for Europe
and 2-2.5% for the US. Such levels should not create any issue
regarding CLO Equity quarterly payments (no interruption/diversion
of payments in 2023 and most probably none in 2024 as well).
As at the end of May 2023, Volta’s NAV was
€232.0m or €6.34 per share.
*It should be noted that approximately 6.31% of
Volta’s GAV comprises investments for which the relevant NAVs as at
the month-end date are normally available only after Volta’s NAV
has already been published. Volta’s policy is to publish its NAV on
as timely a basis as possible to provide shareholders with Volta’s
appropriately up-to-date NAV information. Consequently, such
investments are valued using the most recently available NAV for
each fund or quoted price for such subordinated notes. The most
recently available fund NAV or quoted price was 6.31% as at 31
March 2023.
** “performances” of asset classes are
calculated as the Dietz-performance of the assets in each bucket,
taking into account the Mark-to-Market of the assets at period
ends, payments received from the assets over the period, and
ignoring changes in cross-currency rates. Nevertheless, some
residual currency effects could impact the aggregate value of the
portfolio when aggregating each bucket.
CONTACTS
For the Investment ManagerAXA
Investment Managers ParisSerge Demayserge.demay@axa-im.com+33 (0) 1
44 45 84 47
Company Secretary and
AdministratorBNP Paribas S.A, Guernsey
Branchguernsey.bp2s.volta.cosec@bnpparibas.com +44 (0) 1481
750 853
Corporate BrokerCenkos Securities plcAndrew
WorneDaniel Balabanoff+44 (0) 20 7397 8900
***** ABOUT VOLTA FINANCE
LIMITED
Volta Finance Limited is incorporated in
Guernsey under The Companies (Guernsey) Law, 2008 (as amended) and
listed on Euronext Amsterdam and the London Stock Exchange's Main
Market for listed securities. Volta’s home member state for the
purposes of the EU Transparency Directive is the Netherlands. As
such, Volta is subject to regulation and supervision by the AFM,
being the regulator for financial markets in the Netherlands.
Volta’s Investment objectives are to preserve
its capital across the credit cycle and to provide a stable stream
of income to its Shareholders through dividends that it expects to
distribute on a quarterly basis. The Company currently seeks to
achieve its investment objectives by pursuing exposure
predominantly to CLO’s and similar asset classes. A more
diversified investment strategy across structured finance assets
may be pursued opportunistically. The Company has appointed AXA
Investment Managers Paris an investment management company with a
division specialised in structured credit, for the investment
management of all its assets.
*****
ABOUT AXA INVESTMENT
MANAGERSAXA Investment Managers (AXA IM) is a multi-expert
asset management company within the AXA Group, a global leader in
financial protection and wealth management. AXA IM is one of the
largest European-based asset managers with 2,623 professionals and
€817 billion in assets under management as of the end of September
2022.
*****
This press release is published by AXA
Investment Managers Paris (“AXA IM”), in its capacity as
alternative investment fund manager (within the meaning of
Directive 2011/61/EU, the “AIFM Directive”) of Volta Finance
Limited (the "Volta Finance") whose portfolio is managed by AXA
IM.
This press release is for information
only and does not constitute an invitation or inducement to acquire
shares in Volta Finance. Its circulation may be prohibited in
certain jurisdictions and no recipient may circulate copies of this
document in breach of such limitations or restrictions. This
document is not an offer for sale of the securities referred to
herein in the United States or to persons who are “U.S. persons”
for purposes of Regulation S under the U.S. Securities Act of 1933,
as amended (the “Securities Act”), or otherwise in circumstances
where such offer would be
restricted by applicable law. Such
securities may not be sold in the United States absent registration
or an exemption from registration from the Securities Act.
Volta Finance does not intend to register
any portion of the offer of such securities in the United States or
to conduct a public offering of such securities in the United
States.
*****
This communication is only being
distributed to and is only directed at (i) persons who are outside
the United Kingdom or (ii) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (iii) high net
worth companies, and other persons to whom it may lawfully
be communicated, falling within Article 49(2)(a)
to (d) of the Order (all such persons together being referred to as
“relevant persons”). The securities referred to herein are only
available to, and any invitation, offer or agreement to subscribe,
purchase or otherwise acquire such securities will be engaged in
only with, relevant persons. Any person who is not a relevant
person should not act or rely on this document or any of its
contents. Past performance cannot be relied on as a guide to future
performance.
*****This press release
contains statements that are, or may deemed to be, "forward-looking
statements". These forward-looking statements can be
identified by the use of
forward-looking terminology, including the terms
"believes", "anticipated", "expects", "intends", "is/are expected",
"may", "will" or "should". They include the statements regarding
the level of the dividend, the current market context and its
impact on the long-term return of Volta
Finance's investments. By their nature,
forward-looking statements involve risks and uncertainties and
readers are cautioned that any such forward-looking statements are
not guarantees of future performance. Volta Finance's actual
results, portfolio composition and performance may differ
materially from the impression created by the forward-looking
statements. AXA IM does not
undertake any obligation to publicly update or revise
forward-looking statements.
Any target information is based on
certain assumptions as to future events which may not prove to
be realised. Due to the
uncertainty surrounding these future events, the targets are not
intended to be and should not be regarded as profits or earnings or
any other type of forecasts. There can be no assurance that any of
these targets will be achieved. In addition, no assurance can be
given that the investment objective will be achieved.
The figures provided that relate to past
months or years and past performance cannot be relied on as a guide
to future performance or construed as a reliable indicator as to
future performance. Throughout this review, the citation of
specific trades or strategies is intended to illustrate some of the
investment methodologies and philosophies of Volta Finance, as
implemented by AXA IM. The historical success or AXA IM’s belief in
the future success, of any of these trades or strategies is not
indicative of, and has no bearing on, future results.
The valuation of financial assets can
vary significantly from the prices that the AXA IM could obtain if
it sought to liquidate the positions on behalf of the Volta Finance
due to market conditions and general economic environment. Such
valuations do not constitute a fairness or similar opinion and
should not be regarded as such.
Editor: AXA INVESTMENT MANAGERS PARIS, a
company incorporated under the laws of France, having its
registered office located at Tour
Majunga, 6, Place de la
Pyramide - 92800
Puteaux. AXA IMP is authorized by
the Autorité des
Marchés Financiers under
registration number GP92008 as an alternative investment fund
manager within the meaning of the AIFM Directive.
*****
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