TIDMBGLF
RNS Number : 6421M
Blackstone Loan Financing Limited
22 September 2021
22 SEPTEMBER 2021
FOR IMMEDIATE RELEASE
RELEASED BY BNP PARIBAS SECURITIES SERVICES S.C.A., JERSEY
BRANCH INTERIM RESULTS ANNOUNCEMENT
THE BOARD OF DIRECTORS OF BLACKSTONE LOAN FINANCING LIMITED
ANNOUNCE INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Blackstone Loan Financing Limited (formerly Blackstone / GSO
Loan Financing Limited)
(the "Company" or "BGLF")
Half Yearly Financial Report for the six months ended 30 June
2021
A Note from our Chair
During the first half of 2021, the Company's performance
continued to be positively impacted by reduced actual and expected
investment downgrade and default expectations. The Company's return
was also supported, through its investment in BCF, by the ability
to take advantage of the technical strength in the CLO liability
market to refinance and reset existing CLO investments.
As a result, the Company delivered a published NAV total return
per Ordinary Share of 10.59% for the six month period ended 30 June
2021 and ended the period with a published NAV per share of
EUR0.8875.
The Board's outlook for the remainder of 2021 is optimistic but
remains uncertain as the race between COVID-19 inoculations and the
spread of the Delta variant of the virus is at a key juncture. With
this uncertain trajectory of the markets and global economy in the
second half of 2021, the Board gains comfort from the disciplined
investment approach of the Company's Portfolio Adviser that selects
an underlying portfolio of high-quality companies supported by
robust underlying protections.
Charlotte Valeur
Chair
21 September 2021
Strategic Report
Strategic Report
Key Performance Indicators(1)
IFRS NAV Published NAV
NAV (1) EUR0.8945 EUR0.8875
(31 Dec 2020: EUR0.8557) (31 Dec 2020: EUR0.8435)
NAV total return 9.89% 10.59%
(1)
(31 Dec 2020: 8.85%) (31 Dec 2020: (0.22)%)
Discount (1) (11.68)% (10.99)%
(31 Dec 2020: (21.70)%) (31 Dec 2020: (20.57)%)
Dividend EUR0.035 EUR0.035
(30 Jun 2020: EUR0.030) (30 Jun 2020: EUR0.030)
Further information on the reconciliation between the IFRS NAVs
and the Published NAVs can be found below.
Performance
Ticker IFRS NAV Published Share Discount Discount Dividend
per Share NAV per Price(2) IFRS NAV Published Yield
Share NAV (1)
-------- ----------- ---------- ---------- ---------- ----------- ----------
BGLF
30 Jun
2021 EUR0.8945 EUR0.8875 EUR0.7900 (11.68)% (10.99)% 9.49%
31 Dec
2020 EUR0.8557 EUR0.8435 EUR0.6700 (21.70)% (20.57)% 10.45%(3)
-------- ----------- ---------- ---------- ---------- ----------- ----------
BGLP
30 Jun
2021 GBP0.7667 GBP0.7608 GBP0.6900 (10.00)% (9.31)% 9.32%
31 Dec
2020 GBP0.7647 GBP0.7538 GBP0.6000 (21.54)% (20.40)% 10.47%(3)
-------- ----------- ---------- ---------- ---------- ----------- ----------
LTM 3-Year Annualised Cumulative
Return(1) Annualised Since Inception Since Inception
--------------------- ----------- ------------ ----------------- -----------------
BGLF IFRS NAV 35.41 10.37 7.71 67.49
BGLF Published NAV 18.31 10.06 7.58 66.12
BGLF Ordinary Share
Price 31.16 7.81 6.59 55.73
European Loans 9.52 3.31 3.39 26.06
US Loans 11.67 4.36 4.07 31.09
--------------------- ----------- ------------ ----------------- -----------------
Reconciliation of IFRS NAV to Published NAV
At 30 June 2021, there was a difference between the NAV per
Ordinary Share as disclosed in the Condensed Statement of Financial
Position below, EUR0.8945 per Ordinary Share, ("IFRS NAV") and the
published NAV, EUR0.8875 per Ordinary Share, which was released to
the LSE on 21 July 2021 ("Published NAV"). A reconciliation is
provided in Note 14 below. The difference between the two
valuations is mainly due to the different valuation bases used.
Valuation Policy for the Published NAV
The Company publishes a NAV per Ordinary Share on a monthly
basis in accordance with its Prospectus. The valuation process in
respect of the Published NAV incorporates the valuation of the
Company's CSWs and underlying PPNs (held by the Lux Subsidiary).
These valuations are, in turn, based on the valuation of the BCF
portfolio using a CLO intrinsic calculation methodology per the
Company's Prospectus, which we refer to as a "mark to model"
approach. As documented in the Prospectus, certain "Market Colour"
(market clearing levels, market fundamentals, bids wanted in
competition ("BWIC"), broker quotes or other indications) is not
incorporated into this methodology. The Directors believe that this
valuation process is the appropriate way of valuing the Company's
holdings, and of tracking the long-term performance of the Company
as the underlying portfolio of CLOs held by BCF are comparable to
held to maturity instruments and the Company expects to receive the
benefit of the underlying cash-flows over the CLOs' entire life
cycle.
Valuation Policy for the IFRS NAV
For financial reporting purposes on an annual and semi-annual
basis, to comply with IFRS as adopted by the EU, the valuation of
BCF's portfolio is at fair value using models that incorporate
Market Colour at the period end date, which we refer to as a "mark
to market" approach. IFRS fair value is the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants as at the
measurement date, and is an "exit price" e.g. the price to sell an
asset. An exit price embodies expectations about the future cash
inflows and cash outflows associated with an asset or liability
from the perspective of a market participant. IFRS fair value is a
market-based measurement, rather than an entity-specific
measurement, and so incorporates general assumptions that market
participants are applying in pricing the asset or liability,
including assumptions about risk.
Both the mark to model Published NAV and mark to market IFRS NAV
valuation bases use modelling techniques and input from third-party
valuation specialists. The small number of CLOs held directly by
the Company, as a result of the Rollover Opportunity, are valued
using a mark to market approach for both the Published NAV and IFRS
NAV, consistent with the valuation methodology per the Company's
Prospectus.
The Directors, as set out in the Prospectus, will continue to
assess the performance of the Company using the Published NAV.
Additional information and commentary on Market Colour, credit risk
exposure and any material divergence from the different valuation
bases referred to above will be communicated by the Directors and
Portfolio Adviser if and when appropriate.
Dividend History
Whilst not forming part of the Company's investment objective or
investment policy, it is currently intended that dividends are
payable in respect of each calendar quarter, two months after the
end of that quarter.
On 22 January 2021, the Board announced that the Company had
adopted a revised Dividend Policy targeting a total 2021 annual
dividend of between EUR0.07 and EUR0.08 per ordinary share, to
consist of quarterly payments of EUR0.0175 per ordinary share for
the first three quarters and a final quarter payment of a variable
amount to be determined at that time. This revised Dividend Policy
follows the changes made to the Company's Dividend Policy in 2020,
to pay an annual dividend of between EUR0.06 and EUR0.07 per
Ordinary Share, (the Company subsequently paid an annual dividend
of EUR0.07, paying EUR0.015 for the first three quarters and
EUR0.025 for the final quarter). The changes made in 2020 were
pursuant to a review of the portfolio in light of COVID-19, and the
subsequent changes announced in January 2021 reflect an improved
outlook for both the portfolio and macro environment. These follow
careful analysis and consideration by the Board in discussion with
the Company's Investment Adviser. The Board continues to monitor
the dividend policy throughout the year.
Ordinary Share Dividends for the Period Ended 30 June 2021
Period in respect of Date Declared Ex-dividend Date Payment Date Amount per Ordinary Share
-------------------------- -------------- ----------------- ------------- -------------------------
EUR
-------------------------- -------------- ----------------- ------------- -------------------------
1 Jan 2021 to 31 Mar 2021 23 Apr 2021 6 May 2021 4 June 2021 0.0175
1 Apr 2021 to 30 Jun 2021 21 Jul 2021 5 Aug 2021 3 Sep 2021 0.0175
-------------------------- -------------- ----------------- ------------- -------------------------
Ordinary Share Dividends for the Year Ended 31 December 2020
Period in respect of Date Declared Ex-dividend Date Payment Date Amount per Ordinary Share
--------------------------- -------------- ----------------- ------------- -------------------------
EUR
--------------------------- -------------- ----------------- ------------- -------------------------
1 Jan 2020 to 31 Mar 2020 23 Apr 2020 30 Apr 2020 29 May 2020 0.0150
1 Apr 2020 to 30 Jun 2020 21 Jul 2020 30 Jul 2020 28 Aug 2020 0.0150
1 Jul 2020 to 30 Sept 2020 21 Oct 2020 29 Oct 2020 27 Nov 2020 0.0150
1 Oct 2020 to 31 Dec 2020 22 Jan 2021 4 Feb 2021 5 Mar 2021 0.0250
--------------------------- -------------- ----------------- ------------- -------------------------
Period Highs and Lows
2021 2021 2020 2020
High Low High Low
Published NAV per Ordinary Share EUR0.8875 EUR0.8477 EUR0.8992 EUR0.7663
Ordinary Share Price (last price) (4) EUR0.8000 EUR0.6400 EUR0.8400 EUR0.4500
GBP Ordinary Share Price (last price) (4) GBP0.6964 GBP0.5601 GBP0.7200 GBP0.4200
------------------------------------------ --------- --------- --------- ---------
Schedule of Investments
As at 30 June 2021
Nominal Market % of Net Asset
Holdings Value Value
EUR
----------------------------------------- ----------- ----------- --------------
Investment held in the Lux Subsidiary:
CSWs 275,438,217 403,133,917 95.93
Shares (2,000,000 Class A and 1 Class B) 2,000,001 6,419,016 1.53
CLOs held directly 6,708,541 954,927 0.23
Other Net Assets n/a 9,697,071 2.31
----------------------------------------- ----------- ----------- --------------
Net Assets Attributable to Shareholders 420,204,931 100.00
----------------------------------------- ----------- ----------- --------------
Schedule of Significant Transactions
Date of Transaction Transaction Type Quantity Amount Reason
EUR
----------------------- -------------------------- ---------- ---------- -------------------
CSWs held by the Company - Ordinary Share Class
23 Feb 2021 Redemption 10,287,510 13,903,041 To fund dividend
06 April 2021 Issuance 6,170,000 6,170,000 Investments in PPNs
05 May 2021 Issuance 3,742,949 3,742,949 Investments in PPNs
14 May 2021 Redemption 9,067,077 12,522,939 To fund dividend
(1) Refer to the Glossary below for an explanation of the terms
used above and elsewhere within this report
(2) Bloomberg closing price at period end
(3) Dividend Yield presented as EUR 0.07 per annum, given the
first three quarterly dividends of EUR 0.015 per share and fourth
quarter dividend of EUR 0.025, and the share price as at 31
December 2020
(4) Source: Bloomberg
Chair's Statement
Company Returns and Net Asset Value (5)
The Company delivered an IFRS NAV total return per Ordinary
Share of 9.89% over the first six months of 2021, ending the period
with a NAV of EUR0.8945. The return was composed of 5.02% of
dividend income and 4.87% of net asset growth.
On a Published NAV basis, the Company delivered a total return
per Ordinary Share of 10.59% over the first six months of 2021 ,
ending the period with a NAV of EUR0.8875. The return was composed
of dividend income 5.06% and of net asset growth of 5.53%.
During the first half of 2021, the Company's performance
continued to be positively impacted by reduced actual and expected
investment downgrade and default expectations. The Company's return
was also supported, through its investment in BCF, by the ability
to take advantage of the technical strength in the CLO liability
market to refinance and reset existing CLO investments.
Due to improved forward looking expectations, the Company was
pleased to announce an increase to its stated dividend target to 7
to 8 cents per share for 2021. Consistent with this revised
guidance, the Company paid two dividends to Ordinary Shareholders
in respect of the six-month period ended 30 June 2021, totalling
EUR0.0350 per share. Details of all dividend payments can be found
within the Dividend History section at the front of this Half
Yearly Financial Report.
Historical BGLF NAV and Share Price
The graph shows cumulative Published NAV and Ordinary Share
price total returns and cumulative returns on European and US
loans.
[Graphs and charts are included in the published Half Yearly
Financial Report which is available on the Company's website at
https://www.blackstone.com/fund/bglfln-blackstone-gso-loan-financing-limited/]
Market Conditions
Continuing the tone set from the end of 2020, financial markets
performed strongly in the first half of 2021. Equity markets
reached record levels and credit spreads continued to grind
tighter, on the back of a repricing wave experienced in 1H 2021.
The line--of--sight to reopening and recovery in most developed
economies is becoming clearer, giving us cause for optimism even as
we continue to closely monitor potential economic impacts of the
COVID-19 Delta variant.
Ongoing monetary and fiscal support, accommodative capital
markets, the rollout of mass vaccination programmes, and the
reopening of major economies have all supported a move towards a
normalisation in economic activity. Consequently, credit
fundamentals have continued their improvement as evidenced by a
strong 1Q 2021 reporting period, and GDP expectations for 2021 are
a stark comparison to growth in 2020. Real GDP in the UK and US is
set to grow by 6.7% and 6.6%, compared to a contraction of 10.1%
and 3.5% in 2020, respectively (6) .
At the year's mid-point, below investment grade credit is on its
way to a full year of stable returns, with US interest rates now
well below March's high and possibly poised to rise again. We
believe loans will continue to perform well against other fixed
income asset classes given their floating rate nature and our
current view on relative value and the trajectory of interest
rates. We also expect ongoing CLO creation and demand from
investors searching for higher yielding assets to contribute
positively to the balance of supply and demand and help absorb the
healthy pipeline of new loan issuance expected for the second half
of the year.
Discount Management
The share price discount to Published NAV narrowed from 20.57%
at 31 December 2020 to 10.99% at 30 June 2021. As a Board, we
regularly weigh the balance between paying dividends, reinvesting
in BCF and seeking to ensure the Ordinary Shares trade as closely
as possible to their intrinsic value(7) . During 2021 year-to-date,
the Company repurchased 9,772,007 shares for EUR7,420,732 at a
weighted average discount of 12.11% using available cash with the
goal of reducing the discount. As of 17 September 2021, the share
price discount to Published NAV was 11.65%.
Brexit Update
The Board closely monitored the Brexit trade deal negotiations
during 2020, which culminated with a deal being finalised on 30
December 2020. The potential implications to BGLF of a "hard
Brexit" as a result of no trade deal being agreed before the
year-end deadline, was evaluated across its service providers,
including areas such as human resources, counterparty
relationships, supply chains, macroeconomic, and regulatory policy,
as well as with regards to its marketing registrations, and was
deemed to have a negligible impact on the long-term sustainability
of the Company. Since the UK left the EU, no material risks have
crystallised.
COVID-19
The Directors continue to carefully monitor the ongoing
developments regarding COVID-19, which continues to impact global
commercial activity and contribute to volatility in financial
markets. The global impact of the outbreak continues to evolve as
new variants develop, however the rollout of vaccination programmes
across the globe is encouraging and economic activity has shown
signs of normalisation. Whilst COVID-19 still presents a level of
uncertainty going forward, we are more informed as to its potential
effects on portfolio asset performance and therefore feel better
equipped to navigate this environment. Nevertheless, the potential
direct and indirect risks to the Company, to the extent known, will
be closely monitored and portfolio activity conducted in a way that
is consistent with the Company's stated objectives and the
Portfolio Advisor's investment philosophy of capital
preservation.
ESG
The practice of responsible investing remains a key focus for
investors. The Board regularly engages with the Company's Portfolio
Adviser regarding their ESG policy. Blackstone has committed to
being a responsible investor for over 35 years. This commitment is
affirmed across the organisation and guides its approach to
investing. A summary of Blackstone's responsible investing approach
can be found below .
The Board
Good governance remains at the heart of our work as a Board and
is taken very seriously. We believe that the Company maintains high
standards of corporate governance. The Board was very active during
the period, convening a total of 11 Board meetings and 14 Committee
meetings (including 6 NAV Review Committee meetings). The Board
also has a due diligence meeting scheduled with the Portfolio
Adviser in September 2021, the agenda for which covers risk and
compliance, risk oversight monitoring, finance and accounting and
the wider market. The Board will also be meeting with the BCF board
at the same time.
During the period, the Board and its advisers have met
frequently, with the Company's advisers providing general updates
as well as recommendations on pertinent matters such as the
Company's share repurchase programme. The Board deems the careful
consideration of such matters to be critical to ensuring the
long-term success of the Company, particularly in light of the
challenges and uncertainty faced since the start of 2020.
The work of the Board is also assisted by the Audit Committee,
NAV Review Committee, Management Engagement Committee, the
Remuneration and Nomination Committee, the Risk Committee and the
Inside Information Committee.
The Company is a member of the Association of Investment
Companies (the "AIC") and adheres to the AIC Code of Corporate
Governance (the "AIC Code") which is endorsed by the Financial
Reporting Council (the "FRC"), and meets the Company's obligations
in relation to the UK Corporate Governance Code 2018 (the "UK
Code").
Shareholder Communications
During 1H 2021, using our Portfolio Adviser and Brokers, we
continued our programme of engagement with current and prospective
Shareholders. We sincerely hope that you found the monthly
factsheets, quarterly letters, quarterly update webcasts and market
commentary valuable. We are always pleased to have contact with
Shareholders, and we welcome any opportunity to meet with you and
obtain your feedback.
Prospects and Opportunities in 2021
The Board's outlook for the remainder of 2021 is optimistic but
remains uncertain as the race between COVID-19 inoculations and the
spread of the Delta variant of the virus is at a key juncture. The
line--of--sight to reopening and recovery in most developed
economies is becoming clearer, giving us cause for optimism even as
we continue to closely monitor potential economic impacts of the
COVID-19 Delta variant. With this uncertain trajectory of the
markets and global economy in the second half of 2021, the Board
gains comfort from the disciplined investment approach of the
Company's Portfolio Adviser that selects an underlying portfolio of
high-quality companies supported by robust underlying
protections.
The Board wishes to express its thanks for the support of the
Company's Shareholders.
Charlotte Valeur
Chair
21 September 2021
(5) Past performance is not necessarily indicative of future
results, and there can be no assurance that the Company will
achieve comparable results, will meet its target returns, achieve
its investment objectives, or be able to implement its investment
strategy.
(6) Bloomberg, as of 30/06/2021. Data for 2021 represents
consensus economic forecasts.
(7) Represents the BGLF Euro share price.
Portfolio Adviser's Review
- Loan markets continued their momentum from 2020, with
reopening themed sectors and lower rated assets leading the
outperformance. US and European loans returned 3.48% and 2.91% year
to date (8) . Corporate fundamentals are showing signs of
improvement and defaults continue to beat expectations. The
last-twelve-month ("LTM") par-weighted default rate was 1.3% and
0.5% for US and European Loans, down from 4.4% and 1.2% at the end
of 2020, respectively(9) .
- Owing to favourable conditions for CLO creation and
management, total year to date CLO activity is tracking at record
pace, with refinancings and resets accounting for the majority.
After trending towards multi-year tight spreads through 1H 2021,
CLO liability spreads retreated from their lows under the pressure
of heavy supply, however the arbitrage still remains favourable for
equity investors.
- Trading activity in the CLO portfolio activity focused on
opportunistically capturing the emerging recovery and increasing
spread to preserve net interest margins. On the liability side, BCF
took advantage of the technical strength in the CLO market to
refinance three CLOs, reset seven CLOs, and issue four new CLOs,
all whilst achieving very competitive debt pricing. Additionally,
two CLOs were redeemed.
- Similarly to the fourth quarter of 2020, BCF benefitted from
improved liquidity and equity valuations in the secondary market
and sold down certain non-retention CLO income note positions, with
executed prices that exceeded modelled marks as well as
mark-to-market prices(10).
- CLO securitisations in BCF generated positive cashflow over
2021, supported by uninterrupted distributions from the underlying
CLO portfolio. The weighted average annualised distribution rates
for European and US CLO income notes were 15.6% and 21.7%,
respectively, with strong contributions across vintages and an
additional tailwind from CLO redemptions (11) .
Bank Loan Market Overview
Leveraged loan markets started 2021 on strong footing as the
rally in risk assets continued. Markets were buoyed by the
continued global rollout of COVID-19 vaccinations, with an
additional tailwind from global monetary and fiscal stimulus
implemented in the prior year. Many market indicators pointed to a
broad-based recovery which culminated in year to date returns of
2.91% and 3.48% for European and US leverage loans, respectively,
notably surpassing the returns achieved throughout all of
2020(12).
Following the onset of the pandemic, the wave of CCC downgrades
and defaults anticipated had been avoided in a meaningful manner.
Concurrent with economic activity reverting to a more 'normalised'
state, corporate fundamentals displayed a tangible improvement
after a strong first quarter results period. Earnings for the
second quarter, whilst not yet announced, are expected to show
further improvement. Paired with slowing debt growth, we expect
that corporate issues should be well equipped to grow into their
higher levered capital structures brought forward from 2020.
The US loan last-twelve-month ("LTM") par-weighted default rate
ended June 2021 at 1.3%, down from 4.4% at the end of 2020(13).
Defaults for European Loans were lower at 0.5%, compared to 1.2% at
the end of 2020. Whilst there has not been a revision for European
Loans, J.P. Morgan lowered their US loan default expectations to
0.65% and 1.25% for the end of 2021 and 2022, respectively, just as
the ratio of upgrades to downgrades for US loans reached 2:1 at the
end of June(14).
