TIDMNBMI
RNS Number : 6336L
NB Global Monthly Income Fund Ltd
14 September 2021
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR
INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES,
AUSTRALIA, CANADA OR JAPAN.
14(th) September 2021
NB Global Monthly Income Fund*
Monthly Commentary & Portfolio Update
31(st) August 2021
Key statistics
NAV (GBP) GBP 0.9520
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Current Portfolio Yield** 6.08%
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Number of Investments 310
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Number of Issuers 212
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Asset allocation:
Global High Yield: 30.12%
Global Floating Rate
Loans: 38.82%
Total Traditional Credit: 68.94%
----------------------------- -------
Private Debt: 17.03%
CLO Mezzanine Debt: 9.53%
Special Situations: 4.50%
Total Alternative Credit: 31.06%
----------------------------- -------
Credit rating breakdown: as at 31st August (excluding cash), the
portfolio was invested primarily in B (48.29%) and BBB/BB (15.83%)
rated investments (1)
Market Update
Non-investment grade credit finished the month of August in
positive territory after a modestly weaker July even as concerns
over the resurgence of COVID and its impact on global economic
activity spurred a mild risk-off sentiment in the first part of the
month. Senior floating rate loans saw strong demand overall,
especially in light of rising inflation, central bank taper
expectations, reduced supply relative to July, and positive issuer
fundamentals which overcame the concerns around the spread of the
Delta variant. Also, the final several trading days saw yields on
global high yield corporates decline and spreads tighten as
late-summer supply ceased and prior concerns around the spread of
the Delta variant and central bank tapering were put to the side.
Second quarter earnings continued to come in well above
expectations for issuers across non-investment grade corporate
credit and a very strong U.S. payroll report (+943K in July) also
provided some fuel for the risk-on sentiment over the remainder of
the month.
In the month of August, U.S. senior floating rate loans, as
measured by the S&P/LSTA Leveraged Loan Index (the "S&P
LLI"), returned 0.47% with lower rated tiers outperforming the
index as BB, B and CCC rated issuers returned 0.41%, 0.45% and
0.95%, respectively. The LL100, a measure of the largest, most
liquid issuers, returned 0.59% which also outperformed the total
S&P LLI. Year to date, the S&P LLI has provided a return of
3.76%. The European Leveraged Loan Index (the "ELLI") returned
0.51% in August and 3.63% year to date, excluding currency effects.
The Second Lien Loans index was up 0.72% in the month and 10.54%
year to date.
The global high yield bond market also posted positive returns
in August even as global high yield primary market activity was
robust despite the stalled activity ahead of the late-summer
holidays. The ICE BofA Global High Yield Constrained Index was up
0.69% in August and returned 3.83% year to date. Returns across
rating tiers in August reversed prior trends with higher quality
and non-distressed issuers underperforming the lower quality and
distressed. In the month of August, the BB, B, CCC & lower
rated categories of the ICE BofA Global High Yield Index returned
0.61%, 0,80%, and 0.91%, respectively. Additionally, the ICE BofA
U.S. High Yield Non-Distressed Index returned 0.52%,
underperforming the overall index while the ICE BofA U.S. High
Yield Distressed Index returned 2.05%, significantly outperforming
the ICE BofA U.S. High Yield Constrained Index.
CLO debt trading levels were roughly flat in August, as the
market continued to focus on absorbing the continued significant
primary market activity. Fundamentally, the asset class has
benefitted from the potential of higher near-term rates and strong
underlying fundamental performance as well as continued attractive
relative value vs. other fixed income assets. The CLO BB Index
gained 0.78% over the month and 9.18% year to date.
The pace of defaults and default expectations continued to
decline in both U.S. and European non-investment grade credit
markets, which is consistent with improving fundamentals.
Non-investment grade credit, especially given its lower duration
profile and attractive yields relative to other fixed income, will
likely continue to see favourable investor demand, especially given
that 65% of the global bond market still yields less than 1%.
Non-investment grade credit yields are compensating investors
for the increasingly benign default outlook, will continue to
provide durable income and are especially attractive compared to
other fixed income alternatives. The economic recovery remains
intact despite the risks from COVID, and we would expect the
trajectory of growth and pricing power to be supportive of issuer
fundamentals. Progress on the rate of vaccinations, combined with
pent-up demand, strong consumer balance sheets, businesses working
to rebuild inventories and rehire plus still accommodative central
banks should continue to support economic activity going forward.
