TIDMNBMI
RNS Number : 5017I
NB Global Monthly Income Fund Ltd
19 April 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.
19(th) April 2022
NB Global Monthly Income Fund*
Monthly Commentary & Portfolio Update
31(st) March 2022
Key statistics
NAV (GBP) GBP 0.9227
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Current Portfolio Yield** 6.67%
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Number of Investments 281
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Number of Issuers 212
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Asset allocation:
Global High Yield: 28.76%
Global Floating Rate
Loans: 28.06%
Total Traditional Credit: 56.81%
----------------------------- -------
Private Debt: 23.55%
CLO Mezzanine Debt: 12.25%
Special Situations: 7.38%
Total Alternative Credit: 43.19%
----------------------------- -------
Credit rating breakdown: as at 31 March (excluding cash), the
portfolio was invested primarily in B (44.84%) and BBB/BB (13.94%)
rated investments (1)
Market Update
Non-investment grade credit markets finished the quarter in
negative territory. The ongoing Russia-Ukraine conflict and the
fact that the Fed, ECB and Bank of England are going to have to
tighten monetary policy further to fight higher inflation caused
the generalized macro volatility. However, the senior floating rate
loan market-with its minimal duration-had a positive return in
March and posted modest negative total returns in the first
quarter. The loan market was relatively resilient in a bumpy
quarter despite the macro and headline risk. Floating rate loans
held up significantly better than longer dated assets given its
near zero interest rate risk and the fact that the loans investable
universe has minimal direct exposure to Russia and Ukraine.
Moreover, loan issuer fundamentals and solid demand for floating
rate remained positive tailwinds for the loans asset class with
near all-time low default rates and year-to-date retail inflows of
over $15.5 billion. While the secondary impacts of higher commodity
prices are an area of focus regarding the outlook for global real
GDP growth, issuer fundamentals across non-investment grade credit
markets remain in good shape with default rates below or near
all-time lows.
In the month of March, U.S. senior floating rate loans -
measured by the S&P/LSTA Leveraged Loan Index (the "S&P
LLI") - returned +0.05% with the lowest rated loans underperforming
as the BB, B and CCC rated segments of the index returned +0.20%,
+0.06% and -0.90%, respectively. For the first quarter, the S&P
LLI returned -0.10%. The LL100, a measure of the largest, most
liquid issuers, returned +0.22% in the month and -0.18%
year-to-date. In the first quarter, BB, B and CCC rated loans had
returns of -0.17%, +0.03% and -0.97%, respectively. The European
Leveraged Loan Index (the "ELLI") returned +0.23% in March and
-0.53% year-to-date, excluding currency effects. The second lien
loans index returned -0.14% in March and +0.45% year to date.
The global high yield bond market finished the month of March
and the first quarter of 2022 with negative returns. U.S. Treasury
yields reached 2.48% mid-month after rising almost 100 basis points
since the start of the year and the yield on 10-Year UK Gilts rose
66 basis points since the start of 2022, ending the quarter at
1.67%. Yields on high yield corporate bonds peaked mid-month and
spreads peaked later in the month. That said, spreads came back in
quickly toward month end which was the second most significant
tightening seen over the past fifteen months. Issuer fundamentals
remain solid with default rates posting another record low. The ICE
BofA Global High Yield Constrained Index finished the month with a
return of -1.10% and -5.50% for the first quarter. In March,
returns across ratings saw lesser drawdowns in the lower-rated
credit tier as the BB, B, CCC & lower rated categories of the
ICE BofA Global High Yield Index returned -1.40%, -0.66%, and
-0.73%, respectively. For the first quarter, the BB, B, CCC &
lower rated categories of the ICE BofA Global High Yield Index
returned -6.16%, -4.75%, and -3.57%, respectively.
CLO debt spreads were wider in the quarter, as the CLO market
and other credit assets reacted negatively to the Russian invasion
of Ukraine and associated global economic implications of the
conflict and sanctions. Relative to fixed-rate fixed income
products, CLO debt meaningfully outperformed over the quarter, as
the impact from rising rates more acutely impacted fixed-rate asset
classes. Secondary market volumes meaningfully increased
quarter-over-quarter in investment grade CLO debt, as investors
rotated out of AAA CLO debt due to YTD outperformance, while at the
same time non-investment grade secondary market volumes declined as
investors had less need to sell non-investment grade CLO debt at
lower prices. The CLO BB index was approximately flat over the
quarter (down -0.33%), as spread widening in the quarter was
partially offset by coupon income.