Complementing improving corporate fundamentals was a
well-balanced technical backdrop. Contributions from both debt
refinancing and increased M&A activity led to an increased pace
of European and US loan issuance. Year-to-date gross supply was
EUR82 billion and $417 billion compared to EUR65 billion and $395
billion for the whole of 2020, respectively(15). Healthy demand for
loans has resulted in the market being well bid despite the
increased issuance, resulting in the average price for European and
US indices increasing to EUR99.10 and $97.96 from EUR98.64 and
$95.73 at the end of 2020, respectively(16). Similarly, European
and US loan spreads (represented by 3-year discount margin)
tightened by 19 bp and 43 bp over the same period to 403 bp and 443
bp, respectively(17). Record-setting Collateralised Loan Obligation
("CLO") creation(18), a search of yield in Europe, and demand for
assets with an inflation and interest rate hedge contributed to
healthy inflows, allaying concerns of oversupply.
The broader risk-on sentiment continued to drive outperformance
of CCC-rated assets and COVID-19 impacted sectors. However, as we
approached the end of June, signs of softening were starting to
emerge due to a rise in the Delta variant, stoking concerns of
another prolonged spike in COVID-19 cases across the globe, with
implications for the real economy. Looking forward to the second
half of 2021, we will continue to monitor any effects in the
markets that we invest and position our portfolio
appropriately.
CLO Market Overview
Momentum in the CLO market gathered pace through the year. CLO
liability spreads trended towards multi-year tights and increased
confidence in both underlying collateral quality and CLO structures
themselves led to a sharp increase in CLO activity. Managers aiming
to capitalise on the low cost of funding originated new CLOs, but
more noticeably, those aiming to reduce the cost of debt or lock in
longer reinvestment periods took to the market in earnest. As such,
year-to-date total CLO volumes in Europe were EUR53.5 billion,
which exceeded any full year activity ever recorded, and $220
billion in the US, which was nearly double that of 2020(19).
Re-financings and resets dominated this activity, accounting for
72% and 63% of European and US volumes. This optionality is a key
benefit for CLO equity investors who as a result would be afforded
higher expected future cashflows in aggregate and an immediate
increase in equity net asset value ("NAV") as a result.
In the first quarter, demand for CLO debt was broad based across
tranches. After the rally in risk assets pushed global credit
spreads tighter, CLO debt seemed increasingly attractive on a
relative value basis given the low yield environment. However, as
the second quarter progressed, US and European CLO liability
spreads retreated from their lows under the pressure of heavy
supply. We understand investors were full on allocations after
investing heavily earlier in the year, ultimately leading to an
upwards readjustment in CLO liability spreads as we moved towards
June. In Europe, AAA-rated CLO spreads finished at 94 bp at the end
of June after hitting lows in the high 70 bp region in March
(compared to 105 bp at the end of 2020)(20). Similarly, US CLO
AAA-rated spreads were 113 bp as of the end of June after reaching
100 bp in March 2021 (compared to 132 bp at the end of
2020)(21).
In tandem with improving collateral quality and robust loan
market performance, CLO fundamentals improved in 2021. In Europe,
CCC buckets fell from 6.4% at the end of 2020 to 5.0%, and
defaulted assets to 0% from 0.3% over the same period. There was
also an improvement in Weighted Average Rating Factor ("WARF") by
281 to 2,890 and an increase in junior overcollateralisation ("OC")
cushions by 53 bp to 401 bp during the first half. Weighted Average
Asset Price ("WAP") also increased by 1.1 to 99.0 and Weighted
Average Spreads ("WAS") decreased by 7bp to 370bp. Notably, CLO
equity market value NAVs increased by 12.6 to 63.4(22).
In the US, CCC buckets improved to 5.9% from 7.7%, defaulted
assets fell to 0% from 0.5% and WARF metrics declined by 2014.
Likewise, junior OC cushions increased by 107 bp to 384 bp over the
same period. WAP also increased by 1.4 to 98.7 and WAS decreased by
6 bp to 371 bp. CLO equity NAV also posted an impressive gain of
17.3 to 61.6(23).
As we look forward, CLO supply is expected to grow further,
albeit at a slightly slower pace experienced year to date. In
Europe, total full year CLO supply is forecast to be EUR75-EUR90
billion, an increase of 31%-57% from the midyear point(24). Total
US BSL CLO supply is expected to increase by 47-62% to $300-$330
billion over the same period, setting a full year record if
achieved(25). Although liability spreads have recently widened, our
belief is that the attractive relative value versus other fixed
income asset classes may continue to attract investors and keep a
ceiling on any material repricing. With global loan prices having
largely returned close to par, focus for equity investors has
reverted back to a natural spread arbitrage. As such, we expect
supply to continue but again with refinancing and reset activity
accounting of the majority.
Portfolio Update
BCF
Year to date trading activity continued to focus on protecting
investor capital, proactive management of credit ratings but with
flexibility for portfolio rotation to capture emerging trends. CLOs
opportunistically added names to take advantage of the 'reopening
trade' as visibility improved around the vaccine rollout and
economic reopening. As the rally continued, it was evident
valuations were becoming increasingly stretched as market
participants were discounting an overly optimist forward looking
view. As such, closer attention was paid to long-term corporate
fundamental value to assess those names in which we had longer-term
conviction. We also used the repricing wave in the first quarter to
exit lower spread risk in an effort to preserve net interest
margins. This became an ongoing theme, deploying capital in primary
and secondary markets into higher spread assets with more
compelling valuation profiles.
Consistent with the supportive conditions for CLO creation and
management noted above, BCF has been very active in both new
issuance and optimisation of its liability portfolio. Year to date,
BCF has invested in two European and two US new issue CLOs(26),
further diversifying the portfolio across both vintage and
geography.
The portfolio was well positioned at to take advantage of the
technical strength in the CLO liability market during the first six
months of 2021. BCF refinanced three CLOs and reset seven CLOs year
to date, in most cases reducing the weighted average cost of
capital and extending the duration of cashflows received in the
case of the resets, which is immediately accretive to the NAV of
these CLOs.
It is also worth noting that Blackstone Credit achieved close to
the lowest, if not the lowest, weighted average cost of capital at
the time of pricing during the first half of the year, with further
pricing differentiation between managers depending on their
perceived 'tier'(27). Blackstone Credit was the second most active
manager in the market when considering total CLO activity(28).
Compared to estimates at the initial onset of the COVID-19
pandemic, default rates have fared much better than expected. The
year-to-date default loss rate for the BCF portfolio was 0.00%,
compared to 0.07% for European loans and 0.32% for US loans. Taking
in to account our in-house views of the current portfolio and the
broader recovery, lower default and downgrade expectations have
been fed into modelled valuations. This benefit was most pronounced
in June's positive NAV valuation and we would expect further
improvements in assumptions to contribute to the stability and
growth of BCF's NAV going forward.
BCF also recycled parts of the portfolio during the first half
of 2021. Similarly to the fourth quarter of 2020, BCF benefitted
from improved liquidity and equity valuations in the secondary
market and sold down certain non-retention CLO income note
positions, with executed prices that exceeded modelled marks as
well as mark-to-market prices(29). This included the full sale of
Myers Park and Greenwood Park CLO equity, and a partial sale of
Deer Park CLO equity, which held the record sale price for European
CLO equity at the time of trade.
Additionally, two CLOs have been redeemed year to date. For
Orwell Park, this outcome was economically favourable when compared
with the option of a reset. In the case of Stratus 2020-2, a static
CLO issued during the dislocation in 2020, Blackstone Credit
purchased assets at a discount which were ultimately taken out at
favourable levels, resulting in a realised IRR to date of
34.9%(30). Proceeds will ultimately be allocated towards more
efficient uses to potentially enhance the return profile of the
portfolio.
At the end of June, 38% of BCF's portfolio was composed of US
CLO securities(31) and CLO warehouses (first loss positions),
compared to 41% in December 2020. European CLO income notes
decreased marginally to 40% from 41% at the end of 2020. Exposure
to directly held loans, net of leverage, increased from 13% to 23%
(32) . The weighted average remaining reinvestment period for the
portfolio's CLOs increased in the first six months to 2.0 years
from 1.9 years, largely driven by the addition of new CLOs and
resets of existing CLOs in Europe.
As of 30 June 2021, the weighted average asset coupon of the
portfolio decreased to 3.68% from 3.74% since 31 December 2020,
consistent with a general tightening of loan spreads over the
period. The cost of liabilities narrowed to 1.70% from 1.82% over
the same period, due in part to liability management of the CLO
portfolio and refinancing of BCF's lending facility. The combined
effect resulted in an increase to BCF's net interest margin of 5bp,
to 1.97% in June (from 1.92% at the end of December 2020).
BCF has continued to generate uninterrupted cashflows from its
CLO income note investments throughout 2021. As of 30 June 2021,
the weighted average annualised distribution rates for European and
US CLO income notes were 15.6% and 21.7%, respectively, with strong
contributions across vintages and an additional tailwind from
Orwell Park and Stratus 2020-2 redemptions. This is compared to
15.6% and 17.1% respectively for 2020.
Looking forward, we will continue actively evaluating those CLOs
that are callable as the year progresses, weighing the relative
merits of a refinancing, reset, redemption or sale, and which is
most economically beneficial to that particular CLO.
CLO Portfolio Positions
Closing / Deal Position % of % of Reinvest. Current Current Current NIM
[Expected Close] Size Owned Tranche BCF Period Asset Liability Net 3M Distributions
Date (M) (M) NAV Left Coupon Cost Interest Prior Through Last Payment
(Yrs) Margin Date
--------------------
Ann. Cum.
EUR CLO Income Note Investments
EUR EUR
Phoenix Park Jul-14 417 23.3 51.4% 1.2% 1.83 3.58% 1.78% 1.81% 1.87% 14.2% 95.9%
Sorrento Park Oct-14 248 29.5 51.8% 0.8% 0.00 3.59% 2.38% 1.21% 1.64% 14.6% 96.3%
Castle Park Dec-14 216 24.0 52.2% 1.0% 0.00 3.51% 2.31% 1.20% 1.63% 14.2% 92.4%
Dartry Park Mar-15 427 26.6 51.1% 1.4% 3.83 3.60% 1.67% 1.93% 1.90% 14.0% 82.3%
Tymon Park Dec-15 333 22.7 51.0% 1.3% 0.00 3.54% 1.51% 2.03% 2.17% 16.1% 85.9%
Elm Park May-16 522 31.9 56.1% 2.0% 4.29 3.55% 1.70% 1.85% 2.18% 14.1% 65.5%
Griffith Park Sep-16 456 26.0 53.4% 1.6% 1.89 3.59% 1.57% 2.01% 2.10% 10.3% 48.3%
Clarinda Park Nov-16 417 23.1 51.2% 1.4% 3.63 3.61% 1.70% 1.91% 1.96% 11.4% 51.3%
Palmerston Park Apr-17 415 24.0 53.3% 1.4% 0.00 3.52% 1.55% 1.97% 2.09% 14.1% 56.8%
Clontarf Park Jul-17 414 29.0 66.9% 1.7% 0.10 3.49% 1.59% 1.90% 1.94% 15.4% 58.7%
Willow Park Nov-17 412 23.4 60.9% 1.5% 1.04 3.48% 1.58% 1.90% 1.98% 17.8% 60.1%
Marlay Park Mar-18 413 24.6 60.0% 1.6% 0.79 3.50% 1.40% 2.10% 2.16% 19.6% 59.7%
Milltown Park Jun-18 409 24.1 65.0% 1.8% 1.04 3.54% 1.50% 2.05% 2.12% 18.0% 51.3%
Richmond Park Jul-18 548 46.2 68.3% 2.0% 0.04 3.51% 1.53% 1.98% 2.03% 18.5% 50.8%
Sutton Park Oct-18 408 24.0 66.7% 1.7% 1.87 3.57% 1.72% 1.85% 1.88% 17.7% 41.6%
Crosthwaite Park Feb-19 516 33.0 64.7% 2.1% 4.21 3.58% 1.75% 1.83% 1.62% 13.8% 28.2%
Dunedin Park Sep-19 408 25.3 52.9% 1.6% 2.81 3.59% 1.78% 1.81% 1.87% 12.4% 19.7%
Seapoint Park Nov-19 405 21.6 70.5% 1.6% 2.89 3.58% 1.84% 1.74% 1.82% 16.7% 21.4%
Holland Park Nov-19 428 39.1 72.1% 1.6% 2.87 3.60% 1.90% 1.70% 1.73% 11.1% 16.6%
Vesey Park Apr-20 404 24.5 80.3% 1.9% 3.38 3.62% 1.97% 1.65% 1.71% 24.8% 25.9%
Avondale Park Jun-20 284 18.7 63.0% 1.7% 2.05 3.61% 2.52% 1.10% 1.10% 16.3% 14.0%
Deer Park Sep-20 344 20.5 71.9% 1.6% 2.29 3.56% 2.27% 1.30% 1.32% 8.4% 4.8%
Marino Park Dec-20 324 17.0 71.4% 1.6% 2.55 3.73% 1.84% 1.89% 1.98% n/a n/a
Carysfort Park Apr-21 406 25.1 80.7% 2.0% 4.08 3.67% 1.68% 2.00% 2.00% n/a n/a
Rockfield Park Jul-21 404 24.0 80.0% 2.0% 4.04 n/a n/a n/a n/a n/a n/a
USD CLO Income Note Investments
Dorchester Park Feb-15 $ $ 67.0% 1.2% 0.00 3.60% 1.85% 1.76% 1.92% 16.5% 101.3%
385 44.5
Grippen Park Mar-17 611 29.8 50.1% 1.6% 0.80 3.90% 1.92% 1.98% 1.78% 14.7% 60.3%
Thayer Park May-17 525 27.4 50.1% 1.3% 4.80 3.74% 1.82% 1.92% 1.87% 16.0% 63.1%
Catskill Park May-17 1,029 56.0 51.6% 2.7% 0.80 3.81% 1.76% 2.05% 1.68% 15.1% 59.2%
Dewolf Park Aug-17 614 31.7 51.6% 1.7% 1.29 3.80% 1.90% 1.89% 1.83% 15.9% 57.6%
Gilbert Park Oct-17 1,022 51.8 50.8% 2.7% 1.30 3.84% 1.86% 1.97% 1.81% 16.2% 56.4%
Long Point Park Dec-17 611 29.5 50.1% 1.6% 1.55 3.81% 1.61% 2.19% 2.05% 20.8% 68.6%
Stewart Park Jan-18 874 92.2 50.1% 1.8% 1.51 3.81% 1.65% 2.16% 2.02% 14.2% 46.0%
Cook Park Apr-18 1,025 53.6 50.1% 2.9% 1.80 3.80% 1.53% 2.26% 2.13% 18.2% 54.9%
Fillmore Park Jul-18 561 30.2 54.3% 1.8% 2.04 3.79% 1.71% 2.08% 1.92% 15.8% 42.7%
Harbor Park Dec-18 715 39.7 50.1% 2.3% 2.56 3.82% 1.80% 2.02% 1.91% 16.1% 37.7%
Buckhorn Park Mar-19 502 24.2 50.1% 1.4% 2.80 3.78% 2.16% 1.63% 1.49% 16.2% 33.7%
Niagara Park Jun-19 453 22.1 50.1% 1.4% 3.05 3.81% 1.96% 1.86% 1.84% 15.7% 28.4%
Southwick Park Aug-19 503 26.1 59.9% 1.5% 3.06 3.82% 2.13% 1.70% 1.67% 17.0% 28.3%
Beechwood Park Dec-19 810 48.9 61.1% 2.7% 3.55 3.87% 2.17% 1.70% 1.62% 15.9% 21.1%
Allegany Park Jan-20 505 30.2 66.2% 1.8% 3.55 3.84% 2.13% 1.71% 1.64% 12.8% 16.2%
Harriman Park Apr-20 503 29.2 70.0% 1.9% 4.76 3.87% 1.81% 2.06% 1.72% 28.7% 28.7%
Cayuga Park Aug-20 393 22.9 72.0% 1.6% 2.05 3.83% 2.31% 1.52% 1.43% 23.9% 16.3%
Point Au Roche
Park Jun-21 457 26.5 61.2% 1.7% 5.05 3.99% 1.71% 2.28% n/a n/a n/a
Vertical Retention Investments
Tallman Park May-21 $ 410 2.1 5.0% 0.2% 4.80 3.90% 1.69% 2.21% n/a n/a n/a
US Warehouse Initial Closing Investment Investment Current Current Current Net Interest
Investments Investment / [Expected (EURM) ($M) Loan Asset Liability Margin
Date Close] Exposure Coupon Coupon
Date ($M)
Peace Park
Warehouse May-21 [Sep-21] EUR 10.4 $ 12.7 $ 265.4 3.93% 1.25% 2.69%
Redeemed Vintage Redemption Deal Position % of Tranche Current Realised Cumulative
CLOs Date Size Owned Prior Prior To valuation IRR to Distributions
(M) To Redemption Redemption as % of date Through
(M) BCF NAV Last Payment
Date
Orwell EUR
Park 2015 May-21 303 EUR 24.2 51.0% 0.05% 13.4% 156.4%
Stratus
2020-2 2020 Jun-21 $ 261 $ 24.2 100.0% 0.03% 34.9% 125.2%
As of 30 June 2021, the Fund was invested in accordance with its
and BCF's investment policy and was diversified across 699 issuers
through the directly held loans and CLO portfolio, and across 30
countries and 29 different industries. No individual borrower
represented more than 2% of the overall portfolio at the end of
June 2021.
Key Portfolio Statistics
Current WA
% of Current WA Liability WA Remaining
NAV Asset Coupon Cost RPs (CLOs)
As at 30 June 2021
EUR CLOs 40.06% 3.57% 1.78% 2.0 yrs
US CLOs 37.16% 3.80% 1.85% 2.1 yrs
Directly Held Loans
(less leverage) 22.51% 3.66% 1.35% n/a
US CLO Warehouses 0.94% 3.93% 1.25% n/a
Net Cash & Expenses -0.67% - - n/a
As at 31 December
2020
EUR CLOs 40.56% 3.63% 1.76% 1.5 yrs
US CLOs 39.82% 3.80% 1.89% 2.2 yrs
Directly Held Loans
(less leverage) 12.66% 3.85% 1.85% n/a
US CLO Warehouses 0.86% 3.99% 1.34% n/a
Net Cash & Expenses 6.10% - - n/a
Top 10 Industries
Industry % of Portfolio
30 June 2021 31 December 2020
========================================= ============ ================
Healthcare and Pharmaceuticals 15.92% 15.21%
========================================= ============ ================
High Tech Industries 10.03% 9.32%
========================================= ============ ================
Services Business 9.56% 10.44%
========================================= ============ ================
Banking, Finance, Insurance, Real Estate 7.43% 8.71%
========================================= ============ ================
Media Broadcasting and Subscription 6.84% 6.81%
========================================= ============ ================
Chemicals, Plastics and Rubber 6.26% 6.03%
========================================= ============ ================
Hotels, Gaming and Leisure 5.99% 6.22%
========================================= ============ ================
Construction and Building 5.71% 5.21%
========================================= ============ ================
Telecommunications 4.12% 4.55%
========================================= ============ ================
Services Consumer 3.91% 3.72%
========================================= ============ ================
Top 5 Countries
Country % of Portfolio
30 June 2021 31 December 2020
United States 49.20% 52.73%
United Kingdom 10.27% 9.81%
France 8.05% 7.36%
Netherlands 6.19% 4.52%
Germany 5.72% -
Luxembourg - 6.26%
Top 20 Issuers
# Portfolio Total Moody's Country WA WA WA WA
Facilities Par Par Industry Price Spread Coupon Maturity
(EURM) Outstanding (All-In (Years)
(EURM) Rate)
------------- ---------- --------- ----------- ------------------ ----------- ----- ------ ------- --------
Retail (Global United
Euro Garages 6 190 5,783 Petrol Stations) Kingdom 99.1 4.20% 4.28% 3.8
Euro Garages is the leading global independent convenience retail
and fuel station operator with a fuel, convenience retail and
Food-to-Go offering with partnerships with leading brands such
as Esso, BP, Shell, Dunkin Donuts and Pizza Hut among others.
Media Broadcasting
Numericable 4 166 4,950 and Subscription France 98.8 3.13% 3.18% 4.4
Numericable is one of the largest telecommunications operators
in France by revenues and number of subscribers, with major positions
in residential fixed, residential mobile, B2B, wholesale and media.
AkzoNobel Chemicals,
Specialty Plastics
Chemicals 2 162 4,612 and Rubber Netherlands 99.6 2.90% 2.94% 4.3
AkzoNobel Specialty Chemicals represents a collection of specialty
and commodity chemical and polymer businesses split across five
divisions: Surface Chemistry (surfactants and polymers), ethylene
and sulfur derivatives, polymer chemistry (includes catalysts
and polymer additives), industrial chemicals (includes chlor-alkali
and other industrial chemicals), and pulp and performance chemicals
(includes hydrogen peroxide and other bleaching chemicals, and
variety of other chemicals).
Healthcare
Sivantos and
/ Siemens 2 160 2,981 Pharmaceuticals Denmark 99.4 3.94% 3.96% 4.7
Sivantos/Siemens was created following the completion of the merger
between Sivantos and Widex. The combined company operates in 125
markets and holds the third position in the hearing aid market
globally.
