TIDMNBMI
RNS Number : 5493Y
NB Global Monthly Income Fund Ltd
17 January 2022
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR
INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES,
AUSTRALIA, CANADA OR JAPAN.
17(th) January 2022
NB Global Monthly Income Fund*
Monthly Commentary & Portfolio Update
31(st) December 2021:
Key statistics
NAV (GBP) GBP 0.9492
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Current Portfolio Yield** 6.27%
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Number of Investments 291
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Number of Issuers 209
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Asset allocation:
Global High Yield: 28.12%
Global Floating Rate
Loans: 35.44%
Total Traditional Credit: 63.56%
----------------------------- -------
Private Debt: 22.47%
CLO Mezzanine Debt: 10.97%
Special Situations: 3.00%
Total Alternative Credit: 36.44%
----------------------------- -------
Credit rating breakdown: as at 31 December (excluding cash), the
portfolio was invested primarily in B (46.30%) and BBB/BB (14.05%)
rated investments (1)
Market Update
Non-investment grade credit finished the month of December and
the fourth quarter with solid returns despite the rising number of
Omicron COVID cases globally. While the year-end rally was driven
by favourable fundamentals and strong demand for higher yielding,
lower duration fixed income, there were a couple of brief, sharp
shifts in risk sentiment in November due to the uncertainty of the
new COVID variant's potential impact on economic activity as well
as the Fed's accelerated taper and rate hike timelines due to
persistent inflation. Furthermore, the Bank of England surprised
with a 15 basis point rate hike in December despite concerns over
COVID which signals they are worried about inflation being more
firmly entrenched. As it turns out, Omicron - while a serious
health issue - has less severe symptoms and investors seem to hold
the view that it is unlikely to derail the economic recovery.
Despite the brief bouts of volatility earlier in the final quarter
of 2021, the quarter ended in positive territory for U.S. high
yield and loans with global high yield a bit softer, despite the
broad-based year-end rally. That said, fundamentals across
non-investment grade credit markets remain solid with default rates
below or near all-time lows with technicals in a very favourable
supply/demand balance with record CLO production, strong demand
from investors and the increasing volume of "rising stars" likely
to reduce the available supply in global high yield.
In the month of December, U.S. senior floating rate loans -
measured by the S&P/LSTA Leveraged Loan Index (the "S&P
LLI") - returned 0.64% with lowest rated loans outperforming as the
BB, B and CCC rated segments of the index returned 0.58%, 0.63% and
1.08%, respectively. The LL100, a measure of the largest, most
liquid issuers, was up 0.83%, outperforming the total S&P LLI.
The S&P LLI was up 0.75% in the fourth quarter with the
strongest returns coming from single B's which were up 0.85%,
compared to BB's up 0.68% and CCC & below, up 0.12%. Year to
date, the S&P LLI provided a return of 5.20% with lower credit
rating tiers outperforming the higher rated as CCC, B and BB
returned 12.45%, 5.22% and 3.12%, respectively. The European
Leveraged Loan Index returned 0.39% in December, 0.74% for the
fourth quarter and 4.81% year to date, excluding currency effects.
Second lien loans saw healthy returns and were up 0.76% in
December, 1.87% in the fourth quarter and 13.53% over the full
year.
The global high yield bond market finished the month of December
with solid returns which was in contrast to the first two months of
the quarter (and the 4th quarter) which saw negative returns with
the shift in risk sentiment earlier in the quarter. The ICE BofA
Global High Yield Constrained Index finished the month, quarter and
year-to-date periods with returns of 1.45%, -0.33% and 3.04%
respectively. Returns across rating tiers in the quarter saw lower
quality underperforming the index and higher quality. In the
quarter, the BB, B, CCC & lower rated categories of the ICE
BofA Global High Yield Index returned +0.06%, -1.00%, and -1.20%,
respectively. For the full year, CCC & below outperformed with
returns of 8.75%, compared to 1.22% for single B and 2.97% for BB
rated issuers.