Our global research team continues to monitor the investment thesis
for each issuer in the portfolio given the uncertainty around the
Delta variant and its impact on supply chains and demand in certain
consumer-facing sectors such as travel, lodging, leisure and
entertainment. While the new Delta variant of COVID continues to be
a problem and could result in pockets of short-term volatility, we
believe our bottom-up, fundamental credit research process focused
on security selection while seeking to avoid credit deterioration
and putting only our "best ideas" into portfolios, position us well
to take advantage of any volatility.
Portfolio Positioning
The overall Fund exposure to floating rate assets is at 68%
leading to an average duration of 1.14 years. Floating Rate Loans
remain the biggest allocation at 38.8%, slightly higher month on
month as the team participated in primary. In August, allocations
to both Private Debt and Special Situations increased whilst the
exposure to Global High Yield fell. Our current allocation to
BBB/BB rated credits ended the month at 15.8% whilst our exposure
to CCC and below rated names finished the month at 30.8%, slightly
higher month on month. The new issue markets were quieter in August
in Europe although busier than expected in the US, where the
portfolio participated in several deals.
Recent Investments
An allocation to the 2nd lien term loan of Kenan Advantage was
added in August. We have a favourable view of Kenan's position in
the bulk liquid transportation market with long-standing customer
relationships utilizing exclusive contracts covering liquid
transportation to essential North American infrastructure and
manufacturing operations. Kenan takes no commodity or fuel risk.
The current management team has successfully grown Kenan via cash
flow. We are comfortable with this strategy given the success of
management executing on these bolt-on M&A given the highly
fragmented industry. We expect Kenan to continue to pursue bolt-on
acquisitions with excess opportunities.
The fund also invested in 2nd lien term loans from Teaching
Strategies, a provider of curriculum, assessment and family
engagement software and services to Early Childhood markets.
Despite its small scale the company has a strong penetration in
curriculum and assessment with over 30% market share in public
pre-school markets. The company benefits from a heavy exposure to
federal and state funding (83% of bookings), which has been
steadily growing over the past decade. The Group is also undergoing
a rapid shift from print to digital curriculum, and we expect a
significant uplift from increased digital adoption, resulting in
low-teens revenue growth, while print and professional services
(which management views as re-occurring) grow at a slower pace.
To access the August 2021 Factsheet, please click here
http://www.rns-pdf.londonstockexchange.com/rns/6336L_1-2021-9-13.pdf
.
The Fund's website can be found at the following address:
www.nbgmif.com
1. Source: Standard & Poor's
* Effective 9 September 2020, the fund has changed its
investment policy and name to NB Global Monthly Income
Fund Limited. For more information, please refer to here.
** The Fund's 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 fees, 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 realized
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 no
guarantee of future results.
-S-
For further information, please contact:
Neuberger Berman Europe Limited (Manager)
Elizabeth Papadopoulos +44 (0) 20 3214 9078
Numis Securities Limited (Broker)
Hugh Jonathan
Matt Goss +44 (0) 20 7260 1000
Praxis Fund Services Limited (Company Secretary)
Matt Falla
Gemma Woods +44 (0) 1481 737 600
KL Communications (PR)
Charles Gorman
Will Sanderson +44 (0) 20 7995 6673
Background Information
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.
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.
With offices in 25 countries, Neuberger Berman's diverse team has
over 2,300 professionals.
For seven consecutive years, the company 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). In
2020, the PRI named Neuberger Berman a Leader, a designation
awarded to fewer than 1% of investment firms for excellence in
Environmental, Social and Governance (ESG) practices. The PRI also
awarded Neuberger Berman an A+ in every eligible category for our
approach to ESG integration across asset classes. The firm manages
$402 billion in client assets as of March 31, 2021. For more
information, please visit our website at www.nb.com .
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.
Liquidity Risk: The risk that the Fund may be unable to sell an
investment readily at its fair market value. In extreme market
conditions this can affect the Fund's ability to meet redemption
requests upon demand.
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
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.
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 ("NBEL"), the Company's Manager,
is authorised and regulated by the Financial Conduct Authority
("FCA") and is registered in England and Wales, at The Zig Zag
Building, 70 Victoria Street, London, SW1E 6SQ and is also a
Registered Investment Adviser with the Securities and Exchange
Commission ("SEC") in the U.S. and regulated by the Dubai Financial
Services Authority.
This document is addressed to professional clients only.
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 or NBEL 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 and NBEL.
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.
(c) 2021 Neuberger Berman Group LLC. All rights reserved.
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END
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