Media Broadcasting
Ziggo 2 158 4,379 and Subscription Netherlands 99.3 2.86% 2.88% 7.4
Ziggo is one of the largest cable operators in the Netherlands.
The company provides radio, television, internet, and telephone
services. The company was created as a result of the merger between
Multikabel, @Home and Casema.
McAfee, High Tech United
LLC 2 156 3,359 Industries States 100.2 3.61% 3.65% 3.3
McAfee, LLC is the second largest security software vendor globally,
after Symantec. McAfee serves both the consumer and enterprise
security markets, with a focus on consumer endpoint protection.
Media Broadcasting United
Virgin Media 4 155 5,379 and Subscription Kingdom 99.4 2.68% 2.71% 7.3
Virgin Media is a British telecommunications company which provides
telephone, television, and internet services in the United Kingdom.
Virgin Media is a subsidiary of Liberty Global, an international
television and telecommunications company.
Thyssenkrupp
Elevators 3 153 3,324 Capital Equipment Germany 100.3 4.00% 4.08% 6.1
Thyssenkrupp is the number four player in the global market for
elevator and escalator technology. The company designs, manufacturers,
installs, services, and modernises elevators, escalators, and
platform lifts.
Media Broadcasting
UPC 4 145 3,476 and Subscription Netherlands 99.4 2.73% 2.75% 7.6
UPC is a cable operator in Switzerland, Poland & Slovakia. It
offers broadband, tv and mobile services.
Beverage,
Food and United
Froneri 2 141 4,409 Tobacco Kingdom 98.4 2.33% 2.36% 5.6
Froneri is a global ice cream manufacturer with its headquarters
in North Yorkshire, England. It is the second largest ice cream
producer by volume in the world, after Unilever. Froneri was created
in 2016 as a joint venture between Nestle and PAI Partners to
combine their ice cream activities.
Chemicals,
Plastics United
Ineos Quattro 4 122 4,236 and Rubber Kingdom 99.4 2.48% 2.72% 5
Ineos, through its subsidiaries, manufactures specialty and intermediate
chemicals such as ethylene oxide, acetate esters, glycol, and
specialty polymers. Ineos serves customers worldwide.
TDC A/S 2 120 2,950 Telecommunications Denmark 99.6 3.09% 3.09% 3.9
TDC Group is the Danish telecom incumbent offering mobile services,
broadband as well as tv and entertainment services. The company
is active in B2B and Wholesale segments and has a presence in
Norway.
Banking,
Finance,
Insurance
and Real
ION Trading 2 120 3,141 Estate (FIRE) Ireland 100.5 4.48% 4.57% 6.8
Ion Trading is a global financial software and services company
that offers mission critical trading infrastructure solutions
to banks and other financial institutions. In particular, the
company provides high performance trading solutions for electronic
fixed income markets, including support for cash, futures, repos,
money markets, interest rate swaps and credit default swaps. The
group serves 800+ customers worldwide.
BMC Software
Finance High Tech United
Inc. 2 114 3,615 Industries States 100.2 3.93% 3.96% 4.3
BMC Software is a prominent provider of business management software
used for a variety of functions and processes. The company's software
and services are used in automation and development, IT optimization,
security and compliance, multi-cloud management, artificial intelligence
and machine learning.
Healthcare
and United
IMS Health 4 110 3,097 Pharmaceuticals States 99.5 1.95% 1.98% 3.1
IQVIA, formed after a merger between Quintiles and IMS Health,
provides information and technology services to the pharmaceutical
and healthcare industries. The Company offers services such as
product and portfolio management capabilities, commercial effectiveness
solutions, managed care, and consumer health.
Financiere Healthcare
Chopin (Ceva and
Sante) 1 109 2,050 Pharmaceuticals France 100.5 4.50% 4.50% 4.8
Ceva Santé Animale is a private global veterinary pharmaceutical
company headquartered in France that focuses on the research,
development, production and marketing of pharmaceutical products
and vaccines for poultry, swine, cattle and pets. Ceva provides
four major products (anti-infectives, vaccines, reproduction and
animal behaviour / cardiology) for all major species.
Veritas US High Tech United
INC. 2 108 1,655 Industries States 100.9 4.88% 5.88% 4.2
Veritas Technologies, LLC represents the legacy Information Management
division of Symantec Corporation. For over two decades the Company
has been a market leader in information management software and
solutions that help organizations protect, manage and analyze
their mission-critical enterprise data, such as emails, documents
and spreadsheets, as well as their applications, such as financial,
human resources, supply chain management and enterprise resource
planning ("ERP") systems, collaboration tools and databases. The
Company offers industry-leading backup and recovery solutions
, as either independent software or integrated software-hardware
appliances.
Ahlsell
Investco Construction
AB 1 99 1,808 and Building Sweden 99.4 3.50% 3.50% 4.6
Ahlsell is the leading distributor of building products Nordic
region. Its three main product groups are HVAC, Electrical, and
Tools & Supplies.
CRH Europe Construction
Distribution 2 96 1,650 and Building Netherlands 100 4.12% 4.12% 5.1
CRH European Distribution is a leading regional distributor of
general building products in Germany, Netherlands, Belgium, France,
Switzerland and Austria. The Company specializes in the sale and
distribution of basic building materials and sanitary, heating
and plumbing products. CRH European Distribution was formed as
a subsidiary of CRH through a series of 53 acquisitions since
2004.
Hotels,
Gaming and United
Hotel Beds 3 95 1,808 Leisure Kingdom 91.9 4.42% 4.42% 4.7
HBG is the leading global B2B distributor of accommodation and
ancillary products to the world's travel trade. HBG contracts
directly with 180k hotels and other service providers (e.g. transfers,
excursions, tours, meetings, visa services) in over 180 countries
to provide Travel Operators (TOs), Travel agents (TAs) and Online
Travels agents (OTAs) with an inventory of hotel rooms and ancillary
travel services. HBG operates across four segments the largest
being the Bedbank division. HBG is #1 in the highly-fragmented
bedbank market.
Directly Held CLOs
The majority of the outstanding positions of Rollover Assets
were sold within the first quarter of 2020. As of 30 June 2021, the
market value of Rollover Assets had increased to EUR954,927 or
0.23% of NAV (31 December 2020: market value totalled EUR 549,437
or 0.13% of NAV). This increase is solely due to market
movements.
Subsequent to 30 June 2021, the Company disposed of the final
Rollover Assets, being 2 Mezzanine Notes, for a total consideration
of EUR1,411,355.
Regulatory Update
In Europe, the European Regulation on sustainability-related
disclosures in the financial services sector ("SFDR") was published
on 27 November 2019. With an effective date of 10 March 2021, SFDR
requires certain firms, including private banks, wealth managers
and advisers to comply with new rules on disclosure as regards
sustainable investments and sustainability risks. Asset managers,
including Blackstone Credit ("BX Credit") (formerly GSO Capital
Partners LP), have been working to implement procedures which will
allow us, where required, to comply with the SFDR when the
regulatory reporting requirements come into effect. BX Credit
continues to monitor regulatory developments with regards to SFDR,
including the publication of additional Regulatory Technical
Standards (which, with regards to the SFDR reporting requirements,
are now expected in July 2022, recently extended from January
2022).
In connection with the Securitisation Regulation, widely
anticipated secondary legislation setting out the prescribed form
of reporting templates was published on 3 September 2020 and use of
these reporting templates became mandatory to investors from 23
September 2020. BX Credit was well positioned to transition to the
use of these formal reporting templates, and these reporting
templates are used in respect of all in-scope CLOs.
Risk Management
Given the natural asymmetry of fixed income, our experienced
credit team focuses on truncating downside risk and avoiding
principal impairment and believes that the best way to control and
mitigate risk is by remaining disciplined in all market cycles and
by making careful credit decisions while maintaining adequate
diversification. BCF's portfolio is managed to minimise default
risk and credit related losses, which is achieved through in-depth
fundamental credit analysis and diversified portfolios in order to
avoid the risk of any one issuer or industry adversely impacting
overall performance. As outlined in the Portfolio Update section,
BCF is broadly diversified across issuers, industries, and
countries.
BCF's base currency is denominated in Euro, though investments
are also made and realised in other currencies. Changes in rates of
exchange may have an adverse effect on the value, price, or income
of the investments of BCF. BCF may utilise different financial
instruments to seek to hedge against declines in the value of its
positions as a result of changes in currency exchange rates.
Through the construction of solid credit portfolios and our
emphasis on risk management, capital preservation, and fundamental
credit research, we believe the Company's investment strategy will
continue to be successful.
Blackstone Responsible Investing Approach
The Importance of Responsible Investing
For over 35 years, Blackstone has been committed to being a
responsible investor. This commitment is affirmed across the
organisation and guides our approach to investing. We believe that
adequate consideration of environmental, social, and governance
("ESG") factors for each potential investment enhances our
assessment of risk and also helps us identify opportunities for
transformation at each company where we invest. Consequently, we
believe that a comprehensive ESG program drives value and enhances
returns. We also believe that understanding ESG factors helps us
understand trends and how they will shape demand and markets in
years to come. Our framework applies to all investment
opportunities, though the exact application of that framework
varies by asset class, investment objective and the unique
characteristics of each investment.
Objectives
Blackstone's responsible investing objectives are outlined
below:
-- Integration
Consider environmental, social, and governance issues when
evaluating investment opportunities and when managing / monitoring
portfolios and assets. Pursue high-quality sources of ESG data and
intelligence; where appropriate, integrate that data into our
research process and also use that data to enhance our
understanding of markets and consumer trends. Actively use ESG
considerations to transform our portfolio companies in ways that
both manage risk and are value accretive for our investment
portfolios. In addition, integrate ESG considerations into our
business practices outside of the investment process.
-- Engagement
Work together with our portfolio entities, managers, transaction
partners, peers, and other partners to advance principles of
responsible investment and corporate social responsibility. Share
our ESG philosophy broadly and use our leadership position to
influence others and advance the dialogue of the importance of ESG
integration in finance and for corporate actors generally.
-- Reporting
Be transparent with our investors and other stakeholders about
Blackstone's responsible investing initiatives, successes, and
goals.
Approach and Responsibilities
Across all of Blackstone's businesses, ESG is core to what we
do. Our approach includes an evaluation of ESG considerations (pre-
and post-investment decision making) as a standard part of the
investment and the asset / portfolio management processes. Primary
responsibility lies with our investment teams because these
considerations support investment decisions. Together with
Portfolio Operations and our asset management teams, the investment
teams are also expected to continue to keep these issues front of
mind through the life of the investment.
Blackstone's Chief Sustainability Officer supports the
investment and asset management teams by driving initiatives that
are aimed at improving operational and environmental performance
across the portfolio. Other functional experts within Portfolio
Operations (including Talent Management, Procurement and Healthcare
Cost Containment) may consider ESG insights in delivering operating
intervention capabilities across the portfolio.
Blackstone's ESG Steering Committee coordinates ESG initiatives
across the firm to ensure consistency in approach and, with the
assistance of the Legal & Compliance department, compliance
with Blackstone's ESG policy. Additionally, BXC has an ESG Working
Group that meets monthly and discusses a variety of ESG-related
topics, including, as applicable: review of investments, investor
requests, market trends and newly adopted or pending legislation,
rules, and regulation, and revisions and/or amendments to BXC ESG
Policy. Below is a visual of Blackstone's ESG leadership and
integrated team approach.
[Graphs and charts are included in the published Half Yearly
Financial Report which is available on the Company's website at
https://www.blackstone.com/fund/bglfln-blackstone-gso-loan-financing-limited/]
Blackstone Credit's Commitment to ESG
BX Credit's focus on ESG stems from our commitment to prudent
investing and our culture that prioritizes robust corporate
governance. Our investment team understands Blackstone's focus on
corporate governance, including ESG, and that appreciation is
reflected in the investments we make and how we engage with our
portfolio companies after an investment is made. Review of ESG
risks to investment performance is integrated into BX Credit's
investment analysis and decision-making processes from
pre-investment diligence to post-investment monitoring.
BX Credit recognises the value that incorporating ESG factors in
our investment research creates both in terms of mitigating risk
and enhancing long-term performance across our various investments.
To that end, BX Credit integrates review and consideration of
applicable ESG factors into its decision-making processes, as
summarized below:
Comprehensive Due Diligence
Investment teams within BX Credit consider ESG factors that may
impact investment performance during the due diligence phase of an
investment. ESG due diligence will vary based on (i) the nature of
BX Credit's investment, (ii) the transaction process and timeline,
(iii) the level of access to information, specifically as it
pertains to ESG factors, and (iv) the target portfolio company's
(the "Target") sector or business model. Investment teams will
engage with target companies, sponsor partners, and review publicly
available information to develop insights into the Target's
business and operations. External ESG experts and legal counsel may
also be engaged, as necessary. In 2020, BX Credit worked with a
third party ESG consulting firm to create a sector-specific tool
based on the Sustainability Accounting Standards Board ("SASB")
that provides a framework to conduct ESG due diligence . The
proprietary tool helps our teams identify the most material ESG
risks that may impact a company's performance, so that we are able
to focus our diligence on assessing these risks in a more targeted
fashion. The tool includes industry-specific due diligence
questions, KPIs to track,
detailed guidance on considerations for evaluating the topic and
resources for additional research. We will then compare the
findings from our proprietary ESG research with the ESG due
diligence from a sponsor partner (if applicable).
Investment Committee Engagement and Documentation
Material ESG considerations and risks arising from diligence are
described in the appropriate investment committee materials and
discussed in the relevant investment committee forum. If material
ESG risks are identified, BX Credit may seek to remedy the
situation via additional due diligence, the hiring of specialist
advisors, further discussions with company management or decide not
to move forward with the investment.
Active Post-Investment Monitoring
On an ongoing basis, investment teams monitor the performance of
BX Credit's investments, which includes, but is not limited to,
assessing financial, operational, industry-specific and ESG-related
factors, as applicable. Periodically, BX Credit investment teams
will update the investment committee on the performance of issuers
and highlight any material ESG considerations or risks that warrant
investment committee discussion, both in the context of the
company's industry and on a stand-alone basis.
As a credit investor, BX Credit will have less control over
portfolio companies than equity investors; however, we may seek to
reinforce certain aspects of value-enhancing ESG compliance through
contractual obligations and covenants in governing agreements with
portfolio companies. Underwriting due diligence includes among
other things, material environmental, public health, safety, social
and governance issues associated with lending to a company.
At this time, BX Credit does not explicitly track exposure to
climate risk or monitor the carbon footprint of an investment. In
practice, we take the ESG factors that may impact investment
performance into consideration and incorporate such factors into
our initial evaluation of an investment and our ongoing investment
monitoring process. Our evaluation criteria are based on the
materiality of the ESG risk considering (a) whether it has a
current impact or a potential future impact and (b) any mitigating
actions the issuer undertakes to address the risk. In general,
industries with a high carbon footprint face significant transition
risk with regard to climate change, and that risk would need to be
evaluated before making an investment decision.
Blackstone Ireland Limited
21 September 2021
(8) Credit Suisse Leveraged Loan Index, Credit Suisse Western
European Leveraged Loan Index (Hedged to Euro), as of 30 June
2021.
(9) Credit Suisse Default Report, as of 30 June 2021.
(10) Based on mark to model modified bid prices as of the most
recent month end prior to the transaction trade date and mark to
market bid prices as of the day prior to transaction date. Modelled
marks are only available on a mid basis, therefore a modified bid
is calculated by incorporating the basis between mark to market bid
and mid prices.
(11) Blackstone Credit, Intex. As at 7 January 2021.
(12) Credit Suisse, as of 30 June 2021.
(13) Credit Suisse, as of 30 June 2021.
(14) J.P. Morgan, Moody's, S&P Upgrades vs. Downgrades and
LCD LLI Industry Weights and Total Returns, as of 30 June 2021.
(15) S&P LCD, as of 30 June 2021.
(16) Credit Suisse, as of 30 June 2021.
(17) Credit Suisse, as of 30 June 2021.
(18) As reported by S&P LCD during 1H 2021.
(19) S&P LCD CLO databank, as of 30 June 2021.
(20) Barclays, as of 30 June 2021. Data reflects generic
top-tier manager CLO discount margins from longer reinvestment
period CLOs.
(21) Barclays, as of 30 June 2021. Data reflects generic
top-tier manager CLO discount margins from longer reinvestment
period CLOs.
(22) Paragraph data source: Barclays, as of 30 June 2021. Data
reflects median observations. Data as of latest trustee reports at
month-end, including only reinvesting deals. Underlying data from
Kanerai, Intex, Markit.
(23) Paragraph data source: Barclays, as of 30 June 2021. Data
reflects median observations. Data as of latest trustee reports at
month-end, including only reinvesting deals. Underlying data from
Kanerai, Intex, Markit.
(24) Barclays, as of 16 July 2021.
(25) Barclays, as of 16 July 2021.
(26) Investment in Tallman park was through a vertical retention
position financed by a repurchase agreement. BCF owns 5% of each
tranche, including equity.
(27) As reported by Creditflux and S&P LCD.
(28) Creditflux.
(29) Based on mark to model modified bid prices as of the most
recent month end prior to the transaction trade date and mark to
market bid prices as of the day prior to transaction date. Modelled
marks are only available on a mid basis, therefore a modified bid
is calculated by incorporating the basis between mark to market bid
and mid prices.
(30) Realised IRRs are reflective of distributions made to
equity holders to date based on data available on Intex as of 7
July 2021. Stratus 2020-2 equity will be fully redeemed once all
accrued interest been received and distributed.
(31) US CLO securities held by BCF are almost exclusively CLO
income notes except for Tallman Park senior debt securities (part
of the vertical retention investment).
(32) Portfolio percentages are based on BCF NAV as of 30 June
2021 and 31 December 2020.
Strategic Overview
Purpose
As an investment company, our purpose is to provide permanent
capital to BCF, a company established by Blackstone Ireland Limited
("BIL") (formerly Blackstone/GSO Debt Funds Management Europe
Limited) as part of its loan financing programme, with a view to
generating stable and growing total returns for Shareholders
through dividends and value growth.
We deliver our purpose through working in line with our values,
which form the backbone of what the Company does and are an
important part of our culture.
Values
Integrity and Trust - The Board seeks to act with integrity in
everything it does and to be trustworthy. The Directors seek to
uphold the highest standards of professionalism driven by our
corporate governance processes.
Transparency - The Board aims to ensure all of the Company's
activities are undertaken with the utmost transparency and openness
to sustain trust.
Opportunity - The ability of the Board to identify and seize
opportunities which are in the best interests of our
shareholders.
Sustainability - The Company aims to maintain and deliver
attractive and sustainable returns for its shareholders.
Principal Activities
The Company was incorporated on 30 April 2014 as a closed-ended
investment company limited by shares under the laws of Jersey and
is authorised as a listed fund under the Collective Investment
Funds (Jersey) Law 1988. The Company continues to be registered and
domiciled in Jersey. The Company's Ordinary Shares are quoted on
the Premium Segment of the Main Market of the LSE.
The Company's share capital consists of an unlimited number of
shares of any class. As at 30 June 2021, the Company's issued share
capital was 469,787,075(33) Ordinary Shares. The Company also held
13,115,719(34) (31 December 2020: 5,879,463) ordinary shares in
treasury.
The Company has a wholly-owned Luxemburg subsidiary, Blackstone
/ GSO Loan Financing (Luxembourg) S. à r.l. which has an issued
share capital of 2,000,000 Class A shares and 1 Class B share. All
of the Class A and Class B shares were held by the Company as at 30
June 2021 together with 275,438,217 class B CSWs issued by the Lux
Subsidiary. The Lux Subsidiary invests in PPNs issued by BCF, which
in turn invests in CLOs and loans. As at 30 June 2021, the Company
also held CLO Mezzanine Notes which formed part of the Rollover
Assets. These were subsequently disposed of on 8 September
2021.
The Company is a self-managed company. BIL acts as Portfolio
Adviser to the Company and, pursuant to the Advisory Agreement,
provides advice and assistance to the Company in connection with
its investment in the CSWs. Blackstone Liquid Credit Strategies LLC
("BLCS") (formerly GSO/Blackstone Debt Funds Management LLC) acts
as Portfolio Manager in relation to the Rollover Assets (as defined
in the Company's Prospectus published on 23 November 2018). BNP
Paribas Securities Services S.C.A., Jersey Branch acts as
Administrator, Company Secretary, Custodian and Depositary to the
Company.
Directors' Interests
The Directors held the following number of Ordinary Shares in
the Company as at the period end and the date these condensed
financial statements were approved:
Shares Type As at 30 June As at 31 December
2021 2020
Charlotte Valeur Ordinary 11,500 11,500
Gary Clark Ordinary 168,200 168,200
Heather MacCallum Ordinary - -
Mark Moffat Ordinary 771,593 771,593
Steven Wilderspin Ordinary 20,000 20,000
------------------ --------- ------------- -----------------
Investment Objective
As outlined in the Company's Prospectus, the Company's
investment objective is to provide Shareholders with stable and
growing income returns, and to grow the capital value of the
investment portfolio by exposure to floating rate senior secured
loans and bonds directly and indirectly through CLO Securities and
investments in Loan Warehouses. The Company seeks to achieve its
investment objective through exposure (directly or indirectly) to
one or more companies or entities established from time to time
("Underlying Companies"), such as BCF.