CLO debt had stable, overall positive performance in December
and the fourth quarter, as the asset class continued to adequately
absorb record new issuance and reset volumes. Consistent with
recent quarters, investor demand remained strong in the fourth
quarter benefitting from higher near-term rates and strong
underlying fundamental performance as well as continued attractive
relative value vs. other fixed income assets. Secondary market
volumes declined quarter-over-quarter, with fewer trading days due
to the Thanksgiving and Christmas holidays in the U.S. and
investors more focused on the record primary market activity. The
CLO BB index gained 0.55% in December, 1.47% over the quarter and
11.20% for the full year 2021.
Default rates in December reached all-time lows in high yield
and are just above all-time lows in loans, which is consistent with
improving balance sheets and strong earnings growth. Non-investment
grade credit, especially given its lower duration profile and
attractive yields, will likely continue to see favourable investor
demand as rising interest rates weigh on longer duration, lower
yielding fixed income.
In our view, yields on non-investment grade credit are more than
compensating investors for the increasingly benign default outlook,
will continue to provide durable income and are especially
attractive compared to other fixed income alternatives. While the
persistence of inflation has been acknowledged by central banks,
above-trend real GDP growth and better pricing power should remain
supportive of issuer fundamentals. Strong consumer balance sheets,
growing nominal wages, businesses working to rebuild inventories
and rehire plus more clarity on central bank tapering and rate hike
timelines should continue to be supportive of economic activity and
financial conditions. Our global research team continues to monitor
the investment thesis for each issuer in the fund given the
uncertainty around supply chain disruptions, labour supply
constraints and Omicron's potential impact on demand in certain
consumer-facing sectors such as travel, lodging, leisure and
entertainment. Even with the uncertainty of the pandemic, higher
inflation and potential political risk which could result in
pockets of short-term volatility, we believe our bottom-up,
fundamental credit research process focused on security selection
while seeking to avoid credit deterioration and putting only our
"best ideas" into portfolios, position us well to take advantage of
any volatility.
Portfolio Positioning
The overall Fund exposure to floating rate assets is at 70%,
with an average duration of 1.24 years. Floating Rate Loans
remained the largest asset class in the portfolio at 35.4%, their
weight increasing month on month as we reduced exposure to Special
Situations and CLO Debt Tranches. Exposure to Global High Yield and
Private Debt also increased. In terms of ratings breakdown, our
exposure to lower rated tranches rose during the month,
particularly in the single B space, whilst our holdings in BB rated
credit fell to 14%. Primary market activity eased off as we
approached the holiday season, although we still participated in
several new issues including one from special educational services
provider FullBloom. In secondary notable trades included the sale
of the Merlin Entertainment Term Loan above 97, initially purchased
below 92 in March 2020.
Recent Investments
We added exposure in primary to a new 2nd lien loan from
Diversitech, a provider of aftermarket parts to a diverse range of
end markets. Our positive credit view is based on 85% of revenue
coming from repair & replacement, their leading market position
in HVAC aftermarket parts/supply with a 9% market share (3x that of
their largest competitor), low capex needs and the significant
equity check from sponsor Partners Group.
We also added a position in the 6.125% '28 secured bond from
Modulaire, a provider of modular space units, which are structures
designed to create single or multi-story whole-building solutions
for temporary or permanent application. We view the name as a
secular growth opportunity, through modular adoption displacing
temporary accommodation thanks to their greater flexibility and
cost efficiency. This growth should be reinforced by their strong
market position and good customer diversification, being the market
leader at 4x the size of their nearest competitor with the top 20
customers contributing just 28% of sales.
To access the December 2021 Factsheet, please click here.
http://www.rns-pdf.londonstockexchange.com/rns/5493Y_1-2022-1-14.pdf
The Fund's website can be found at the following address:
www.nbgmif.com
1. Source: Standard & Poor's
* Effective 9 September 2020, the fund has changed its
investment policy and name to NB Global Monthly Income
Fund Limited. For more information, please refer to here.
** The Fund's Current Portfolio Yield is a market-value weighted
average of the current yields of the holdings in the portfolio,
calculated as the coupon (base rate plus spread) divided by current
price. The calculation does not take into account any fees, fund
expenses or sales charges paid, which would reduce the results. The
Current Yield for the Fund will fluctuate from month to month. The
Current Yield should be regarded as an estimate of the Fund's rate
of investment income, and it may not equal the realized
distribution rate for each share class. You should consult the
Fund's prospectus for additional information about the Fund's
dividends and distributions policy. Past performance is no
guarantee of future results.