Default rates in March declined to another all-time low in high
yield and are just above all-time lows in loans, which is
consistent with sturdy balance sheets and solid free cash flow
growth. Our outlook for defaults also remains benign with
well-below average default rates expected in 2022 and 2023.
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
compensating investors for the benign default outlook, will
continue to provide durable income and are attractive compared to
other fixed income alternatives, especially as central banks
continue to hike policy rates. While the Russia-Ukraine conflict
and higher inflation present heightened uncertainty, global real
growth is estimated to be at or slightly above trend for 2022 and
input costs for most issuers are being passed on to end markets and
consumers. Our analysts have been keenly focused on the outlook for
issuer margins given input cost pressures. Mitigating this,
however, are strong consumer and business balance sheets, growing
nominal wages, strong jobs growth and businesses working to clear
supply bottlenecks, which should provide support for economic
activity and issuer fundamentals. Our global research team
continues to monitor the investment thesis for each issuer in the
portfolio given the uncertainty around the conflict in Eastern
Europe and the secondary impacts related to commodity prices and
the sanctions put in place on Russia. Supply chain disruptions
remain a concern and this is also something we continue to monitor
closely. Even with the uncertainty created by the elevated
geopolitical risk and spike in commodity prices, which is resulting
in short-term volatility, we believe our bottom-up, fundamental
credit research 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 the increased
volatility.
Portfolio Positioning
The overall Fund exposure to floating rate assets is at 65%,
with an average duration of 1.75 years. We reduced exposure to
Floating Rate loans which remained relatively stable despite the
ongoing volatility in fixed income markets, and increased holdings
in Private Debt, Special Situations and CLO Debt Tranches, with our
weight in Global High Yield little changed on the month. Our
exposure to BB and single B rated assets fell during the month,
whilst holdings in the CCC space increased slightly. In light of
the disruption brought by events in Ukraine and volatility in the
rates market, primary market activity was very limited during the
period, nevertheless we did look to tactically take advantage of
the market dynamic to add to issuers with more stable fundamentals
and compelling valuations.
Recent Investments
We added exposure to a 2nd lien loan from Renaissance Learning,
a digital learning platform serving K-12 districts and schools with
a leading market position in assessment, analytics, and
literacy/maths practices. Our favourable view of the credit is
driven by the company's high recurring non-cyclical revenue mix and
retention rates, favourable industry tailwinds driving accelerated
digital technology adoption in education, high margins, low capex
and consistently solid free cash flow generation.
We also added to a position in the 7% '26 call perpetual bond
from Vistra, one of the largest independent power producers in the
United States. It operates an integrated platform with 39GW of
power generation capacity and is one of the largest competitive
providers of retail electricity in the US and Texas, serving
approximately 4.5m homes. Our favourable view of the credit profile
is supported by its diversified portfolio of competitive power
plants and an integrated generation and retail business model which
partially mitigates the impact of fluctuations in natural gas
prices. These attributes position the company to generate FCF in a
wide range of commodity price and economic environments.
To access the March 2022 Factsheet, please click here
http://www.rns-pdf.londonstockexchange.com/rns/5017I_1-2022-4-18.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
$460 billion in client assets as of December 31, 2021. For more
information, please visit our website at www.nb.com .
RISK CONSIDERATIONS
Market Risk : The risk of a change in the value of a position as
a result of underlying market factors, including among other
things, the overall performance of companies and the market
perception of the global economy.
Liquidity Risk: The risk that the Fund may be unable to sell an
investment readily at its fair market value. In extreme market
conditions this can affect the Fund's ability to meet redemption
requests upon demand.
Credit Risk: The risk that bond issuers may fail to meet their
interest repayments, or repay debt, resulting in temporary or
permanent losses to the Fund.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
Counterparty Risk: The risk that a counterparty will not fulfil
its payment obligation for a trade, contract or other transaction,
on the due date.
Counterparty Risk: The risk that a counterparty will not fulfil
its payment obligation for a trade, contract or other transaction,
on the due date.
Operational Risk: The risk of direct or indirect loss resulting
from inadequate or failed processes, people and systems including
those relating to the safekeeping of assets or from external
events.
Derivatives Risk: The Fund is permitted to use certain types of
financial derivative instruments ("FDI") (including certain complex
instruments) which can give rise to particular risks, including
market risk, liquidity risk and counterparty credit risk. This may
increase the Fund's leverage significantly which may cause large
variations in the value of your share.
Currency Risk: Investors who subscribe in a currency other than
the base currency of the Fund are exposed to currency risk.