Investment Policy
Overview
As outlined in the Company's Prospectus, the Company's
investment policy is to invest (directly, or indirectly through one
or more Underlying Companies) in a diverse portfolio of senior
secured loans (including broadly syndicated, middle market or other
loans) (such investments being made by the Underlying Companies
directly or through investments in Loan Warehouses), bonds and CLO
Securities, and generate attractive risk-adjusted returns from such
portfolios. The Company intends to pursue its investment policy by
investing (through one or more subsidiaries) in profit
participating instruments (or similar securities) issued by one or
more Underlying Companies.
Each Underlying Company will use the proceeds from the issue of
the profit participating instruments (or similar securities),
together with the proceeds from other funding or financing
arrangements it has in place currently or may have in the future,
to invest in: (i) senior secured loans, bonds, CLO Securities and
Loan Warehouses; or (ii) other Underlying Companies which,
themselves, invest in senior secured loans, bonds, CLO Securities
and Loan Warehouses. The Underlying Companies may invest in
European or US senior secured loans, bonds, CLO Securities, Loan
Warehouses and other assets in accordance with the investment
policy of the Underlying Companies. Investments in Loan Warehouses,
which are generally expected to be subordinated to senior finance
provided by third-party banks, will typically be in the form of an
obligation to purchase preference shares or a subordinated loan.
There is no limit on the maximum US or European exposure. The
Underlying Companies do not invest substantially directly in senior
secured loans or bonds domiciled outside North America or Western
Europe.
Investment Limits and Risk Diversification
The Company's investment strategy is to implement its investment
policy by investing directly or indirectly through the Underlying
Companies, in a portfolio of senior secured loans and bonds or in
Loan Warehouses containing senior secured loans and bonds and, in
connection with such strategy, to own debt and equity tranches of
CLOs and, in the case of European CLOs and certain US CLOs, to be
the risk retention provider in each.
The Underlying Companies may periodically securitise a portion
of the loans, or a Loan Warehouse in which they invest, into CLOs
which may be managed either by such Underlying Company itself, by
BIL or DFM (or one of their affiliates), in their capacity as the
CLO Manager.
Where compliance with the European Risk Retention Requirements
is sought (which may include both EUR and US CLOs) the Underlying
Companies will retain exposures of each CLO, which may be held
as:
-- CLO Income Notes equal to: (i) between 51% and 100% of the
CLO Income Notes issued by each such CLO in the case of European
CLOs; or (ii) CLO Income Notes representing at least 5% of the
credit risk relating to the assets collateralising the CLO in the
case of US CLOs (each of (i) and (ii), (the "horizontal strip");
or
-- Not less than 5% of the principal amount of each of the
tranches of CLO Securities in each such CLO (the "vertical
strip").
To the extent attributable to the Company, the value of the CLO
Income Notes retained by Underlying Companies in any CLO will not
exceed 25% of the Published NAV of the Company at the time of
investment.
Investments in CLO Income Notes and loan warehouses are highly
leveraged. Gains and losses relating to underlying senior secured
loans will generally be magnified. Further, to the extent
attributable to the Company, the aggregate value of investments
made by Underlying Companies in vertical strips of CLOs (net of any
directly attributable financing) will not exceed 15% of the
Published NAV of the Company at the time of investment. This
limitation shall apply to Underlying Companies in aggregate and not
to Underlying Companies individually.
Loan Warehouses may eventually be securitised into CLOs managed
either by an Underlying Company itself or by BIL or DFM (or one of
their affiliates), in their capacity as the CLO Manager. To the
extent attributable to the Company, the aggregate value of
investments made by Underlying Companies in any single externally
financed warehouse (net of any directly attributable financing)
shall not exceed 20% of the NAV of the Company at the time of
investment, and in all externally financed warehouses taken
together (net of any directly attributable financing) shall not
exceed 30% of the NAV of the Company at the time of investment.
These limitations shall apply to Underlying Companies in aggregate
and not to Underlying Companies individually.
The following limits (the "Eligibility Criteria") apply to
senior secured loans and bonds (and, to the extent applicable,
other corporate debt instruments) directly held by any Underlying
Company (and not through CLO Securities or Loan Warehouses):
% of a Underlying Company's
Maximum Exposure Gross Asset Value
Per obligor 5
Per industry sector 15
(With the exception of one industry, which may be up to
20%)
To obligors with a rating lower than B-/B3/B- 7.5
To second lien loans, unsecured loans, mezzanine loans and
high yield bonds 10
---------------------------------------------------------- ----------------------------------------------------------
For the purposes of these Eligibility Criteria, "gross asset
value" shall mean gross assets, including any investments in CLO
Securities and any undrawn commitment amount of any gearing under
any debt facility. Further, for the avoidance of doubt, the
"maximum exposures" set out in the Eligibility Criteria shall apply
on a trade date basis.
Each of these Eligibility Criteria will be measured at the close
of each Business Day on which a new investment is made, and there
will be no requirement to sell down in the event the limits are
breached at any subsequent point (for instance, as a result of
movement in the gross asset value, or the sale or downgrading of
any assets held by an Underlying Company).
In addition, each CLO in which an Underlying Company holds CLO
Securities and each Loan Warehouse in which an Underlying Company
invests will have its own eligibility criteria and portfolio
limits. These limits are designed to ensure that: (i) the portfolio
of assets within the CLO meets a prescribed level of diversity and
quality as set by the relevant rating agencies that rate securities
issued by such CLO, or (ii) in the case of a Loan Warehouse, that
the warehoused assets will eventually be eligible for a rated CLO.
The CLO Manager will seek to identify and actively manage assets
which meet those criteria and limits within each CLO or Loan
Warehouse. The eligibility criteria and portfolio limits within a
CLO or Loan Warehouse may include the following:
-- A limit on the weighted average life of the portfolio;
-- A limit on the weighted average rating of the portfolio;
-- A limit on the maximum amount of portfolio assets with a rating lower than B-/B3/B-; and
-- A limit on the minimum diversity of the portfolio.
CLOs in which an Underlying Company may hold CLO Securities or
Loan Warehouses in which an Underlying Company may invest also have
certain other criteria and limits, which may include:
-- A limit on the minimum weighted average of the prescribed rating agency recovery rate;
-- A limit on the minimum amount of senior secured assets;
-- A limit on the maximum aggregate exposure to second lien
loans, high yield bonds, mezzanine loans and unsecured loans;
-- A limit on the maximum portfolio exposure to covenant-lite loans;
-- An exclusion of project finance loans;
-- An exclusion of structured finance securities;
-- An exclusion on investing in the debt of companies domiciled
in countries with a local currency sub-investment grade rating;
and
-- An exclusion of leases.
This is not an exhaustive list of the eligibility criteria and
portfolio limits within a typical CLO or Loan Warehouse and the
inclusion or exclusion of such limits and their absolute levels are
subject to change depending on market conditions. Any such limits
applied shall be measured at the time of investment in each CLO or
Loan Warehouse.
Changes to Investment Policy
Any material change to the investment policy of the Company
would be made only with the approval of Ordinary Shareholders.
It is intended that the investment policy of each substantial
Underlying Company will mirror the Company's investment policy,
subject to such additional restrictions as may be adopted by a
substantial Underlying Company from time to time. The Company will
receive periodic reports from each substantial Underlying Company
in relation to the implementation of such substantial Underlying
Company's investment policy to enable the Company to have oversight
of its activities.
If a substantial Underlying Company proposes to make any changes
(material or otherwise) to its investment policy, the Directors
will seek Ordinary Shareholder approval of any changes which are
either material in their own right or, when viewed as a whole
together with previous non-material changes, constitute a material
change from the published investment policy of the Company. If
Ordinary Shareholders do not approve the change in investment
policy of the Company such that it is once again materially
consistent with that of such substantial Underlying Company, the
Directors will redeem the Company's investment in such substantial
Underlying Company (either directly or, if the Company's investment
in a subsidiary is invested by such subsidiary in such substantial
Underlying Company (either directly or through one or more other
Underlying Companies), by redeeming the securities held by the
Company in such subsidiary and procuring that the subsidiary
redeems its investment in such substantial Underlying Companies
(either directly or through one or more other Underlying
Companies)), as soon as reasonably practicable but at all times
subject to the relevant legal, regulatory and contractual
obligations.
The Board considers BCF to be a substantial Underlying
Company.
Company Borrowing Limit
The Company will not utilise borrowings for investment purposes.
However, the Directors are permitted to borrow up to 10% of the
Company's Published NAV for day-to-day administration and cash
management purposes. For the avoidance of doubt, this limit only
applies to the Company and not the Underlying Companies.
In accordance with the Company's Prospectus, the Company may use
hedging or derivatives (both long and short) for the purposes of
efficient portfolio management. It is intended that up to 100% (as
appropriate) of the Company's exposure to any non-Euro assets will
be hedged, subject to suitable hedging contracts being available at
appropriate times and on acceptable terms.
Investment Strategy
Whether the senior secured loans, bonds or other assets are held
directly by an Underlying Company or via CLO Securities or Loan
Warehouses, it is intended that, in all cases, the portfolios will
be actively managed (by the Underlying Companies or the CLO
Manager, as the case may be) to minimise default risk and potential
loss through comprehensive credit analysis performed by the
Underlying Companies or the CLO Manager (as applicable).
Vertical strips in CLOs in which Underlying Companies may invest
are expected to be financed partly through term finance for
investment-grade CLO Securities, with the balance being provided by
the relevant Underlying Company investing in such CLO. This term
financing may be full-recourse, non-mark to market, long-term
financing which may, among other things, match the maturity of the
relevant CLO or match the reinvestment period or non-call period of
the relevant CLO. In particular, and although not forming part of
the Company's investment policy, the following levels of, or
limitations on, leverage are expected in relation to investments
made by Underlying Companies:
-- Senior secured loans and bonds may be levered up to 2.5x with term finance;
-- Investments in "first loss" positions or the "warehouse
equity" in Loan Warehouses will not be levered;
-- CLO Income Notes will not be levered;
-- Investments in CLO Securities rated B- and above at the time
of issue may be funded entirely with term finance; and
-- Investments in a vertical strip may be levered 6.0-7.0x, with
term finance as described above.
To the extent that they are financed, vertical strips are
anticipated to require less capital than horizontal strips, which
is expected to result in more efficient use of the Underlying
Companies' capital. In addition, since the return profile on
financed vertical strips is different to retained CLO Income Notes,
BIL believes that vertical strips may be more robust through a
market downturn, although projected IRRs may be slightly lower.
However, an investment in vertical strips is not expected to impact
the Company's stated target return.
From time to time, as part of its ongoing portfolio management,
the Underlying Companies may sell positions as and when suitable
opportunities arise. Where not bound by risk retention
requirements, it is the intention that the Underlying Companies
would seek to maintain control of the call option of any CLOs
securitised.
With respect to investments in CLO Securities, while the
Underlying Companies maintain a focus on investing in newly issued
CLOs, it will also evaluate the secondary market for sourcing
potential investment opportunities in CLO Securities.
Whilst the intention is to pursue an active, non-benchmark total
return strategy, the Company is cognisant of the positioning of the
loan portfolios against relevant indices. Accordingly, the
Underlying Companies will track the returns and volatility of such
indices, while seeking to outperform them on a consistent basis.
In-depth, fundamental credit research dictates name selection and
sector over-weights/under-weights relative to the benchmark,
backstopped by constant portfolio monitoring and risk oversight.
The Underlying Companies will typically look to diversify their
portfolios to avoid the risk that any one obligor or industry will
adversely impact overall returns. The Underlying Companies also
place an emphasis on loan portfolio liquidity to ensure that if
their credit outlook changes, they are free to respond quickly and
effectively to reduce or mitigate risk in their portfolio. The
Company believes this investment strategy will be successful in the
future as a result of its emphasis on risk management, capital
preservation and fundamental credit research. The Directors believe
the best way to control and mitigate risk is by remaining
disciplined in market cycles, by making careful credit decisions
and maintaining adequate diversification.
The portfolio of the Underlying Companies in which the Company
invests (through its wholly-owned subsidiary) remains broadly
divided between European CLOs and US CLOs.
The Company operates with Euro as its functional currency. The
Rollover Assets and a significant proportion of the portfolio of
assets held by Underlying Companies to which the Company has
exposure may, from time to time, be denominated in currencies other
than Euro. In accordance with the Company's investment policy, up
to 100 per cent (as appropriate) of the Company's exposure to such
non-Euro assets is hedged, subject to suitable hedging contracts
being available at appropriate times and on acceptable terms.
(33) Excludes Ordinary Shares repurchased of 267,756 and 28,000
as announced on the RNS on 29 June 2021 and 30 June 2021
respectively.
(34) Includes Ordinary Shares repurchased of 267,756 and 28,000
as announced on the RNS on 29 June 2021 and 30 June 2021
respectively.
Corporate Activity
EGM and Name Change
On 6 January 2021, the Company announced that at the
Extraordinary General Meeting held on the same date a special
resolution to change the Company's name from "Blackstone / GSO Loan
Financing Limited" to "Blackstone Loan Financing Limited" had been
duly passed.
On 13 January 2021, the Company announced that, further to the
announcement made on 6 January 2021 and with effect from 11 January
2021 the Company's name had been changed accordingly.
Revised Dividend Policy
On 22 January 2021, the Board announced that the Company had
adopted a revised Dividend Policy targeting a total 2021 annual
dividend of between EUR0.07 and EUR0.08 per ordinary share, to
consist of quarterly payments of EUR0.0175 per ordinary share for
the first three quarters and a final quarter payment of a variable
amount to be determined at that time.
Share Repurchase Programme
During the period ended 30 June 2021, the Company repurchased
7,236,256 of its Ordinary Shares at a weighted average price per
share of EUR0.76 (including repurchase fees) as part of its
discount management programme as further described below. The
repurchased Ordinary Shares are held as treasury shares. Further
details of the repurchases during the period are included
below.
On 7 and 11 January 2021, and on 10 March 2021, the Company's
Joint Brokers, on behalf of the Company, made three market share
repurchases for a total of 125,000 shares at a weighted average
price of EUR0.65 per share (including repurchase fees).
On 12 March 2021 the Company announced that it had appointed its
Joint Brokers to manage a Share Repurchase Programme to repurchase
Ordinary Shares within certain pre-set parameters, to begin on 12
March 2021 and run until 26 May 2021.
On 1 June 2021 the Company announced that the above-described
Share Repurchase Programme had been renewed until 23 July 2021,
being the date of the Company's Annual General Meeting, and that in
order to commence the renewed Share Repurchase Programme the
Company instructed its Joint Brokers to buy up to 5 million
ordinary shares at a price of EUR0.75 per share. The Company
invited any shareholders interested in selling their shares to
contact their usual contact at Winterflood or N+1 Singer by no
later than 2:00pm on 3 June.
On 3 June 2021 the Company repurchased 5 million shares at a
price of EUR0.75 per share (including repurchase fees).
On 16 June 2021, a further market share repurchase was made
under the Share Repurchase Programme for a total of 1,590,500
shares at a weighted average price of EUR0.765 per share (including
repurchase fees).
On 15, 18, 22, 28, 29 and 30 June, six additional market share
repurchases were made under the Share Repurchase Programme for a
total of 520,756 shares at a weighted average price of EUR0.78 per
share (including repurchase fees).
On 26 July 2021, the Company announced that the above-described
Share Repurchase Programme had been renewed until 30 September
2021.
From 1 July 2021 to 21 September 2021 the Company repurchased
2,535,751 Ordinary Shares at a weighted average price per share of
EUR0.78 (including repurchase fees).
Risk Overview
Each Director is aware of the risks inherent in the Company's
business and understands the importance of identifying, evaluating
and monitoring these risks. The Board has adopted procedures and
controls to enable it to manage these risks within acceptable
limits and to meet all of its legal and regulatory obligations.
The Board considers the process for identifying, evaluating and
managing any significant risks faced by the Company on an ongoing
basis and these risks are reported and discussed at Board meetings.
It ensures that effective controls are in place to mitigate these
risks and that a satisfactory compliance regime exists to ensure
all applicable local and international laws and regulations are
upheld.
Risk Appetite
The Board's strategic risk appetite is to balance the amount of
income distributed by the Company by way of dividend with the
opportunity to reinvest the returns received from the underlying
CLO investments in further CLO equity through the structure. The
Board seeks to ensure that the dividend policy is sustainable
without eroding capital. Where the Company's share price is at a
material discount to the NAV per share the Board may decide to
repurchase shares in accordance with its share buyback policy
instead of, or as well as, reinvestment into CLOs.
When considering other risks, the Board's risk appetite is
effectively governed by a cost benefit analysis when assessing
mitigation measures. However, at all times the Company will seek to
follow best practice and remain compliant with all applicable laws,
rules and regulations.
Principal Risks and Uncertainties
As recommended by the Risk Committee, the Board has adopted a
risk management framework to govern how the Board: identifies
existing and emerging risks; determines risk appetite; identifies
mitigation and controls; assesses, monitors and measures risk; and
reports on risks.
The Board reviews risks at least twice a year and receives
deep-dive reports on specific risks as recommended by the Risk
Committee. Throughout the period under review the Board considered
15 main risks which have a higher probability and a significant
potential impact on performance, strategy, reputation, or
operations (Category A risks). Of these, the five risks identified
below were considered the principal risks faced by the Company
where the combination of probability and impact was assessed as
being most significant. During the period, ESG risk has been added
as a Category A Risk, as it is a key current focus of the Board and
the Portfolio Adviser. The Board also considered another 14 less
significant existing or emerging risks (Category B risks) which are
monitored on a watch list.
During the period, as the COVID-19 pandemic continued its
course, the Board and the Risk Committee considered the impact that
the situation was having on the Company's business and its service
providers. Risks relating to Reliance on Service Providers and
Business Continuity were initially heightened but then receded as
service providers demonstrated adaptability and resilience. Due to
the material impact that the epidemic is having on the Company,
society and the economy, the five principal risks below are
considered through the lens of COVID-19.
Principal risk COVID-19 commentary
--------------------------------------------------------- ---------------------------------------------------------
Investment Performance
A key risk to the Company is unsatisfactory investment Credit markets, along with most other asset classes,
performance due to an economic downturn were initially badly hit by the expected
along with continued political uncertainty which could impact of COVID-19 on companies and markets. However, as
negatively impact global credit markets the actual impact of the pandemic
and the risk reward characteristics for CLO structuring. on specific companies and markets has become clearer,
This could directly impact the performance markets have adjusted and rebounded.
of the underlying CLOs that the Company invests in and it
could also result in a reduced number During 2020, the Portfolio Adviser conducted detailed
of suitable investment opportunities and/or lower reviews of the companies that comprised
shareholder demand. the underlying portfolio and, within the parameters of
the CLOs, traded in and out of different
names to re-orientate the portfolios for the COVID-19
environment. The Portfolio Adviser has
since managed the portfolio as detailed in the Portfolio
Advisers report above.
The Board takes comfort from the pedigree of Blackstone
Credit as Portfolio Advisers and their
ability to trade and manage risk in the portfolios in
difficult circumstances, as demonstrated
in the GFC and as seen in 2020 and 2021.
--------------------------------------------------------- ---------------------------------------------------------
Share price discount
The price of the Company's shares may trade at a discount Due to the inherent uncertainty created by the onset of
relative to the underlying net asset the COVID-19 pandemic last year, the
value of the shares. Company's discount initially widened as far as 36.7%,
although there had been no sustained
selling pressure.
The discount subsequently narrowed somewhat but remained
in the range 16% - 30% for the rest
of 2020.
As the likely impact of the pandemic became clearer in
mid-2020, the Board commenced buying
back some of the Company's shares. Please refer to the
Chair's Statement and Share Repurchase
Programme in Corporate Activity. The Board also began
consulting with advisers to formulate
a clearer policy regarding the application of cash
generated by the underlying portfolio between
distributions to shareholders, amounts re-invested into
the portfolio and amounts available
to buy back the Company's shares where there is a
discount.
The discount consequently narrowed from a range of
14.65% to 26.18% during the 3 months to
31 March 2021 to a range of 5.82% to 14.65% during the 3
months to 30 June 2021. The discount
as at 30 June 2021 was 10.99%.
--------------------------------------------------------- ---------------------------------------------------------
Investment valuation The Directors use their judgement, with the assistance of
The investment in the Lux Subsidiary is accounted for at the Portfolio Adviser, in selecting
fair value through profit or loss an appropriate valuation technique and refer to
and the investment in PPNs issued by BCF held by the Lux techniques commonly used by market practitioners.
Subsidiary are at fair value. Investments The board of directors of BCF likewise use their
in BCF (the PPNs) are illiquid investments, not traded on judgement in determining the valuation of
an active market and are valued investments and underlying CLOs and equity tranches
using valuation techniques determined by the Directors. retained by BCF. Independent valuation
The underlying CLO investments held service providers are involved in determining the fair
by BCF are valued using modelling methodologies, value of underlying CLOs.
described in the Company's Prospectus, that The Board and Portfolio Adviser have paid close attention
are based upon many assumptions. to developing market expectations
and assumptions through the pandemic, to ensure that
The valuation of the Company's investments therefore valuations reflect reasonable future
requires significant judgement and there scenarios.
is a risk that they are incorrectly valued due to Sales of equity positions in the CLOs held by BCF, to
calculation errors or incorrect assumptions. third parties, during the period have
validated that the Company's valuation policy is
reasonable.