-S-
For further information, please contact:
Neuberger Berman Europe Limited (Manager)
Elizabeth Papadopoulos +44 (0) 20 3214 9078
Numis Securities Limited (Broker)
Hugh Jonathan
Matt Goss +44 (0) 20 7260 1000
Praxis Fund Services Limited (Company Secretary)
Matt Falla
Gemma Woods +44 (0) 1481 737 600
KL Communications (PR)
Charles Gorman
Will Sanderson +44 (0) 20 7995 6673
Background Information
The Company is a registered closed-ended investment company
incorporated in Guernsey. It is managed by Neuberger Berman Europe
Limited, which has delegated certain of its responsibilities and
functions to the AIFM, Neuberger Berman Investment Advisers LLC,
both of which are indirect wholly owned subsidiaries of Neuberger
Berman Group LLC.
Neuberger Berman, founded in 1939, is a private, independent,
employee-owned investment manager. The firm manages a range of
strategies-including equity, fixed income, quantitative and
multi-asset class, private equity, real estate and hedge funds-on
behalf of institutions, advisors and individual investors globally.
With offices in 25 countries, Neuberger Berman's diverse team has
over 2,300 professionals.
For seven consecutive years, the company has been named first or
second in Pensions & Investments Best Places to Work in Money
Management survey (among those with 1,000 employees or more). In
2020, the PRI named Neuberger Berman a Leader, a designation
awarded to fewer than 1% of investment firms for excellence in
Environmental, Social and Governance (ESG) practices. The PRI also
awarded Neuberger Berman an A+ in every eligible category for our
approach to ESG integration across asset classes. The firm manages
$437 billion in client assets as of September 30, 2021. For more
information, please visit our website at www.nb.com .
RISK CONSIDERATIONS
Market Risk : The risk of a change in the value of a position as
a result of underlying market factors, including among other
things, the overall performance of companies and the market
perception of the global economy.
Liquidity Risk: The risk that the Fund may be unable to sell an
investment readily at its fair market value. In extreme market
conditions this can affect the Fund's ability to meet redemption
requests upon demand.
Credit Risk: The risk that bond issuers may fail to meet their
interest repayments, or repay debt, resulting in temporary or
permanent losses to the Fund.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
Counterparty Risk: The risk that a counterparty will not fulfil
its payment obligation for a trade, contract or other transaction,
on the due date.
Counterparty Risk: The risk that a counterparty will not fulfil
its payment obligation for a trade, contract or other transaction,
on the due date.
Operational Risk: The risk of direct or indirect loss resulting
from inadequate or failed processes, people and systems including
those relating to the safekeeping of assets or from external
events.
Derivatives Risk: The Fund is permitted to use certain types of
financial derivative instruments ("FDI") (including certain complex
instruments) which can give rise to particular risks, including
market risk, liquidity risk and counterparty credit risk. This may
increase the Fund's leverage significantly which may cause large
variations in the value of your share.
Currency Risk: Investors who subscribe in a currency other than
the base currency of the Fund are exposed to currency risk.
Fluctuations in exchange rates may affect the return on
investment.
The past performance shown is based on the share class to which
this factsheet relates. If the currency of this share class is
different from your local currency, then you should be aware that
due to exchange rate fluctuations the performance shown may
increase or decrease if converted into your local currency.
IMPORTANT INFORMATION
This document has been issued by NB Global Monthly Income Fund
Limited (the "Company"), and should not be taken as an offer,
invitation or inducement to engage in any investment activity and
is solely for the purpose of providing information about the
Company.
This document does not constitute or form part of, and should
not be construed as, any offer for sale or subscription of, or
solicitation of any offer to buy or subscribe for, any share in the
Company or securities in any other entity, in any jurisdiction.