Fluctuations in exchange rates may affect the return on
investment.
The past performance shown is based on the share class to which
this factsheet relates. If the currency of this share class is
different from your local currency, then you should be aware that
due to exchange rate fluctuations the performance shown may
increase or decrease if converted into your local currency.
IMPORTANT INFORMATION
This document has been issued by NB Global Monthly Income Fund
Limited (the "Company"), and should not be taken as an offer,
invitation or inducement to engage in any investment activity and
is solely for the purpose of providing information about the
Company. This document does not constitute or form part of, and
should not be construed as, any offer for sale or subscription of,
or solicitation of any offer to buy or subscribe for, any share in
the Company or securities in any other entity, in any jurisdiction.
This product is only suitable for institutional, professional and
high net worth investors, private client fund managers and brokers
who are capable of evaluating the merits and risks of the product
and who plan to stay invested until the end of the recommended
holding period and can bear loss of capital. An investor with
reasonable knowledge of loans and alternative credit would need to
be assessed by the advisor or distributor to establish suitability
for this product.
Due to the inherent risk of investment in the debt market
particularly related to alternative credit, it is expected that a
qualified investor would be able to understand the risks in such
security types and the potential impact of investing in the
product. This product is designed to form part of a portfolio of
investments.
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 is authorised and regulated by
the Financial Conduct Authority and is registered in England and
Wales, at The Zig Zag Building, 70 Victoria Street, London, SW1E
6SQ.
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 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.
An investment in the Company involves risks, with the potential
for above average risk, and is only suitable for people who are in
a position to take such risks. No recommendation or advice is being
given as to whether any investment or strategy is suitable for a
particular investor. Each recipient of this document should make
such investigations as it deems necessary to arrive at an
independent evaluation of any investment, and should consult its
own legal counsel and financial, actuarial, accounting, regulatory
and tax advisers to evaluate any such investment. It should not be
assumed that any investments in securities, companies, sectors or
markets identified and described were or will be profitable.
Investment in the Company should not constitute a substantial
proportion of an investor's portfolio and may not be appropriate
for all investors. Diversification and asset class allocation do
not guarantee profit or protect against loss.
Past performance is not a reliable indicator of current or
future results. The value of investments may go down as well as up
and investors may not get back any of the amount invested. The
performance data does not take account of the commissions and costs
incurred on the issue and redemption of units.
The value of investments designated in another currency may rise
and fall due to exchange rate fluctuations in respect of the
relevant currencies. Adverse movements in currency exchange rates
can result in a decrease in return and a loss of capital.
Tax treatment depends on the individual circumstances of each
investor and may be subject to change, investors are therefore
recommended to seek independent tax advice.
This document, and the information contained therein, is not for
viewing, release, distribution or publication in or into the United
States, Canada, Japan, South Africa or any other jurisdiction where
applicable laws prohibit its release, distribution or publication,
and will not be made available to any national, resident or citizen
of the United States, Canada, Japan or South Africa. The
distribution of this document in other jurisdictions may be
restricted by law and persons into whose possession this document
comes must inform themselves about, and observe, any such
restrictions. Any failure to comply with the restrictions may
constitute a violation of the federal securities law of the United
States and the laws of other jurisdictions.
The Company's shares have not been and will not be registered
under the US Securities Act of 1933, as amended (the "Securities
Act"), or with any securities regulatory authority of any state or
other jurisdiction of the United States. The shares may not be
offered, sold, resold, pledged, delivered, distributed or otherwise
transferred, directly or indirectly, into or within the United
States, or to, or for the account or benefit of, US persons (as
defined in Regulation S under the Securities Act). No public
offering of the shares is being made in the United States.
The Company has not been and will not be registered under the US
Investment Company Act of 1940, as amended (the "Investment Company
Act") and, as such, holders of the shares will not be entitled to
the benefits of the Investment Company Act. No offer, sale, resale,
pledge, delivery, distribution or transfer of the shares may be
made except under circumstances that will not result in the Company
being required to register as an investment company under the
Investment Company Act. In addition, the shares are subject to
restrictions on transferability and resale in certain jurisdictions
and may not be transferred or resold except as permitted under
applicable securities laws and regulations. Any failure to comply
with these restrictions may constitute a violation of the
securities laws of any such jurisdictions.
The "Neuberger Berman" name and logo are registered service
marks of Neuberger Berman Group LLC.
(c) 2022 Neuberger Berman Group LLC. All rights reserved.
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END
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