--------------------------------------------------------- ---------------------------------------------------------
Income distribution model The Directors use their judgement, with the assistance of
The Company receives cash flows from its underlying the Portfolio Adviser, in setting
exposure to debt and CLO investments held the Company's distribution policy to ensure that it is
by BCF. Each underlying CLO will pay out a mixture of appropriate given the performance of
income and capital return over its life the underlying CLOs.
with a terminal capital value in the 70 to 80% range. BCF As a result of the initial COVID-19 impact assessment
aims to distribute most of the proceeds conducted by the Portfolio Adviser in
that it receives from CLO investments to the Company (via March/April 2020, the Company decided to amend its
PPNs) whilst reinvesting some of dividend policy. The target for 2020 dividends
the proceeds back into CLOs to maintain capital invested. was announced as a range from EUR0.06 to EUR0.07 per
In turn, the Company aims to distribute share. This was to ensure that there
income received to shareholders, in accordance with its was sufficient cover for distributions in the reasonable
distribution policy, without eroding downside scenarios identified by
capital. the Portfolio Adviser.
There is a risk that the distribution policy at the Due to the robust performance of the underlying portfolio
Company level may be too generous or re-investment relative to the modelled downside
at the BCF level may not be sufficient, resulting in the scenarios, the Company was able to pay dividends for 2020
erosion of underlying capital invested. of EUR0.07 per share and announced
a target range for 2021 of EUR0.07 to EUR0.08 per share.
--------------------------------------------------------- ---------------------------------------------------------
Operational
The Company has no employees, systems or premises and is The Risk Committee has reviewed the arrangements put in
reliant on its Portfolio Adviser place by key service providers to
and service providers for the delivery of its investment ensure continuity of service to the Company and is
objective and strategy. currently satisfied that they are sufficient.
This will be kept under regular review.
The COVID-19 pandemic means that all of the Company's
service providers are operating under
business continuity procedures with staff mainly working
from home. This increases the risk
of control breakdowns, errors and omissions and
regulatory breaches.
As the pandemic takes its course there is also an
increased risk that key individuals at the
Portfolio Adviser and other service providers will be ill
or otherwise unable to work. This
will reduce the capacity for the Company to operate.
--------------------------------------------------------- ---------------------------------------------------------
Going Concern
The Directors have considered the Company's investment
objective, risk management and capital management policies, its
assets and the expected income from its investments while factoring
in the economic impact the outbreak of COVID-19 had during 2020 and
continues to have through 2021, as discussed further in the Chair's
Statement and the Portfolio Adviser's Review. The Directors are of
the opinion that the Company is able to meet its liabilities and
ongoing expenses as they fall due and they have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Accordingly,
these financial statements have been prepared on a going concern
basis and the Directors believe it is appropriate to continue to
adopt this basis for a period of at least 12 months from the date
of approval of these financial statements.
Performance Analysis
IFRS NAV Performance Analysis for the Periods Ended 30 June 2021
and 31 December 2020 - Contributors to Change
[Graphs and charts are included in the published Half Yearly
Financial Report which is available on the Company's website at
https://www.blackstone.com/fund/bglfln-blackstone-gso-loan-financing-limited/]
Further commentary on the Company's performance is contained in
the Chair's Statement and the Portfolio Adviser's Review.
Published NAV Performance Analysis for the Periods Ended 30 June
2021 and 31 December 2020 - Contributors to Change
[Graphs and charts are included in the published Half Yearly
Financial Report which is available on the Company's website at
https://www.blackstone.com/fund/bglfln-blackstone-gso-loan-financing-limited/]
Further commentary on the Company's performance is contained in
the Chair's Statement and the Portfolio Adviser's Review.
Other Information
Valuation Methodology
As noted above, the Published NAV and the IFRS NAV may diverge
because of different key assumptions used to determine the
valuation of the BCF portfolio. Key assumptions which are different
between the two bases as at 30 June 2021 are detailed below:
Asset Valuation Input IFRS Published IFRS Published
Methodology NAV NAV NAV NAV
30 June 2021 31 December 2020
Discounted
CLO Securities Cash Flows Default rate 2.00% 1.58%(35) 1.75% 1.83%
Conditional
prepayment
rate 20% 20% 23% 24%
Reinvestment
spread (bp
over LIBOR) 347.32 359.98 370.00 359.23
Recovery rate
Loans 60% 60% 60% 60%
Recovery lag
(Months) 0 6 0 12
Discount rate 11.65% 14.00% 14.55% 14.00%
----------------------------------------------- ------- ---------- ------- ----------
All of the assumptions above are based on weighted averages.
Certain assumptions, which underpin the period-end Published
NAV, such as the default rate, reinvestment spread, the 6-month
recovery lag on assumed defaulted assets and the discount rate
contribute to the divergence between the IFRS NAV and Published
NAV. The below table further explains the rationale regarding the
differences in certain assumptions that significantly contributed
to the valuation divergence as at 30 June 2021.
Assumptions IFRS NAV Published NAV
------------- ------------------------------------- --------------------------------
Reinvestment Largely weighted by a CLO's Represents a normalised,
Spread current portfolio weighted long-term view of loan
average spread, which assumes spreads to be achieved
that the CLO investment over the life of the CLO's
manager will continue to remaining reinvestment
reinvest in collateral period. Initially informed
with a similar spread and by the underwriting model
rating composition to the at issuance, the assumption
existing collateral pool. is periodically reviewed
In addition, weighting and updated to the extent
may be given to primary of secular changes in loan
loan spreads to the extent spreads.
current primary market
opportunities suggest different
spreads than the existing
portfolio.
Discount Intended to reflect the Based on the expected rate
Rate market required rate of of return at the time of
return for similar securities initial underwriting, assuming
and is informed by market a hold period to maturity
research, BWICs, market and current projections
colour for comparable transactions, around collateral performance
and dealer runs. The discount and reinvestment. The discount
rate may vary based on rate is periodically reviewed
underlying loan prices, and updated to the extent
exposure to distressed of secular changes in the
assets or industries, manager market required rate of
performance, and time remaining return.
in reinvestment period.
Source of the Company's Dividend - Ordinary Class
The Company through its investments in the Lux Subsidiary
receives income, on a quarterly basis, on the PPNs held by the
latter in BCF, which continues to generate positive cash flows from
its CLO Income Note investments and from its portfolio of directly
held and warehoused loans.
The Company redeems CSWs on a quarterly basis to transfer the
income from the Lux Subsidiary. As detailed on above, the Company
redeemed 19,354,587 CSWs in the Lux Subsidiary during the period
with a fair value of EUR26,425,980 to fund the quarterly
dividend.
Alternative Investment Fund Managers Directive
The AIFMD requires certain information to be made available to
investors in AIFs before they invest and requires that material
changes to this information be disclosed in the annual report of
each AIF. There have been no material changes (other than those
reflected in these financial statements) to this information
requiring disclosure.
Alternative Performance Measures
In accordance with ESMA Guidelines on APMs, the Board has
considered which APMs are included in the Half Yearly Financial
Report and require further clarification. An APM is defined as a
financial measure of historical or future financial performance,
financial position, or cash flows, other than a financial measure
defined or specified in the applicable financial reporting
framework. APMs included in the financial statements, which are
unaudited and outside the scope of IFRS, are detailed in the table
below:
Published NAV total Published NAV per (Discount) / Premium
return per Ordinary Ordinary Share(36) per Ordinary Share
Share(36)
Definition The increase in Gross assets less BGLF's closing
the Published NAV liabilities (including share price on
per Ordinary Share accrued but unpaid the LSE less the
plus the total dividends fees) determined Published NAV per
paid per Ordinary in accordance with share as at the
Share during the the section entitled period end, divided
period, with such "Net Asset Value" by the Published
dividends paid being in Part I of the NAV per share as
re-invested at NAV, Company's Prospectus, at that date.
as a percentage divided by the number
of the NAV per share of Ordinary Shares
as at period end. at the relevant
time.
Reason NAV total return The Published NAV The discount or
summarises the Company's per share is an premium per Ordinary
true growth over indicator of the Share is a key
time while taking intrinsic value indicator of the
into account both of the Company. discrepancy between
capital appreciation the market value
and dividend yield. and the intrinsic
value of the Company.
Target Approximately 11%+ Not applicable Maximum discount
of 7.5%
Performance
2021(37) 10.59% 0.8875 (10.99)%(38)
2020 (0.22)% 0.8435 (20.57)%
2019 14.46% 0.9187 (10.20)%
2018 6.70% 0.8963 (15.21)%
2017 1.38% 0.9378 5.03%
2016 13.28% 1.0238 (1.10)%
------------ ------------------------- ----------------------- ----------------------
A reconciliation of the APMs to the most directly reconcilable
line items presented in the financial statements for the six months
ended 30 June 2021 and the year ended 31 December 2020 is presented
below:
Published NAV total return per Ordinary Share
Six months ended Year ended
30 June 2021 31 December 2020
Opening Published NAV per Ordinary
Share (A) EUR0.8435 EUR0.9187
Adjustments per Ordinary Share (B) EUR0.0122 EUR(0.0644)
Opening IFRS NAV per Ordinary Share
(C=A+B) EUR0.8557 EUR0.8543
Closing Published NAV per Ordinary
Share (D) EUR0.8875 EUR0.8435
Adjustments per Ordinary Share (E) EUR0.0070 EUR0.0122
Closing IFRS NAV per Ordinary Share
(F=D+E) EUR0.8945 EUR0.8557
Dividends paid during the period/year
(G) EUR0.0425 EUR0.0700
Published NAV total return per Ordinary
Share
(H=(D-A+G)/A) 10.25% (0.57)%
Impact of dividend re-investment
(I) 0.34% 0.35%
Published NAV total return per Ordinary
Share with dividends re-invested
(J=H+I) 10.59% (0.22)%
IFRS NAV total return per Ordinary
Share
(K=(F-C+G)/C) 9.50% 8.36%
Impact of dividend re-investment
(L) 0.39% 0.49%
IFRS NAV total return per Ordinary
Share with
dividends re-invested (M=K+L) 9.89% 8.85%
---------------------------------------- ------------------ -----------------
Refer to Note 14 for further details on the adjustments per
Ordinary Share.
Published NAV per Ordinary Share
30 June 2021 31 December 2020
Published NAV per Ordinary Share
(A) EUR0.8875 EUR0.8435
Adjustments per Ordinary Share (B) EUR0.0070 EUR0.0122
IFRS NAV per Ordinary Share (C=A-B) EUR0.8945 EUR0.8557
------------------------------------ ------------ ----------------
Refer to Note 14 for further details on the adjustments per
Ordinary Share.
(Discount) / Premium per Ordinary Share
30 June 2021 31 December 2020
Published NAV per Ordinary Share (A) EUR0.8875 EUR0.8435
Adjustments per Ordinary Share (B) EUR0.0070 EUR0.0122
IFRS NAV per Ordinary Share (C=A-B) EUR0.8945 EUR0.8557
Closing share price as at the period
end per the LSE (D) EUR0.7900 EUR0.6700
Discount to Published NAV per Ordinary
Share (E=(D-A)/A) (10.99)% (20.57)%
Discount to IFRS NAV per Ordinary
Share (F=(D-C)/C) (11.68)% (21.70)%
--------------------------------------- ------------ ----------------
Refer to Note 14 for further details on the adjustments per
Ordinary Share.
(35) The metric shown represents a time weighted average of a
default vector which begins at the current portfolio default rate
and ramps up to an assumed long term average default rate.
(36) Published NAV is an APM from which these metrics are
derived.
(37) For the 6 month period to 30 June 2021
(38) Chair's Statement above.
Future Developments
Significant Events after the Reporting Period
On 21 July 2021, the Company declared a dividend of EUR0.0175
per Ordinary Share in respect of the period from 1 April 2021 to 30
June 2021. A total payment of EUR7,205,128 was made on 28 August
2021.
During the period from 1 July 2021 to 21 September 2021, the
Company repurchased:
a) under the 2020 AGM authority, 1,080,000 of its Ordinary
Shares of no par value at a total cost of EUR840,900 (excluding
fees and commissions); and
b) under the 2021 AGM authority, 1,455,751 of its Ordinary
Shares of no par value at a total cost of EUR 1,125,660 (excluding
fees and commissions).
On 8 September, the Company disposed of the final Rollover
Assets, being 2 Mezzanine Notes, for total proceeds of
EUR1,411,355.
Additionally, refer to Note 18 below for further details.
Outlook
It is the Board's intention that the Company will pursue its
investment objective and investment policy as detailed above.
Further comments on the outlook for the Company for the 2021
financial year and the main trends and factors likely to affects
its future development, performance and position are contained
within the Chair's Statement and the Portfolio Adviser's
Review.
Directors' Biographies
Directors' Biographies
The Directors appointed to the Board as at the date of approval
of this Half Yearly Financial Report are:
Charlotte Valeur
Position: Chair of the Board (non-executive and independent director, resident in Jersey)
Date of appointment: 13 June 2014
Charlotte has over 35 years of experience in finance, primarily
as an investment banker in Capital Markets in Denmark and the U.K.
She is an experienced FTSE Chair, Non-Executive Director and
corporate governance expert. Charlotte's current appointments
include her roles as NED of listed company Digital 9 Infrastructure
Plc, NED of NTR Plc and NED of Laing O'Rourke Construction Ltd.
Charlotte previously held roles as Chair of FTSE250 Kennedy
Wilson Europe Real Estate Plc; Chair of DW Catalyst Fund Ltd; NED
of Renewable Energy Generation Plc; NED of Phoenix Spree
Deutschland Ltd, NED of
JPMorgan Convertibles Income Fund, and NED of FTSE250 3i
Infrastructure Plc.
Charlotte is also a Trustee of the Institute of Neurodiversity
and Chair and founder of Board Apprentice. She is a member of the
London Stock Exchange Primary Markets Group, serves on the Advisory
Board of the Moller Institute, Churchill College, University of
Cambridge and is a visiting Professor in Governance at University
of Strathclyde. Charlotte was previously the Chair of the UK
Institute of Directors.
Gary Clark, ACA
Position: Chair of the Remuneration and Nomination Committee and
NAV Review Committee; Senior Independent Director (non-executive
and independent director, resident in Jersey)
Date of appointment: 13 June 2014
Gary Clark acts as an independent non-executive director for a
number of investment managers including Emirates NBD, Aberdeen
Standard Capital and ICG. Until 1 March 2011 he was a managing
director at State Street and their head of Hedge Fund Services in
the Channel Islands. Gary Clark, a Chartered Accountant, served as
chairman of the Jersey Funds Association from 2004 to 2007 and was
managing director at AIB Fund Administrators Limited when it was
acquired by Mourant in 2006. This business was sold to State Street
in 2010. Prior to this Gary Clark was managing director of the
futures broker, GNI (Channel Islands) Limited in Jersey.
A specialist in alternative investment funds, Gary Clark was one
of several practitioners involved in a number of significant
changes to the regulatory regime for funds in Jersey, including the
introduction of both Jersey's Expert Funds Guide and Jersey's
Unregulated Funds regime.
As a Chartered Accountant with over 30 years' experience in
financial services, including many years focused on running fund
administration businesses in alternative asset classes, Gary Clark
brings a wealth of highly relevant experience, at both board level
and as an executive, in fund / asset management operations,
including in particular valuation, accounting and administrative
controls and processes.
Heather MacCallum, CA
Position: Chair of the Audit Committee (non-executive and independent
director, resident in Jersey)
Date of appointment: 7 September 2017
Heather MacCallum is a Chartered Accountant and was a partner
of KPMG Channel Islands for 15 years before retiring from the
partnership in 2016.
Heather MacCallum now holds a portfolio of non-executive directorships
including Aberdeen Latin American Income Fund Limited and Invesco
Bond Income Plus Limited (formerly City Merchants High Yield
Trust Limited), both of which are investment companies listed
on the London Stock Exchange. She is the Chair of Jersey Water,
an unlisted Jersey utility company.
She is a member of the Institute of Directors and the Institute
of Chartered Accountants of Scotland (ICAS). She is also a
past president of the Jersey Society of Chartered and Certified
Accountants.
With 20 years' experience gained in a global professional services
firm, Heather MacCallum brings financial experience including
technical knowledge of accounting and auditing, especially
in the context of financial services, and in particular the
investment management sector.
Steven Wilderspin, FCA, IMC
Position: Chair of the Risk Committee (non-executive and independent
director, resident in Jersey)
Date of appointment: 11 August 2017
Steven Wilderspin, a qualified Chartered Accountant, has been
the Principal of Wilderspin Independent Governance, which provides
independent directorship services, since 2007. He has served
on a number of private equity, property and hedge fund boards
as well as commercial companies.
In February 2021 Steven Wilderspin was appointed as a director
of FTSE 250 GCP Infrastructure Investments Ltd and he is also
a director of FTSE 250 HarbourVest Global Private Equity Limited.
In December 2017 Steven Wilderspin stepped down from the board
of FTSE 250 3i Infrastructure plc, where he was chairman of
the audit and risk committee, after ten years' service.
From 2001 until 2007, Steven Wilderspin was a director of fund
administrator Maples Finance Jersey Limited where he was responsible
for fund and securitisation structures. Before that, from 1997,
Steven Wilderspin was Head of Accounting at Perpetual Fund
Management (Jersey) Limited.
Steven Wilderspin has significant listed corporate governance
experience, particularly in the area of risk management, so
is well placed to lead the board through the development of
its risk framework.
Mark Moffat
Position: Non-executive and independent director (resident
in UK)
Date of appointment: 8 January 2020
Mark Moffat has been involved in structuring, managing and
investing in CLOs for over 20 years. Mark Moffat left GSO Capital
Partners LP(39) , part of the credit businesses of The Blackstone
Group L.P., in April 2015 to pursue other interests.
Whilst at GSO Mark Moffat was a senior managing director and
the portfolio manager responsible for investing in structured
credit and co-head of the European activities of the Customised
Credit Strategies division.
Mark Moffat joined GSO in January 2012 following the acquisition
by GSO of Harbourmaster Capital Management Limited where he
was co-head. Prior to joining Harbourmaster in 2007, Mark Moffat
was head of European debt and equity capital markets and the
European CLO business of Bear Stearns. At Bear Stearns, Mark
Moffat was responsible for the origination, structuring and
execution of CLOs in Europe over a seven-year period. Prior
to Bear Stearns, Mark Moffat was global head of CLOs at ABN
AMRO and a director in the principal finance team of Greenwich
NatWest.
With over 20 years of experience structuring, managing and
investing in CLOs Mark Moffat brings a deep knowledge of how
CLO structures and markets perform over the credit cycle.
(39) On November 9th, 2020, GSO Capital Partners changed its
name to Blackstone Credit to reflect the business's longstanding
integration with Blackstone.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Half Yearly
Financial Report and condensed interim financial statements in
accordance with applicable law and regulations.
The Directors confirm to the best of their knowledge that:
-- the condensed interim financial statements within the Half
Yearly Financial Report have been prepared in accordance with IAS
34 Interim Financial Reporting as adopted by the EU and give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the Company as at 30 June 2021, as required by
the UK's FCA's DTR 4.2.4R;
-- the Chair's Statement, the Portfolio Adviser's Report, the
Strategic Report and the notes to the condensed interim financial
statements includes a fair review of the information required
by:
i. DTR 4.2.7R, being an indication of important events that have
occurred during the first six months, the financial period ended 30
June 2021 and their impact on the condensed interim financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
ii. DTR 4.2.8R, being related party transactions that have taken
place in the first six months, the financial period ended 30 June
2021 and that have materially affected the financial position or
performance of the Company during the period.
Charlotte Valeur Heather MacCallum
Director Director
21 September 2021
Independent Review Report to Blackstone / GSO Loan Financing
Limited
Independent Review Report to Blackstone Loan Financing
Limited
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises the condensed
statement of comprehensive income, condensed statement of financial
position, condensed statement of changes in equity, condensed
statement of cash flows and related notes 1 to 18. We have read the
other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
company will be prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34 as
adopted by the European Union and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
St. Helier Jersey
21 September 2021
Condensed Statement of Financial Position
Condensed Statement of Financial Position
As at 30 June 2021 (Unaudited)
As at As at
30 June 2021 31 December 2020
(unaudited) (audited)
Notes EUR EUR
--------------------------------------------------------------- ----- -------------- ------------------
Current assets
Cash and cash equivalents 11,286,658 20,725,819
Other receivables 5 111,108 151,038
Financial assets at fair value through profit or loss - Lux Co 6 409,552,933 388,000,146
Financial assets at fair value through profit or loss - CLOs 6 954,927 549,437
Total current assets 421,905,626 409,426,440
--------------------------------------------------------------- ----- -------------- ------------------
Non-current liabilities
Intercompany loan 7 (1,057,318) (869,988)
--------------------------------------------------------------- ----- -------------- ------------------
Total non-current liabilities (1,057,318) (869,988)
--------------------------------------------------------------- ----- -------------- ------------------
Current liabilities
Payables 8 (643,377) (351,277)
--------------------------------------------------------------- ----- -------------- ------------------
Total current liabilities (643,377) (351,277)
--------------------------------------------------------------- ----- -------------- ------------------
Total liabilities (1,700,695) (1,221,265)
--------------------------------------------------------------- ----- -------------- ------------------
Net assets 13,14 420,204,931 408,205,175
--------------------------------------------------------------- ----- -------------- ------------------
Capital and reserves
Stated capital 9 466,000,781 471,465,875
Retained earnings (45,795,850) (63,260,700)
Shareholders' Equity 420,204,931 408,205,175
--------------------------------------------------------------- ----- -------------- ------------------
Net Asset Value per Share 13 0.8945 0.8557
--------------------------------------------------------------- ----- -------------- ------------------
These financial statements were authorised and approved for
issue by the Directors on 21 September 2021 and signed on their
behalf by:
Charlotte Valeur Heather MacCallum
Director Director
The accompanying notes below form an integral part of the
condensed interim financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 June 2021 (Unaudited)
Six months ended Six months ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
Notes EUR EUR
-------------------------------------------------------------------------- ------ ---------------- ----------------
Income
Realised gain on foreign exchange 6,313 67,962
Net gain/(loss) on financial assets at fair value through profit or loss -
Lux Co 6 38,065,818 (42,499,534)
Net gain/(loss) on financial assets at fair value through profit or loss -
CLOs 6 252,636 (2,169,446)
Income distribution from CLOs 2.5(b) 155,362 253,061
Total income 38,480,129 ( 44,347,957)
-------------------------------------------------------------------------- ------ ---------------- ----------------
Expenses
Operating expenses 3 (670,397) (743,146)
-------------------------------------------------------------------------- ------ ---------------- ----------------
Profit/(loss) before taxation 37,809,732 (45,091,103)
Taxation 2.4 - -
Profit/(loss) after taxation 37,809,732 (45,091,103)
-------------------------------------------------------------------------- ------ ---------------- ----------------
Loan interest expense 7 (7,633) (4,923)
Bank interest expense (68,443) (28,334)
-------------------------------------------------------------------------- ------ ---------------- ----------------
Total interest expense (76,076) (33,257)
-------------------------------------------------------------------------- ------ ---------------- ----------------
Total comprehensive income/(loss) for the period attributable to
Shareholders 37,733,656 (45,124,360)
-------------------------------------------------------------------------- ------ ---------------- ----------------
Basic and diluted earnings/(loss) per share 12 0.0793 (0.0945)
-------------------------------------------------------------------------- ------ ---------------- ----------------
The Company has no items of other comprehensive income/(loss),
and therefore the profit/(loss) for the period is also the total
comprehensive income/(loss).