The Company is a closed-ended investment company incorporated
and registered in Guernsey and is governed under the provisions of
the Companies (Guernsey) Law, 2008 (as amended), and the Registered
Collective Investment Scheme Rules 2008 issued by the Guernsey
Financial Services Commission ("GFSC"). It is a non-cellular
company limited by shares and has been declared by the GFSC to be a
registered closed-ended collective investment scheme. The Company's
shares are admitted to the Official List of the UK Listing
Authority with a premium listing and are admitted to trading on the
Premium Segment of the London Stock Exchange's Main Market for
listed securities.
Neuberger Berman Europe Limited ("NBEL"), the Company's Manager,
is authorised and regulated by the Financial Conduct Authority
("FCA") and is registered in England and Wales, at The Zig Zag
Building, 70 Victoria Street, London, SW1E 6SQ and is also a
Registered Investment Adviser with the Securities and Exchange
Commission ("SEC") in the U.S. and regulated by the Dubai Financial
Services Authority.
This document is addressed to professional clients only.
This document is presented solely for information purposes and
nothing herein constitutes investment, legal, accounting or tax
advice, or a recommendation to buy, sell or hold a security.
We do not represent that this information, including any third
party information, is complete and it should not be relied upon as
such. Any views or opinions expressed may not reflect those of the
Company or NBEL as a whole. All information is current as of the
date of this material and is subject to change without notice. No
part of this document may be reproduced in any manner without prior
written permission of the Company and NBEL.
An investment in the Company involves risks, with the potential
for above average risk, and is only suitable for people who are in
a position to take such risks. No recommendation or advice is being
given as to whether any investment or strategy is suitable for a
particular investor. Each recipient of this document should make
such investigations as it deems necessary to arrive at an
independent evaluation of any investment, and should consult its
own legal counsel and financial, actuarial, accounting, regulatory
and tax advisers to evaluate any such investment. It should not be
assumed that any investments in securities, companies, sectors or
markets identified and described were or will be profitable.
Investment in the Company should not constitute a substantial
proportion of an investor's portfolio and may not be appropriate
for all investors. Diversification and asset class allocation do
not guarantee profit or protect against loss.
Past performance is not a reliable indicator of current or
future results. The value of investments may go down as well as up
and investors may not get back any of the amount invested. The
performance data does not take account of the commissions and costs
incurred on the issue and redemption of units.
The value of investments designated in another currency may rise
and fall due to exchange rate fluctuations in respect of the
relevant currencies. Adverse movements in currency exchange rates
can result in a decrease in return and a loss of capital.
Tax treatment depends on the individual circumstances of each
investor and may be subject to change, investors are therefore
recommended to seek independent tax advice.
This document, and the information contained therein, is not for
viewing, release, distribution or publication in or into the United
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applicable laws prohibit its release, distribution or publication,
and will not be made available to any national, resident or citizen
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The distribution of this document in other jurisdictions may be
restricted by law and persons into whose possession this document
comes must inform themselves about, and observe, any such
restrictions. Any failure to comply with the restrictions may
constitute a violation of the federal securities law of the United
States and the laws of other jurisdictions.
The Company's shares have not been and will not be registered
under the US Securities Act of 1933, as amended (the "Securities
Act"), or with any securities regulatory authority of any state or
other jurisdiction of the United States. The shares may not be
offered, sold, resold, pledged, delivered, distributed or otherwise
transferred, directly or indirectly, into or within the United
States, or to, or for the account or benefit of, US persons (as
defined in Regulation S under the Securities Act). No public
offering of the shares is being made in the United States.
The Company has not been and will not be registered under the US
Investment Company Act of 1940, as amended (the "Investment Company
Act") and, as such, holders of the shares will not be entitled to
the benefits of the Investment Company Act. No offer, sale, resale,
pledge, delivery, distribution or transfer of the shares may be
made except under circumstances that will not result in the Company
being required to register as an investment company under the
Investment Company Act. In addition, the shares are subject to
restrictions on transferability and resale in certain jurisdictions
and may not be transferred or resold except as permitted under
applicable securities laws and regulations. Any failure to comply
with these restrictions may constitute a violation of the
securities laws of any such jurisdictions.
The "Neuberger Berman" name and logo are registered service
marks of Neuberger Berman Group LLC.
(c) 2022 Neuberger Berman Group LLC. All rights reserved.
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END
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