All items in the above statement are derived from continuing
operations. No operations were acquired or discontinued during the
period.
The accompanying notes below form an integral part of the
condensed interim financial statements.
Condensed Statement of Changes in Equity
Condensed Statement of Changes in Equity
For the six months ended 30 June 2021 (Unaudited)
Notes Stated Retained
Capital Earnings
Ordinary Ordinary
Share Share Total
EUR EUR EUR
------------------------------ ----- ----------- ------------ ------------
Shareholders' Equity
at
1 January 2021 9 471,465,875 (63,260,700) 408,205,175
Total comprehensive
income for the period
attributable to Shareholders - 37,733,656 37,733,656
Transactions with
owners
Dividends 16 - (20,268,806) (20,268,806)
Ordinary Shares repurchased 9 (5,454,172) - (5,454,172)
Redemption Fees 9 (10,922) - (10,922)
-------------------------------- ----- ----------- ------------ ------------
(5,465,094) (20,268,806) (25,733,900)
------------------------------ ----- ----------- ------------ ------------
Shareholders' Equity
at
30 June 2021 9 466,000,781 (45,795,850) 420,204,931
-------------------------------- ----- ----------- ------------ ------------
For the six months ended 30 June 2020 (Unaudited)
Notes Retained
Stated Capital Earnings Stated Retained
Ordinary Ordinary Capital Earnings
Share Share C Share C Share Total
EUR EUR EUR EUR EUR
--------------------------- ----- -------------- -------------- ------------ ------------ --------------
Shareholders' Equity
at
1 January 2020 (Restated) 403,034,162 (59,772,318) 77,270,167 (10,026,020) 410,505,991
Total comprehensive
loss for the period
attributable
to Shareholders - (45,124,360) - - (45,124,360)
Transactions with
owners
Issuance of Shares 70,550,462 (3,306,315) (77,270,167) 10,026,020 -
Dividends 16 - (19,220,872) - - (19,220,872)
Ordinary Shares
repurchased (16,500) - - - (16,500)
--------------------------- ----- -------------- -------------- ------------ ------------ --------------
70,533,962 (22,527,187) (77,270,167) 10,026,020 (19,237,372)
--------------------------- ----- -------------- -------------- ------------ ------------ --------------
Shareholders' Equity
at
30 June 2020 473,568,124 (127,423,865) - - 346,144,259
--------------------------- ----- -------------- -------------- ------------ ------------ --------------
Refer to below for details on the conversion of the Company's C
Shares into Ordinary Shares.
The accompanying notes on below form an integral part of the
condensed interim financial statements.
Condensed Statement of Cash Flows
Condensed Statement of Cash Flows
For the six months ended 30 June 2021 (Unaudited)
Six months ended Six months ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
EUR EUR
------------------------------------------------------------------------------ ---------------- ----------------
Cash flow from operating activities
Total comprehensive income/(loss) for the period attributable to Shareholders 37,733,656 (45,124,360)
Adjustments to reconcile profit/(loss) after tax to net cash flows:
* Movement in Unrealised (gain)/loss on financial
assets at fair value through profit and loss (31,539,597) 49,581,770
* Realised gain on financial assets at fair value
through profit and loss (6,778,857) (4,809,134)
Purchase of financial assets at fair value through profit or loss (10,065,803) (6,994,122)
Proceeds from sale of financial assets at fair value through profit or loss 26,425,980 28,135,304
Changes in working capital
Decrease in other receivables 39,930 146,436
Increase in payables 292,100 159,322
------------------------------------------------------------------------------ ---------------- ----------------
Net cash generated from operating activities 16,107,409 21,095,216
------------------------------------------------------------------------------ ---------------- ----------------
Cash flow from financing activities
Redemption costs (10,922) -
Ordinary Shares repurchased (5,454,172) (16,500)
Increase in intercompany loan 187,330 172,126
Dividends paid (20,268,806) (19,220,872)
------------------------------------------------------------------------------ ---------------- ----------------
Net cash used in financing activities (25,546,570) (19,065,246)
------------------------------------------------------------------------------ ---------------- ----------------
Net (decrease)/increase in cash and cash equivalents (9,439,161) 2,029,970
------------------------------------------------------------------------------ ---------------- ----------------
Cash and cash equivalents at the start of the period 20,725,819 11,464,088
------------------------------------------------------------------------------ ---------------- ----------------
Cash and cash equivalents at the end of the period 11,286,658 13,494,058
------------------------------------------------------------------------------ ---------------- ----------------
The accompanying notes below form an integral part of the
condensed interim financial statements.
Notes to the Condensed Interim Financial Statements
For the six months ended 30 June 2021
1 General information
The Company is a closed-ended limited liability investment
company domiciled and incorporated under the laws of Jersey with
variable capital pursuant to the Collective Investment Funds
(Jersey) Law 1988. It was incorporated on 30 April 2014 under
registration number 115628. The Company's Ordinary Shares are
quoted on the Premium Segment of the Main Market of the LSE and the
Company has a premium listing on the Official List of the FCA. The
Company's C Shares were quoted on the SFS of the Main Market of the
LSE until 6 January 2020. On 6 January 2021, the Company announced
that at the Extraordinary General Meeting held earlier that day a
special resolution had been duly passed to change the name of the
Company from 'Blackstone/GSO Loan Financing Limited' to 'Blackstone
Loan Financing Limited'. On 13 January 2021, the Company announced
that the name change had taken effect from and including 11 January
2021.
The Company's investment objective is to provide Shareholders
with stable and growing income returns, and to grow the capital
value of the investment portfolio by exposure to floating rate
senior secured loans and bonds directly and indirectly through CLO
Securities and investments in Loan Warehouses. The Company seeks to
achieve its investment objective through exposure (directly or
indirectly) to one or more companies or entities established from
time to time.
As at 30 June 2021, the Company's stated capital comprised
469,787,075 Ordinary Shares of no par value (31 December 2020:
477,023,331), each carrying the right to 1 vote; 13,115,719
Ordinary Shares held in treasury (31 December 2020: 5,879,463).The
Company may issue one or more additional classes of shares in
accordance with the Articles of Association.
The Company has a wholly owned Luxemburg subsidiary, Blackstone
/ GSO Loan Financing (Luxembourg) S. à r.l., which has an issued
share capital of 2,000,000 Class A shares and 1 Class B share held
by the Company as at 30 June 2021. The Company also holds
275,438,217 Class B CSWs (31 December 2020: 284,879,854) issued by
the Lux Subsidiary. The Company also holds 2 Mezzanine Notes (31
December 2020: 2 Mezzanine Notes held) which formed part of the
Rollover Assets and were disposed of on 8 September 2021.
The Company's registered address is IFC 1, The Esplanade, St
Helier, Jersey, JE1 4BP, Channel Islands.
2 Significant accounting policies
2.1 Statement of compliance
The Annual Report and Audited Financial Statements (the "Annual
Report") are prepared in accordance with the Disclosure Guidance
and Transparency Rules of the FCA and with IFRS as adopted by the
EU as at 1 January 2021 which comprise standards and
interpretations approved by the International Accounting Standards
Board, and interpretations issued by the International Financial
Reporting Standards and Standing Interpretations Committee as
approved by the International Accounting Standards Committee which
remain in effect. The Half Yearly Financial Report has been
prepared in accordance with IAS 34 Interim Financial Reporting. The
accounting policies adopted are consistent with those of the
previous financial year and corresponding interim period, expect
for new standards and interpretations adopted by the Company as set
out below.
New standards, amendments and interpretations issued and
effective for the financial year beginning 1 January 2021
Amendments to existing standards effective for annual periods
beginning on or after 1 January 2021
The Company applies for the first time amendments regarding
replacement issues in the context of the IBOR reform (Amendments to
IFRS 9, IAS 39 and IFRS 7) which all became effective on 1 January
2021. The Directors do not expect that the adoption of the
amendments to standards listed will have a material impact on the
financial statements of the Company in future periods.
Several other amendments and interpretations apply for the first
time in 2021, but these do not have an impact on the condensed
financial statements.
The Half Yearly Financial Report has been prepared on a going
concern basis. After reviewing the Company's budget and cash flow
forecast for the next financial period and taking into
consideration the economic impact the outbreak of COVID-19
continues to have in 2021, the Directors are satisfied that, at the
time of approving the condensed interim financial statements, it is
appropriate to adopt the going concern basis in preparing the
condensed interim financial statements.
There have been no changes in accounting policies during the
period.
The accounting policies in respect of financial instruments are
set out in Note 2.2 below respectively due to the significance of
financial instruments to the Company.
2.2 Financial instruments
Investments and other financial assets
(i) Initial recognition
The Company recognises a financial asset or a financial
liability in its Condensed Statement of Financial Position when,
and only when, the Company becomes party to the contractual
provisions of the instrument.
Purchases and sales of investments are recognised on the trade
date - the date on which the Company commits to purchase or sell
the investment.
(ii) Classification
The Company classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through OCI, or through profit or loss); and
-- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses are either
to be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on
whether the Company has made an irrevocable election at the time of
initial recognition to account for the equity instrument at
FVOCI.
The Company reclassifies debt instruments when and only when its
business model for managing those assets changes.
(iii) Measurement
At initial recognition, the Company measures a financial asset
at its fair value plus, in the case of a financial asset not at
FVPL, transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial
assets carried at FVPL are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the
Company's business model for managing the asset and the cash flow
characteristics of the asset. The Company's business model is to
manage its debt instruments and to evaluate their performance on a
fair value basis. The Company's policy requires the Portfolio
Adviser and the Board to evaluate the information about these
financial assets on a fair value basis together with other related
financial information. Consequently, these debt instruments are
measured at fair value through profit or loss.
Equity instruments
The Company subsequently measures all equity investments at fair
value. Dividends from such investments are recognised in profit or
loss as other income when the Company's right to receive payments
is established.
Changes in fair value of financial assets at FVPL are recognised
in "net gain on financial assets at fair value through profit or
loss" in the Condensed Statement of Comprehensive Income.
(iv) Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership.
(v) Fair value estimation
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
As at 30 June 2021, the Company held 275,438,217 CSWs, 2,000,000
Class A shares and 1 Class B share issued by the Lux Subsidiary
(the "Investments") (31 December 2020: 284,879,854 CSWs, 2,000,000
Class A shares and 1 Class B share). These Investments are not
listed or quoted on any securities exchange, are not traded
regularly and, on this basis, no active market exists. The Company
is not entitled to any voting rights in respect of the Lux
Subsidiary by reason of their ownership of the CSWs, however, the
Company controls the Lux Subsidiary through its 100% holding of the
shares in the Lux Subsidiary.
The fair value of the CSWs and the Class A and Class B shares
are based on the net assets of the Lux Subsidiary which is based
substantially in turn on the fair value of the PPNs issued by
BCF.
The Company determines the fair value of the CLOs held directly
using third party valuations.
(vi) Valuation process
The Directors have held discussions with BIL in order to gain
comfort around the valuation of the CLOs, the underlying assets in
the BCF portfolio and through this, the valuation of the PPNs and
CSWs a s of the Condensed Statement of Financial Position date.
The Directors, through ongoing communication with the Portfolio
Adviser including quarterly meetings, discuss the performance of
the Portfolio Adviser and the underlying portfolio and in addition
review monthly investment performance reports. The Directors
analyse the BCF portfolio in terms of the investment mix in the
portfolio. The Directors also consider the impact of general credit
conditions and more specifically credit events in the US and
European corporate environment on the valuation of the CSWs, PPNs
and the BCF portfolio.
Portfolio
The Directors discuss the valuation process to understand the
methodology regarding the valuation of its underlying portfolio and
direct CLO holdings, both comprising Level 3 assets. The majority
of Level 3 assets in BCF are comprised of CLOs. In reviewing the
fair value of these assets, the Directors look at the assumptions
used and any significant fair value changes during the period under
analysis.
Net Asset Value
The IFRS NAV of the Company is calculated by the Administrator
based on information from the Portfolio Adviser and is reviewed and
approved by the Directors, taking into consideration a range of
factors including the unaudited IFRS NAV of both the Lux Subsidiary
and BCF, and other relevant available information. The other
relevant information includes the review of available financial and
trading information of BCF and its underlying portfolio, advice
received from the Portfolio Adviser and such other factors as the
Directors, in their sole discretion, deem relevant in considering a
positive or negative adjustment to the valuation.
The estimated fair values may differ from the values that would
have been realised had a ready market existed and the difference
could be material.
The fair value of the CLOs held directly, CSWs and the Class A
and Class B shares are assessed on an ongoing basis by the
Board.
F inancial liabilities
(vii) Classification
Financial liabilities include payables which are held at
amortised cost using the effective interest rate method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or where appropriate a shorter period, to the
net carrying amount on initial recognition.
(viii) Recognition, measurement and derecognition
Financial liabilities are measured initially at their fair value
plus any directly attributable incremental costs of acquisition or
issue.
Gains and losses are recognised in the Condensed Statement of
Comprehensive Income when the liabilities are derecognised.
The Company derecognises a financial liability when the
obligation specified in the contract is discharged, cancelled or
expires.
2.3 Shares in issue
The shares of the Company are classified as equity, based on the
substance of the contractual arrangements and in accordance with
the definition of equity instruments under IAS 32 Financial
Instruments: Presentation.
The proceeds from the issue of shares are recognised in the
Condensed Statement of Changes in Equity, net of the incremental
issuance costs.
Share repurchased by the Company are deducted from equity. No
gain or loss is recognised in the Condensed Statement of
Comprehensive Income on the purchase, sale or cancellation of the
Company's own equity instruments. The consideration paid or
received is recognised directly in the Condensed Statement of
Changes in Equity. Shares repurchased are recognised on the trade
date.
2.4 Taxation
Profit arising in the Company for the period of assessment will
be subject to Jersey tax at the standard corporate income tax rate
of 0% (30 June 2020: 0%).
2.5 Income
2.5a Interest income and expense
Interest income and expense is recognised under IFRS 9
separately through profit or loss in the Condensed Statement of
Comprehensive Income, on an effective interest rate yield
basis.
2.5b Income distributions from CLOs
Income from the financial assets at fair value through profit or
loss - CLOs is recognised under IFRS 9 in the Condensed Statement
of Comprehensive Income as Income distributions from CLOs. Income
from the CLOs is recognised on an accruals basis.
2.6 Critical accounting judgements and estimates
The preparation of the financial statements in conformity with
IFRS requires management to make judgements, estimates and
assumptions that affect items reported in the Condensed Statement
of Financial Position and Condensed Statement of Comprehensive
Income. It also requires management to exercise its judgement in
the process of applying the Company's accounting policies.
Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount
of assets and liabilities affected in future periods.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Estimates
(a) Fair value
For the fair value of all financial instruments held, the
Company determines fair values using appropriate techniques.
Refer to Note 2.2 for further details on the significant
estimates applied in the valuation of the company's financial
instruments.
Judgements
(b) Non-consolidation of the Lux Subsidiary
The Company meets the definition of an Investment Entity as
defined by IFRS 10 - Consolidated Financial Statements ("IFRS 10")
and is required to account for its investment at fair value through
profit or loss.
The Company has multiple unrelated investors and holds multiple
investments in the Lux Subsidiary. The Company has been deemed to
meet the definition of an Investment Entity per IFRS 10 as the
following conditions exist:
-- the Company has obtained funds for the purpose of providing
investors with investment management services;
-- the Company's business purpose, which has been communicated
directly to investors, is investing solely for returns from capital
appreciation, investment income, or both; and
-- the performance of investments made through the Lux
Subsidiary is measured and evaluated on a fair value basis.
The Company has also considered the typical characteristics of
an investment entity per IFRS 10 in assessing whether it meets the
definition of an Investment Entity.
The Company controls the Lux Subsidiary through its 100% holding
of the voting rights and ownership. The Lux Subsidiary is
incorporated in Luxembourg.
Refer to Note 10 for further disclosures relating to the
Company's interest in the Lux Subsidiary.
3 Operating expenses
Six months ended
Six months ended 30 June 2020
30 June 2021 (unaudited) (unaudited)
EUR EUR
------------------------------------------------ ------------------------------------ ----------------
Professional fees 105,437 214,194
Administration fees 168,381 162,427
Brokerage fees 64,459 42,760
Regulatory fees 23,271 17,059
Directors' fees and other expenses (see Note 4) 142,926 132,534
Audit fees and audit related fees 125,203 123,823
Registrar fees 17,959 37,263
Sundry expenses 22,761 13,086
670,397 743,146
------------------------------------------------ ------------------------------------ ----------------
Administration fees
Under the administration agreement, the Administrator is
entitled to receive variable fees based on the Published NAVs of
the Company for the provision of administrative and compliance
oversight services and a fixed fee for the provision of company
secretarial services. The overall charge for the above-mentioned
fees for the Company for the six months ended 30 June 2021 was
EUR168,381 (30 June 2020: EUR162,427) and the amount due at 30 June
2021 was EUR53,806 (31 December 2020: EUR52,470).
Advisory fees
Under the Advisory Agreement, the Portfolio Adviser is entitled
to receive out of pocket expenses, all reasonable third-party
costs, and other expenses incurred in the performance of its
obligations. On this basis, the Portfolio Adviser recharged
EUR1,721 to the Company (30 June 2020: EUR82,612) comprising
primarily legal fees of EUR1,721 for the period ended 30 June 2021
(30 June 2020: EUR80,359). This amount has been included under
Professional fees for the six months ended 30 June 2021.
Audit and non-audit fees
The Company incurred EUR125,203 (30 June 2020: EUR123,823) in
audit and audit-related fees during the period of which EUR126,044
(31 December 2020: EUR116,118) was outstanding at the period
end.
The Company did not incur any (30 June 2020: EURNil) non-audit
fees during the period and no amount was outstanding as at 30 June
2021 (31 December 2020: EURNil). The table below outlines the
audit, audit related and non-audit services received during the
period.
Six months ended Six months ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
EUR EUR
---------------------------------------------------------- --- ---------------- ----------------
Audit of the Company 56,084 55,571
Audit related services - review of interim financial report 69,119 68,252
Total audit and audit related services 125,203 123,823
--------------------------------------------------------------- ---------------- ----------------
Total fees to Deloitte LLP and member firms 125,203 123,823
--------------------------------------------------------------- ---------------- ----------------
Professional fees
Professional fees comprise EUR37,824 in legal fees and EUR67,613
in other professional fees. In 2020, professional fees comprised
EUR87,532 in legal fees and EUR126,662 in other professional
fees.
4 Directors' fees
The Company has no employees. The Company incurred EUR142,926
(30 June 2020: EUR131,096) in Directors' fees (consisting
exclusively of short-term benefits) during the period of which
EUR69,264 (31 December 2020: EUR66,752) was outstanding at the
period end.
No pension contributions were payable in respect of any of the
Directors.
Refer to above for details on the Directors' interests.
5 Other receivables
As at As at
30 June 2021 31 December 2020
(unaudited) (audited)
EUR EUR
-------------------- ------------- -----------------
Prepayments 11,167 23,190
Interest receivable 99,941 127,848
-------------------- ------------- -----------------
111,108 151,038
-------------------- ------------- -----------------
6 Financial assets at fair value through profit or loss
As at As at
30 June 2021 31 December 2020
(unaudited) (audited)
Total Total
--------------------------------------------------------------- --- --- ------------- -----------------
EUR EUR
--------------------------------------------------------------- --- --- ------------- -----------------
Financial assets at fair value through profit or loss - Lux Co 409,552,933 388,000,146
------------------------------------------------------------------------- ------------- -----------------
Financial assets at fair value through profit or loss - CLOs 954,927 549,437
------------------------------------------------------------------------- ------------- -----------------
Financial assets at fair value through profit or loss - Lux Co
consists of 275,438,217 CSWs, 2,000,000 Class A shares and 1 Class
B share issued by the Lux Subsidiary (31 December 2020: 284,879,854
CSWs, 2,000,000 Class A shares and 1 Class B share issued by the
Lux Subsidiary). Financial assets at fair value through profit or
loss - CLOs consists of two Mezzanine Notes (31 December 2020: two
directly held CLO Mezzanine Notes), which formed part of the
Rollover Assets. These assets were disposed of following the period
end on 8 September 2021.
CSWs
The Company has the right, at any time during the exercise
period (being the period from the date of issuance and ending on
earlier of the 3 February 2046 or the date on which the liquidation
of the Lux Subsidiary is closed), to request that the Lux
Subsidiary redeems all or part of the CSWs at the redemption price
(see below), by delivering a redemption notice, provided that the
redemption price will be due and payable only if and to the extent
that (a) the Lux Subsidiary will have sufficient funds available to
settle its liabilities to all other ordinary or subordinated
creditors, whether privileged, secured or unsecured, prior in
ranking to the CSWs, after any such payment, and (b) the Lux
Subsidiary will not be insolvent after payment of the redemption
price.
The redemption price is the amount payable by the Lux Subsidiary
on the redemption of CSWs outstanding, which shall be at any time
equal to the fair market value of the ordinary shares (that would
have been issued in case of exercise of all CSWs), as determined by
the Board on a fully diluted basis on the date of redemption, less
a margin (determined by the Board on the basis of a transfer
pricing report prepared by an independent advisor), and the
redemption price for each CSW shall be obtained by dividing the
amount determined in accordance with the preceding sentence by the
actual number of CSWs outstanding.
If at the end of any financial year there is excess cash, as
determined in good faith by the Lux Subsidiary board (but for this
purpose only), the Lux Subsidiary will automatically redeem, to the
extent of such excess cash, all or part of the CSWs at the
redemption price provided the requirements in the previous
paragraph are met, unless the Company notifies the Lux Subsidiary
otherwise. For the avoidance of doubt, to the extent the
subscription price for the CSWs to be redeemed has not been paid at
the time the CSWs were issued, the subscription price for such CSWs
to be redeemed shall be deducted from the Redemption Price.
CSWs listed in an exercise notice may not be redeemed.
Class A and Class B shares held in the Lux Subsidiary
Class A and Class B shares are redeemable and have a par value
of one Euro per share. Class A and Class B Shareholders have equal
voting rights commensurate with their shareholding.
Class A and Class B Shareholders are entitled to dividend
distributions from the net profits of the Lux Subsidiary (net of an
amount equal to five per cent of the net profits of the Lux
Subsidiary which is allocated to the general reserve, until this
reserve amounts to ten per cent of the Lux Subsidiary nominal share
capital).
Dividend distributions are paid in the following order of
priority:
-- Each Class A share is entitled to the Class A dividend, being
a cumulative dividend in an amount of not less than 0.10% per annum
of the face value of the Class A shares.
-- Each Class B share is entitled to the Class B dividend (if
any), being any income such as but not limited to interest or
revenue deriving from the receivable from the PPN's held by the Lux
Subsidiary, less any non-recurring costs attributable to the Class
B shares.
Any remaining dividend amount for allocation of the Class A
dividend and Class B dividend shall be allocated pro rata among the
Class A shares.
The Board does not expect income in the Lux Subsidiary to
significantly exceed the anticipated annual running costs of the
Lux Subsidiary and therefore does not expect that the Lux
Subsidiary will pay significant, or any, dividends although it
reserves the right to do so.
Fair value hierarchy
IFRS 13 Fair Value Measurement ("IFRS 13") requires an analysis
of investments valued at fair value based on the reliability and
significance of information used to measure their fair value.
The Company categorises its financial assets according to the
following fair value hierarchy detailed in IFRS 13 that reflects
the significance of the inputs used in determining their fair
values:
-- Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted
prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from
market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable variable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are
valued based on quoted prices for similar instruments where
significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
Fair value hierarchy
30 June 2021 (unaudited) Level 1 Level 2 Level 3 Total
EUR EUR EUR EUR
Financial assets at fair value through profit or loss - Lux Co - - 409,552,933 409,552,933
--------------------------------------------------------------- ------- ------- ----------- -----------
Financial assets at fair value through profit or loss - CLOs - - 954,927 954,927
--------------------------------------------------------------- ------- ------- ----------- -----------
-
31 December 2020 (audited) Level 1 Level 2 Level 3 Total
EUR EUR EUR EUR
--------------------------------------------------------------- ------- ------- ----------- -----------
Financial assets at fair value through profit or loss - Lux Co - - 388,000,146 388,000,146
--------------------------------------------------------------- ------- ------- ----------- -----------
Financial assets at fair value through profit or loss - CLOs - - 549,437 549,437
--------------------------------------------------------------- ------- ------- ----------- -----------
The Company determines the fair value of the financial assets at
fair value through profit or loss - Lux Co using the unaudited IFRS
NAV of both the Lux Subsidiary and BCF.
The Company determines the fair value of the CLOs held directly
using third party valuations. The Portfolio Adviser can challenge
the marks if they appear off-market or unrepresentative of fair
value.
During the six months ended 30 June 2021 and the year ended 31
December 2020, there were no reclassifications between levels of
the fair value hierarchy.
The Company's maximum exposure to loss from its interests in the
Lux Subsidiary and indirectly in BCF is equal to the fair value of
its investments in the Lux Subsidiary.
Financial assets at fair value through profit or loss
reconciliation
The following table shows a reconciliation of all movements in
the fair value of financial assets - Lux Co categorised within
Level 3 between the start and the end of the reporting period:
30 June 2021 (unaudited) Total
EUR
--------------------------------------------------------------------------- ------------
Balance as at 1 January 2021 388,000,146
Purchases - CSWs 9,912,949
Sale proceeds - CSWs (26,425,980)
Realised gain on financial assets at fair value through profit or loss 6,778,857
Unrealised gain on financial assets at fair value through profit or loss 31,286,961
---------------------------------------------------------------------------- ------------
Balance as at 30 June 2021 409,552,933
---------------------------------------------------------------------------- ------------
Realised gain on financial assets at fair value through profit or loss 6,778,857
Total change in unrealised gain on financial assets for the period 31,286,961
Net gain on financial assets at fair value through profit or loss - Lux Co 38,065,818
---------------------------------------------------------------------------- ------------
31 December 2020 (audited) Total
EUR
--------------------------------------------------------------------------- -------------
Balance as at 1 January 2020 396,392,271
Purchases - CSWs 6,800,000
Sale proceeds - CSWs (51,548,650)
Realised gain on financial assets at fair value through profit or loss 9,233,413
Unrealised gain on financial assets at fair value through profit or loss 27,123,112
---------------------------------------------------------------------------- -------------
Balance as at 31 December 2020 388,000,146
---------------------------------------------------------------------------- -------------
Realised gain on financial assets at fair value through profit or loss 9,233,413
Total change in unrealised gain on financial assets for the year 27,123,112
Net gain on financial assets at fair value through profit or loss - Lux Co 36,356,525
---------------------------------------------------------------------------- -------------
The following table shows a reconciliation of all movements in
the fair value of financial assets - CLOs categorised within Level
3 between the start and the end of the reporting period:
30 June 2021 (unaudited) Total
EUR
------------------------------------------------------------------------- -------
Balance as at 1 January 2021 549,437
PIK capitalised 152,854
Purchases - CLOs -
Sale proceeds - CLOs -
Realised gain on financial assets at fair value through profit or loss -
Unrealised gain on financial assets at fair value through profit or loss 252,636
-------------------------------------------------------------------------- -------
Balance as at 30 June 2021 954,927
-------------------------------------------------------------------------- -------
Realised gain on financial assets at fair value through profit or loss -
Total change in unrealised gain on financial assets for the period 252,636
Net loss on financial assets at fair value through profit or loss - CLOs 252,636
-------------------------------------------------------------------------- -------
31 December 2020 (audited) Total
EUR
-------------------------------------------------------------------------------- -------------
Balance as at 1 January 2020 3,192,772
Purchases - CLOs 278,010
Sale proceeds - CLOs (864,361)
Realised loss on financial assets at fair value through profit or loss - CLOs 54,976 (40)
Unrealised loss on financial assets at fair value through profit or loss - CLOs (2,111,960)
--------------------------------------------------------------------------------- -------------
Balance as at 31 December 2020 549,437
--------------------------------------------------------------------------------- -------------
Realised gain on financial assets at fair value through profit or loss 158,632 (39 )
Total change in unrealised loss on financial assets for the period (2,111,960)
Net loss on financial assets at fair value through profit or loss - CLOs (1,953,328)
--------------------------------------------------------------------------------- -------------
Please refer to Note 2.2 for the valuation methodology of
financial assets at fair value through profit and loss.
The Company's investments, through the Lux Subsidiary, in BCF
are untraded and illiquid. The Board has considered these factors
and concluded that there is no further need to apply a discount for
illiquidity as at the end of the reporting period.
Quantitative information of significant unobservable inputs and
sensitivity analysis to significant changes in unobservable inputs
- Level 3
The significant unobservable inputs used in the fair value
measurement of the financial assets at fair value through profit or
loss - Lux Co within Level 3 of the fair value hierarchy together
with a quantitative sensitivity analysis as at 30 June 2021 and 31
December 2020 are as shown below:
Asset Class Fair Value Unobservable Ranges(40) Weighted Sensitivity to
Inputs average changes in significant
unobservable inputs
------------------ ------------ ---------------- ----------- --------- ------------------------
EUR
------------------ ------------ ---------------- ----------- --------- ------------------------
CSWs 403,133,917 Undiscounted N/A N/A 20% increase/decrease
NAV of will have a fair
BCF value impact of
+/- EUR80,626,783
------------------ ------------ ---------------- ----------- --------- ------------------------
Class A and 6,419,016 Undiscounted N/A N/A 20% increase/decrease
Class B shares NAV of will have a fair
the value impact of
Lux Subsidiary +/- EUR1,283,803
------------------ ------------ ---------------- ----------- --------- ------------------------
Total as at
30 June 2021
(unaudited) 409,552,933
------------------ ------------ ---------------- ----------- --------- ------------------------
Asset Class Fair Value Unobservable Ranges(40) Weighted Sensitivity to
Inputs average changes in significant
unobservable inputs
------------------ ------------ ---------------- ----------- --------- ------------------------
CSWs 381,605,063 Undiscounted N/A N/A 20% increase/decrease
NAV of will have a fair value
BCF impact of +/-
EUR76,321,012
----------------- ------------- ---------------- ----------- --------- ----------------------------
Class A and 6,395,083 Undiscounted N/A N/A 20% increase/decrease
Class B shares NAV of will have a fair
the value impact of
Lux Subsidiary +/-
EUR1,279,016
------------------ ------------ ---------------- ----------- --------- ------------------------
Total as at 388,000,146
31 December
2020
(audited)
------------------ ------------ ---------------- ----------- --------- ------------------------
The significant unobservable inputs used in the fair value
measurement of the financial assets at fair value through profit or
loss - CLOs, comprising directly held CLO Mezzanine Notes, within
Level 3 of the fair value hierarchy together with a quantitative
sensitivity analysis as at 30 June 2021 and 31 December 2020 are as
shown below:
Asset Class Fair Value Unobservable Ranges(41) Weighted Sensitivity
Inputs average to changes in
significant
unobservable
inputs
--------------- ----------- ------------- ----------- --------- ----------------------
EUR
--------------- ----------- ------------- ----------- --------- ----------------------
Mezzanine Notes
---------------------------- ------------- ----------- --------- ----------------------
Directly 20% increase/decrease
Held CLO will have a
Mezzanine Third party 0.1% - fair value impact
Notes 954,927 valuations 38.9% 16.9% of +/- EUR190,985
--------------- ----------- ------------- ----------- --------- ----------------------
Total as
at
30 June 2021
(unaudited) 954,927
--------------- ----------- ------------- ----------- --------- ----------------------
Asset Class Fair Value Unobservable Ranges(41) Weighted Sensitivity
Inputs average to changes in
significant
unobservable
inputs
-------------- ----------- ------------- ----------- --------- ----------------------
EUR
-------------- ----------- ------------- ----------- --------- ----------------------
Mezzanine Notes
--------------------------- ------------- ----------- --------- ----------------------
Directly 20% increase/decrease
Held CLO will have a
Mezzanine Third party 0.1% - fair value impact
Notes 549,437 valuations 23.6% 10.3% of +/- EUR109,887
-------------- ----------- ------------- ----------- --------- ----------------------
Total as
at
31 December
2020 549,437
-------------- ----------- ------------- ----------- --------- ----------------------
7 Intercompany loan
As at As at
30 June 2021 31 December 2020
(unaudited) (audited)
Total Total
-------------------------------------------------- --- --- ------------- -----------------
EUR EUR
-------------------------------------------------- --- --- ------------- -----------------
Intercompany loan - payable to the Lux Subsidiary 1,057,318 869,988
------------------------------------------------------------ ------------- -----------------
The intercompany loan - payable to the Lux Subsidiary is a
revolving unsecured loan between the Company and the Lux
Subsidiary. The intercompany loan has a maturity date of 13
September 2033 and is repayable at the option of the Company up to
the maturity date. Interest is accrued at a rate of 1.6% per annum
and is payable annually only when a written request has been
provided to the Company by the Lux Subsidiary.
8 Payables
As at As at
30 June 2021 31 December 2020
(unaudited) (audited)
EUR EUR
----------------------------------- ------------- -----------------
Professional fees 125,168 91,844
Administration fees 53,806 52,470
Directors' fees 69,264 66,752
Audit fees 126,044 116,188
Intercompany loan interest payable 26,566 18,933
Other payables 242,529 5,090
Total payables 643,377 351,277
----------------------------------- ------------- -----------------
All payables are due within the next twelve months.
9 Stated capital
Authorised
The authorised share capital of the Company is represented by an
unlimited number of shares of any class at no par value.
Allotted, called up and fully-paid
Ordinary Shares Number of shares Stated capital
EUR
---------------------------------------------------------- ---------------- --------------
As at 1 January 2021 477,023,331 471,465,875
Shares repurchased during the period and held in treasury (7,236,256) (5,454,172)
Redemption fees - (10,922)
---------------------------------------------------------- ---------------- --------------
Total Ordinary Shares as at 30 June 2021 (unaudited) 469,787,075 466,000,781
---------------------------------------------------------- ---------------- --------------
Allotted, called up and fully-paid
Ordinary Shares Number of shares Stated capital
EUR
---------------------------------------------------------- ---------------- --------------
As at 1 January 2020 402,319,490 403,034,162
Issue of Ordinary Shares upon conversion of C Shares 78,202,348 70,550,462
Shares repurchased during the period and held in treasury (3,498,507) (2,118,749)
---------------------------------------------------------- ---------------- --------------
Total Ordinary Shares as at 31 December 2020 (audited) 477,023,331 471,465,875
---------------------------------------------------------- ---------------- --------------
Allotted, called up and fully-paid
C Shares Number of shares Stated capital
EUR
------------------------------------------------ ---------------- --------------
As at 1 January 2020 133,451,107 77,270,167
C Share conversion and cancellation (133,451,107) (77,270,167)
------------------------------------------------ ---------------- --------------
Total C Shares as at 31 December 2020 (audited) - -
------------------------------------------------ ---------------- --------------
Ordinary Shares
At the 2020 AGM, held on 16 July 2020, the Directors were
granted authority to repurchase up to 14.99% of the issued share
capital as at the date of the 2020 AGM for cancellation or to be
held as treasury shares.
At the 2021 AGM, held on 23 July 2021, the Directors were
granted authority to repurchase up to 14.99% of the issued share
capital as at the date of the 2021 AGM for cancellation or to be
held as treasury shares.
Refer to Note 18 for further details on repurchases of Ordinary
Shares under the 2020 and 2021 AGM authority subsequent to the
reporting period. The 2021 authority will expire at the 2022 AGM.
The Directors intend to seek annual renewal of this authority from
Shareholders.
At the 2021 AGM, the Directors were granted authority to allot,
grant options over or otherwise dispose of up to 70,274,181 Shares
(being equal to 10.00% of the Shares in issue at the date of the
AGM). This authority will expire at the 2021 AGM.
As at 30 June 2021, the Company had 469,787,075 Ordinary Shares
in issue and 13,115,719 Ordinary Shares in treasury (31 December
2020: 477,023,331 Ordinary Shares in issue and 5,879,463 Ordinary
Shares in treasury).
Refer to Note 18 for further details on repurchases of Ordinary
Shares under the 2021 AGM authority subsequent to the reporting
period.
At the Company's 2021 AGM held on 23 July 2021, the Company
received shareholder approval to resell up to 46,880,707 Shares
held by the Company in treasury. Under the authority approved at
the 2021 AGM, these Shares are permitted to be sold or transferred
out of treasury for cash at a price representing a discount to Net
Asset Value per Share not greater than the discount at which such
Shares were repurchased by the Company. To-date, no shares have
been resold by the Company under this authority.
Voting rights - Ordinary Class
Holders of Ordinary Shares have the right to receive income and
capital from assets attributable to such class. Ordinary
Shareholders have the right to receive notice of general meetings
of the Company and have the right to attend and vote at all general
meetings.
Dividends
The Company may, by resolution, declare dividends in accordance
with the respective rights of the Shareholders, but no such
dividend shall exceed the amount recommended by the Directors. The
Directors may pay fixed rate and interim dividends.
A general meeting declaring a dividend may, upon the
recommendation of the Directors, direct that payment of a dividend
shall be satisfied wholly or partly by the issue of Ordinary Shares
or the distribution of assets and the Directors shall give effect
to such resolution.
Except as otherwise provided by the rights attaching to or terms
of issue of any Shares, all dividends shall be apportioned and paid
pro rata according to the amounts paid on the Shares during any
portion or portions of the period in respect of which the dividend
is paid. No dividend or other monies payable in respect of a Share
shall bear interest against the Company.
The Directors may deduct from any dividend or other monies
payable to a Shareholder all sums of money (if any) presently
payable by the holder to the Company on account of calls or
otherwise in relation to such Shares.
Any dividend unclaimed after a period of 10 years from the date
on which it became payable shall, if the Directors so resolve, be
forfeited and cease to remain owing by the Company.
The dividends declared by the Board during the period are
detailed above.
Please refer to Note 18 for dividends declared after the period
end.
Repurchase of Ordinary Shares
The Board intends to seek annual renewal of this authority from
the Ordinary Shareholders at the Company's AGM, to make one or more
on-market purchases of Shares in the Company for cancellation or to
be held as treasury shares.
The Board may, at its absolute discretion, use available cash to
purchase Shares in issue in the secondary market at any time.
Rights as to Capital
On a winding up, the Company may, with the sanction of a special
resolution and any other sanction required by the Companies Law,
divide the whole or any part of the assets of the Company among the
Shareholders in specie provided that no holder shall be compelled
to accept any assets upon which there is a liability. On return of
assets on liquidation or capital reduction or otherwise, the assets
of the Company remaining after payments of its liabilities shall
subject to the rights of the holders of other classes of shares, to
be applied to the Shareholders equally pro rata to their holdings
of shares.
Capital management
The Company is closed-ended and has no externally imposed
capital requirements. The Company's capital as at 30 June 2021
comprises shareholders' equity at a total of EUR420,204,931 (31
December 2020: EUR408,205,175).
The Company's objectives for managing capital are:
-- to invest the capital in investments meeting the description,
risk exposure and expected return indicated in its prospectus;
-- to achieve consistent returns while safeguarding capital by
investing via the Lux Subsidiary in BCF and other Underlying
Companies;
-- to maintain sufficient liquidity to meet the expenses of the
Company and to meet dividend commitments; and
-- to maintain sufficient size to make the operation of the Company cost efficient.
The Board monitors the capital adequacy of the Company on an
on-going basis and the Company's objectives regarding capital
management have been met.
Please refer to Note 10c Liquidity Risk in the Annual Report and
Audited Financial Statements for the year ended 31 December 2020
for further discussion on capital management, particularly on how
the distribution policy is managed.
C Shares
On 7 January 2019, the Company issued 133,451,107 C Shares in
specie as a result of the Rollover Offer. The Rollover Offer
included a transfer of assets amounting to EUR70,604,469, cash
proceeds amounting to EUR7,446,204 and incurred EUR780,506 in
costs. The C Shares were admitted to trading on the SFS of the main
market of the LSE. The C Shares were converted to Ordinary Shares
on 6 January 2020. As at 30 June 2021 and 31 December 2020, the
Company had no C Shares in issue following the conversion and
cancellation as described below.
Conversion
On 24 October 2019, the Company announced that it had reinvested
EUR62.6 million into BCF as part of its realization strategy and
that the Company intended to convert the C Shares into Ordinary
Shares. On 20 November 2019, the Company announced that the
Calculation Date would fall on 29 November 2019 to accommodate
dividend payment schedules in accordance with the Company's
Articles of Association.
The calculation of the Conversion Ratio was based on the net
assets attributable to the Ordinary Shares - EUR362,950,897 (NAV
per Share of EUR 0.9021) and C Shares - EUR70,550,462 (NAV per
Share of EUR 0.5287) as at close of business on 29 November 2019.
On 20 December 2019, the Company announced the Conversion Ratio of
0.5860 Ordinary Shares per C Share.
On this basis, 133,451,107 C Shares were converted into
78,202,348 Ordinary Shares. The 78,202,348 Ordinary Shares were
admitted to the premium listing segment of the Official List of the
FCA and to trading on the LSE's Main Market for listed securities
on 7 January 2020.
10 Interests in other entities
Interests in unconsolidated structured entities
IFRS 12 "Disclosure of Interests in Other Entities" defines a
structured entity as an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding
who controls the entity, such as when any voting rights relate to
the administrative tasks only and the relevant activities are
directed by means of contractual agreements. A structured entity
often has some of the following features or attributes:
-- restricted activities;
-- a narrow and well-defined objective;
-- insufficient equity to permit the structured entity to
finance its activities without subordinated financial support;
and
-- financing in the form of multiple contractually linked
instruments that create concentrations of credit or other
risks.
Involvement with unconsolidated structured entities
The Directors have concluded that the CSWs and voting shares of
the Lux Subsidiary in which the Company invests, but that it does
not consolidate, meet the definition of a structured entity.
The Directors have also concluded that BCF also meets the
definition of a structured entity.
The Directors have also concluded that CLOs in which the Company
invests, that are not subsidiaries for financial reporting
purposes, meet the definition of structured entities because:
-- the voting rights in the CLOs are not dominant rights in
deciding who controls them, as they relate to administrative tasks
only;
-- each CLO's activities are restricted by its Prospectus; and
-- the CLOs have narrow and well-defined objectives to provide
investment opportunities to investors.
Interests in subsidiary
As at 30 June 2021, the Company owns 100% of the Class A and
Class B shares in the Lux Subsidiary comprising 2,000,000 Class A
shares and 1 Class B share (31 December 2020: 2,000,000 Class A
shares and 1 Class B share). The Lux Subsidiary's principal place
of business is Luxembourg.
Other than the investments noted above, the Company did not
provide any financial support for the periods ended 30 June 2021
and 31 December 2020, nor had it any intention of providing
financial or other support.
The Company has an intercompany loan payable to the Lux
Subsidiary as at 30 June 2021 and 31 December 2020. Refer to Note 7
for further details.
11 Segmental reporting
As per IFRS 8 Operating Segments, an operating segment is a
component of an entity
-- that engages in business activities from which it may earn revenues and incur expenses;
-- whose operating results are reviewed regularly by the
entity's chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its
performance; and
-- for which discrete financial information is available.
The Board, who is the chief operating decision maker, view the
operations of the Company as one operating segment, being the
Ordinary Share Class following the conversion of C Shares into
Ordinary Shares.
During the period ended 30 June 2021 and year ended 31 December
2020, the Company's primary exposure was to the Lux Subsidiary in
Europe. The Lux Subsidiary's primary exposure is to BCF, an Irish
entity. BCF's primary exposure is to the US and Europe.
12 Basic and diluted earnings/(loss) per Share
As at
30 June 2021 As at
(unaudited) 30 June 2020 (unaudited)
Restated
----------------------------------------------------- ------------- -------------------------
EUR EUR
----------------------------------------------------- ------------- -------------------------
Total comprehensive income/(loss) for the period 37,733,656 (45,124,360)
Weighted average number of shares during the period 476,027,006 477,514,055
Basic and diluted earnings/(loss) per Ordinary Share 0.0793 (0.0945)
----------------------------------------------------- ------------- -------------------------
13 Net asset value per Ordinary Share
As at
30 June 2021 As at
(unaudited) 31 December 2020 (audited)
EUR EUR
---------------------------------------- ------------- ---------------------------
IFRS Net asset value 420,204,931 408,205,175
Number of Ordinary Shares at period end 469,787,075 477,023,331
---------------------------------------- ------------- ---------------------------
IFRS Net asset value per Ordinary Share 0.8945 0.8557
---------------------------------------- ------------- ---------------------------
14 Reconciliation of Published NAV to IFRS NAV per the financial statements
Ordinary Shares As at As at
30 June 2021 31 December 2020
(unaudited) (audited)
NAV NAV per share NAV NAV per share
------------------------------------------- ----------- ------------- ----------- -------------
EUR EUR EUR EUR
------------------------------------------- ----------- ------------- ----------- -------------
Published NAV attributable to Shareholders 416,955,380 0.8875 402,369,392 0.8435
Adjustment - valuation 3,315,551 0.0071 5,835,783 0.0122
Adjustment - payables (66,000) (0.0001) - -
NAV per the financial statements 420,204,931 0.8945 408,205,175 0.8557
------------------------------------------- ----------- ------------- ----------- -------------
As noted above, there can be a difference between the Published
NAV and the IFRS NAV per the financial statements, mainly because
of the different bases of valuation. The above table reconciles the
Published NAV to the IFRS NAV per the financial statements.
15 Related party transactions
All transactions between related parties were conducted on terms
equivalent to those prevailing in an arm's length transaction. In
accordance with IAS 24 "Related Party Disclosures", the related
parties and related party transactions during the period
comprised:
Transactions with entities with significant influence
As at 30 June 2021, Blackstone Asia Treasury Pte held 43,000,000
Ordinary Shares in the Company (31 December 2020: 43,000,000).
Transactions with key management personnel
The Directors are the key management personnel as they are the
persons who have the authority and responsibility for planning,
directing and controlling the activities of the Company. The
Directors are entitled to remuneration for their services. Refer to
Note 4 for further detail.
Transactions with other related parties
At 30 June 2021, current employees of the Portfolio Adviser and
its affiliates, and accounts managed or advised by them, hold
24,875 Ordinary shares (31 December 2020: 24,875) which represents
0.005% (31 December 2020: 0.005%) of the issued shares of the
Company.
The Company has exposure to the CLOs originated by BCF, through
its investment in the Lux Subsidiary. BIL is also appointed as a
service support provider to BCF and as the collateral manager to
the Direct CLO Subsidiaries. BLCS has been appointed as the
collateral manager to BCM LLC, Dorchester Park CLO Designated
Activity Company and the Indirect CLO Subsidiaries.
Transactions with Subsidiaries
The Company held 275,438,217 CSWs as at 30 June 2021 (31
December 2020: 284,879,854) following the issuance of 9,912,949 (31
December 2020: 6,800,000) and redemption of 19,354,587 (31 December
2020: 41,678,730) CSWs by the Lux Subsidiary. Refer to Note 6 for
further details.
As at 30 June 2021, the Company held 2,000,000 Class A shares
and 1 Class B share in the Lux Subsidiary with a nominal value of
EUR2,000,001 (31 December 2020: 2,000,000 Class A shares and 1
Class B share in the Lux Subsidiary with a nominal value of
EUR2,000,001).
As at 30 June 2021, the Company held an intercompany loan
payable to the Lux Subsidiary amounting to EUR1,057,318 (31
December 2020: EUR869,988).
16 Dividends
The Company declared and paid the following dividends on
Ordinary Shares during the six months ended 30 June 2021:
Period in respect of Date Declared Ex-dividend Date Payment Date Amount per Ordinary Share Amount paid
-------------------------- -------------- ----------------- ------------- ------------------------- -----------
EUR EUR
-------------------------- -------------- ----------------- ------------- ------------------------- -----------
1 Oct 2020 to 31 Dec 2020 22 Jan 2021 4 Feb 2021 5 Mar 2021 0.0250 11,923,084
1 Jan 2021 to 31 Mar 2021 23 Apr 2021 6 May 2021 4 Jun 2021 0.0175 8,345,722
-------------------------- -------------- ----------------- ------------- ------------------------- -----------
Total 20,268,806
---------------------------------------------------------------------------- ------------------------- -----------
The Company declared and paid the following dividends on
Ordinary Shares during the six months ended 30 June 2020:
Period in respect of Date Declared Ex-dividend Date Payment Date Amount per Ordinary Share Amount paid
-------------------------- -------------- ----------------- ------------- ------------------------- -----------
EUR EUR
-------------------------- -------------- ----------------- ------------- ------------------------- -----------
1 Oct 2019 to 31 Dec 2019 21 Jan 2020 30 Jan 2020 28 Feb 2020 0.0250 12,013,045
1 Jan 2020 to 31 Mar 2020 23 Apr 2020 30 Apr 2020 29 May 2020 0.0150 7,207,827
-------------------------- -------------- ----------------- ------------- ------------------------- -----------
Total 19,220,872
---------------------------------------------------------------------------- ------------------------- -----------
17 Controlling party
In the Directors' opinion, the Company has no ultimate
controlling party.
18 Events after the reporting period
The Board has evaluated subsequent events for the Company
through to 21 September 2021, the date the condensed interim
financial statements are available to be issued, and, other than
those listed below, concluded that there are no material events
that require disclosure or adjustment to the financial
statements.
On 21 July 2021, the Company declared a dividend of EUR0.0175
per Ordinary Share in respect of the period from 1 April 2021 to 30
June 2021. A total payment of EUR8,202,373 was made on 3 September
2021.
On 23 July 2021, the Company received shareholder approval to
resell up to 46,880,707 Shares held by the Company in treasury.
Refer to Note 9 for further detail.
On 26 July 2021, the Company announced that the Share Repurchase
Programme had been renewed until 30 September 2021.
On 8 September, the Company disposed of the final Rollover
Assets, being 2 Mezzanine Notes, for total proceeds of
EUR1,411,355.
During the period from 1 July 2021 to 21 September 2021, the
Company repurchased:
a) under the 2020 AGM authority, 1,080,000 of its Ordinary
Shares of no par value at a total cost of EUR840,900 (excluding
fees and commissions); and
b) u nder the 2021 AGM authority, 1,455,751 of its Ordinary
Shares of no par value at a total cost of EUR 1,125,660 (excluding
fees and commissions).
(40) The difference between these two figures of EUR103,656
relates to a realised gain on the management fee rebate element
arising from two of the previously directly held CLOs whereby BLCS
was the CLO manager.
(41) The ranges provided in the table above refer to the highest
and lowest marks received across the range of CLOs held. The ranges
reflect the different stages of the lifecycle of each of the CLOs
on an individual basis. The low ranges in the table above are
prices from CLOs which have been called and are in wind-down.
Company Information rmation
Directors Registered Office
Ms Charlotte Valeur (Chair) IFC 1
Mr Gary Clark The Esplanade
Ms Heather MacCallum St Helier
Mr Steven Wilderspin Jersey
Mr Mark Moffat JE1 4BP, Channel Islands
All c/o the Company's registered office
----------------------------------------------------------- --------------------------------------
Portfolio Adviser Registrar
Blackstone Ireland Limited Link Asset Services (Jersey) Limited
30 Herbert Street 12 Castle Street
2(nd) Floor St Helier
Dublin 2, Ireland Jersey, JE2 3RT, Channel Islands
----------------------------------------------------------- --------------------------------------
Administrator / Company Secretary / Custodian / Depositary Auditor
----------------------------------------------------------- --------------------------------------
BNP Paribas Securities Services S.C.A. Deloitte LLP
IFC 1 Gaspé House
The Esplanade 66-72 Esplanade
St Helier St Helier
Jersey JE2 3QT, Channel Islands
JE1 4BP, Channel Islands
Legal Adviser to the Company (as to Jersey Law) Legal Adviser to the Company
(as to English Law)
----------------------------------------------------------- --------------------------------------
Carey Olsen Herbert Smith Freehills LLP
47 Esplanade Exchange House
St Helier Primrose Street
Jersey London
JE1 0BD, Channel Islands EC2A 2EG, United Kingdom
Joint Broker Joint Broker (from 4 March 2020)
Nplus1 Singer Advisory LLP Winterflood Securities Limited
1 Bartholomew Lane The Atrium Building
London, EC2N 2AX , United Kingdom Cannon Bridge House, 25 Dowgate Hill
London, EC4R 2GA, United Kingdom
Glossary
TERM
DEFINITION
"AGM" "ry Annual General Meeting
"AIC" the Association of Investment Companies,
of which the Company is a member
"AIC Code" the AIC Code of Corporate Governance
for Jersey companies
"AIFMD" Alternative Investment Fund Managers
Directive
"AIFs" Alternative investment funds
"Articles" the Articles of Incorporation of the
Company
"BCF" Blackstone Corporate Funding Designated
Activity Company
"BCF Facility" BCF entered into a facility agreement
dated 1 June 2017, as amended, between
(1) BCF (as borrower), (2) Citibank Europe
plc, UK Branch (as administration agent),
(3) Bank of America N.A. London Branch
(as an initial lender), (4) BNP Paribas
(as an initial lender), (5) Deutsche
Bank AG, London Branch (as initial lender),
(6) Citibank N.A. London Branch (as account
bank, custodian and trustee) and (7)
Virtus Group LP (as collateral administrator)
"BGLC" Ticker for the Company's C Share Quote
"BGLF" or the "Company" Blackstone Loan Financing Limited (formerly
Blackstone / GSO Loan Financing Limited)
"BGLP" Ticker for the Company's Sterling Quote
"BIL" or the "Portfolio Blackstone Ireland Limited
Adviser"
"Board" the Board of Directors of the Company
"BLCS" Blackstone Liquid Credit Strategies LLC
"BSL" Broadly Syndicated Loans
"BWIC" Bids wanted in competition
"BX Credit" Blackstone Credit
"CSWs" Cash Settlement Warrants
"CLOs" Collateralised Loan Obligations
"Companies Law" Companies (Jersey) Law 1991
"DFM or the "Portfolio GSO / Blackstone Debt Funds Management
Manager" or the "Rollover LLC
Portfolio Manager"
"DTR" Disclosure Guidance and Transparency
Rules
"Discount" / "Premium" calculated as the NAV per share as at
the period end less BGLF's closing share
price on the London Stock Exchange, divided
by the NAV per share as at that date
"Dividend yield" calculated as the last four quarterly
dividends declared divided by the share
price as at the period end
"ECB" European Central Bank
"EU" European Union
"FCA" Financial Conduct Authority (United Kingdom)
"Fed" Federal Reserve
"FRC" Financial Reporting Council (United Kingdom)
"FVPL" Fair value through profit or loss
"FVOCI" Fair value through other comprehensive
income
"GFC" Global Financial Crisis
"GSO" GSO Capital Partners LP
"IFRS" International Financial Reporting Standards
"IFRS NAV" Gross assets less liabilities (including
accrued but unpaid fees) determined in
accordance with IFRS as adopted by the
EU
"LCD" S&P Global Market Intelligence's Leveraged
Commentary & Data provides in-depth coverage
of the leveraged loan market through
real-time news, analysis, commentary,
and proprietary loan data
"Loan Warehouse" A special purpose vehicle incorporated
for the purposes of warehousing US and/or
European floating rate senior secured
loans and bonds
"LSE" London Stock Exchange
"LTM" Last twelve months
"Lux Subsidiary" Blackstone / GSO Loan Financing (Luxembourg)
S. à r.l
"NAV" Net asset value
"NAV total return per Calculated as the increase / decrease
share" in the NAV per share plus the total dividends
paid per share during the period, with
such dividends paid being re-invested
at NAV, as a percentage of the NAV per
share
"NIM" Net interest margin
"NED" Non-Executive Director
"OC" Over-Collateralisation
"OCI" Other Comprehensive Income
"PPNs" Profit Participating Notes
"Published NAV" Gross assets less liabilities (including
accrued but unpaid fees) determined in
accordance with the section entitled
"Net Asset Value" in Part I of the Company's
Prospectus and published on a monthly
basis
"Return" Calculated as the increase /decrease
in the NAV per share plus the total dividends
paid per share, with such dividends paid
being re-invested at NAV, as a percentage
of the NAV per share.
LTM return is calculated over the period
July 2020 to June 2021.
"RNS" Regulatory News Service
"Rollover Assets" The assets attributable to the Carador
Income Fund plc Rollover Shares - a pool
of CLO assets from Carador Income Fund
plc
"Rollover Offer" As announced by the Board on 28 August
2018, a rollover proposal to offer newly
issued C Shares to electing shareholders
of Carador Income Fund plc, in consideration
for the transfer of a pool of CLO assets
from Carador Income Fund plc to the Company
"SFS" Specialist Fund Segment
"UK Code" UK Corporate Governance Code 2018
"US MOA" United States Majority Owned Affiliate
"Underlying Company" A company or entity to which the Company
has a direct or indirect exposure for
the purpose of achieving its investment
objective, which is established to, among
other things, directly or indirectly,
purchase, hold and/or provide funding
for the purchase of CLO Securities
"WA" Weighted Average
"WAP" Weighted Average Asset Price
"WARF" Weighted Average Rating Factor
"WAS" Weighted Average Spread
A copy of the Company's Half Yearly Financial Report will be
available shortly on the Company's website
(https://www.blackstone.com/fund/bglfln-blackstone-loan-financing-limited),
on the National Storage Mechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism), and will
also be provided to those shareholders who have requested a printed
copy.
IFC1 - The Esplanade - St Helier - Jersey - JE1 4BP
Company Secretary
Tel: +44 (0) 1534 709178 / 813783
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
NOTE: PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
PERFORMANCE RESULTS AND THERE CAN BE NO ASSURANCE THAT BGLF WILL
ACHIEVE COMPARABLE RESULTS.
IMPORTANT INFORMATION
Any reference herein to future returns or distributions is a
target and not a forecast and there can be no guarantee or
assurance that it will be achieved.
This document has been issued by Blackstone Loan Financing
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,
including the United States, Canada, Japan or South Africa nor
shall it, or any part of it, or the fact of its distribution, form
the basis of, or be relied on in connection with, any contract or
investment decision whatsoever, in any jurisdiction.
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 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. The shares issued by
the Company (the "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, taken up, exercised, renounced,
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) except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States and in
a manner which would not require the Company to register under the
Investment Company Act. No public offering of the Shares is being
made in the United States.
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. Investors may be required to bear
the financial risks of their investment in the Shares for an
indefinite period of time. Any failure to comply with these
restrictions may constitute a violation of the securities laws of
any such jurisdictions.
This document may contain forward-looking statements that
represent the Company's opinions, expectations, beliefs,
intentions, estimates or projections. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology. Any statement other than a statement of historical
fact is a forward-looking statement. By their nature,
forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors because they relate to
events and depend on circumstances that will occur in the future
whether or not outside the control of the Company. Actual results
may differ materially from those expressed or implied by any
forward-looking statement and even if the results of the Company
are consistent with such forward-looking statement, those results
may not be indicative of results in subsequent periods. The Company
does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Recipients of this document should not
place undue reliance on any forward-looking statement, which speaks
only as of the date of its issuance.
No liability whatsoever (whether in negligence or otherwise)
arising directly or indirectly from the use of this document is
accepted and no representation, warranty or undertaking, express or
implied, is or will be made by the Company, or any of its
directors, officers, employees, advisers, representatives or other
agents ("Agents") for any information or any of the opinions
contained herein or for any errors, omissions or misstatements.
None of the Agents makes or has been authorised to make any
representation or warranties (express or implied) in relation to
the Company or as to the truth, accuracy or completeness of this
document, or any other written or oral statement provided. In
particular, no representation or warranty is given as to the
achievement or reasonableness of, and no reliance should be placed
on any projections, targets, estimates or forecasts contained in
this document and nothing in this document is or should be relied
on as a promise or representation as to the future.
Unless otherwise indicated, the information provided herein is
based on matters as they exist as of the date of preparation and
not as of any future date. Recipients of this document are
encouraged to contact the Company's representatives to discuss the
procedures and methodologies used to make the projections and other
information provided herein.
All investments are subject to risk, including the loss of the
principal amount invested. Past performance is not necessarily
indicative of future results, and there can be no assurance that
BGLF will achieve comparable results, will meet its target returns,
achieve its investment objectives or be able to implement its
investment strategy. Certain countries have been susceptible to
epidemics, most recently COVID-19, which may be designated as
pandemics by world health authorities. The outbreak of such
epidemics, together with any resulting restrictions on travel or
quarantines imposed, has had and will continue to have a negative
impact on the economy and business activity globally (including in
the countries in which the Company invests), and thereby is
expected to adversely affect the performance of the Company's
Investments. Furthermore, the rapid development of epidemics could
preclude prediction as to their ultimate adverse impact on economic
and market conditions, and, as a result, presents material
uncertainty and risk with respect to the Company and the
performance of its Investments. All investments to be held by the
Company involve a substantial degree of risk, including the risk of
total loss. The value of shares and the income from them is not
guaranteed and can fall as well as rise due to stock market and
currency movements. When you sell your investment you may get back
less than you originally invested. You should always seek expert
legal, financial, tax and other professional advice before making
any investment decision.
Blackstone Loan Financing Limited is a self-managed Jersey
registered alternative investment fund, and is regulated by the
Jersey Financial Services Commission as a 'listed fund' under the
Collective Investment Funds (Jersey) Law 1988 (the "Funds Law") and
the Jersey Listed Fund Guide published by the Jersey Financial
Services Commission. The Jersey Financial Services Commission is
protected by the Funds Law against liability arising from the
discharge of its functions thereunder. The Jersey Financial
Services Commission has neither reviewed nor approved of the issue
of this document.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR LLLFLFKLEBBZ
(END) Dow Jones Newswires
September 22, 2021 08:59 ET (12:59 GMT)
Blackstone Loan Financing (LSE:BGLP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Blackstone Loan Financing (LSE:BGLP)
Historical Stock Chart
From Jul 2023 to Jul 2024
