TIDMNBMI
RNS Number : 2131P
NB Global Monthly Income Fund Ltd
17 June 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) June 2022
NB Global Monthly Income Fund*
Monthly Commentary & Portfolio Update
31(st) May 2022:
Key statistics
NAV (GBP) GBP 0.8713
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Current Portfolio Yield** 7.30%
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Number of Investments 276
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Number of Issuers 211
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Asset allocation:
Global High Yield: 29.65%
Global Floating Rate
Loans: 29.14%
Total Traditional Credit: 58.79%
----------------------------- -------
Private Debt: 23.63%
CLO Mezzanine Debt: 12.01%
Special Situations: 5.58%
Total Alternative Credit: 41.21%
----------------------------- -------
Credit rating breakdown: as at 31 May (excluding cash), the
portfolio was invested primarily in B (46.53%) and BBB/BB (13.17%)
rated investments (.)
Market Update
Non-investment grade credit markets ended the month of May with
mixed results. Senior floating rate loans saw drawdowns, U.S. high
yield managed to eke out a gain on late-session rallies and global
high yield had modest declines in the month. The continued risk-off
market environment was driven by concerns over issuer margin
pressures as a result of higher commodity prices, rising labor
costs and slowing demand. Market expectations for more central
banks rate hikes also weighed on sentiment. Credit dispersion was
apparent among high yield and loan issuers with lower rated credits
seeing more pronounced weakness. Wider new-issue pricing also
reflected the recent volatility and muted new issuance. While
issuer managements were generally more guarded in their guidance,
balance sheets and fundamentals remain relatively solid with the
default rate still well below average and just above all-time
lows.
In May, U.S. senior floating rate loans-measured by the
S&P/LSTA Leveraged Loan Index (the "S&P LLI")-returned
-2.56% with the lowest rated loans underperforming as the BB, B and
CCC rated segments of the index returned -1.77%, -2.85% and -3.87%,
respectively. Year to date, the S&P LLI returned -2.45%. The
LL100, a measure of the largest, most liquid issuers, returned
-2.50% in the month and -2.80% year-to-date. The European Leveraged
Loan Index (the "ELLI") returned -2.55% in May and -3.21%
year-to-date, excluding currency effects. The second lien loans
index returned -3.08% in May and -2.35% year to date.
The global high yield bond market finished the month of May with
negative returns even though moves in long-term interest rates were
more moderate. U.S. Treasury yields ended the month at 2.74% after
declining 15 basis points since the end of April and the yield on
10-Year UK Gilts rose 4 basis points since the end of April, ending
the month of May at 1.98%. The ICE BofA Global High Yield
Constrained Index finished the month with a return of -0.35% and
-8.82% year to date. In May, returns across credit ratings saw
larger drawdowns in the middle and lower credit tiers with BB's
seeing positive returns on the month. The BB, B, CCC & lower
rated categories of the ICE BofA Global High Yield Index returned
+0.55%, -1.23%, and -3.12%, respectively. Year to date, the BB, B,
CCC & lower rated categories of the ICE BofA Global High Yield
Index returned -8.78%, -8.69%, and -9.56%, respectively.
CLO debt spreads moved meaningfully wider in May in conjunction
with declines in the leveraged loan market. This was a continuation
of the weakness we began to see in the second half of April, as
increasing recessionary fears continued to impact all risk assets.
Loan and CLO markets began to rally off the lows around the end of
the month, but most of the current move higher occurred subsequent
to month-end. Secondary non-investment grade market volumes
increased modestly month-over-month, toward volume levels more
consistent with typical monthly averages. The CLO BB index returned
-6.53% in the month and -6.18% year to date.
Default rates in May remained near all-time lows in high yield
and 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,
could likely see a re-emergence of investor demand in coming months
as rising interest rates continue to weigh on longer duration,
lower yielding fixed income.
In our view, non-investment grade yields are compensating
investors for the benign default outlook, will continue to provide
durable income and are attractive compared to other fixed income
alternatives. While the tightening of financial conditions and
geopolitical risks continue to create incremental volatility,
global real GDP growth is estimated to be at or slightly below
trend for 2022. As real growth slows, this will help to alleviate
some of the inflationary pressures. Our analysts continue to be
keenly focused on the outlook for issuer margins given higher input
costs. Mitigating this, however, are strong consumer and business
balance sheets, growing nominal wages and solid job growth. This
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
secondary impacts related to elevated commodity prices as a result
of sanctions and other disruptions made worse by the conflict in
Eastern Europe. While supply chain discontinuities remain a
concern, there are signs of normalization. Even with the heightened
uncertainty, commodity price swings and central bank tightening,
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 1.7 years. During the month the weight
of holdings in Special Situations grew at the expense of Global
High Yield, the weight of Private Debt, CLO Debt Tranches and
Global Floating Rate Loans remaining broadly flat over the month.
The performance of Western credit markets continued to be poor as
investors expected interest rates would continue to rise in the
face of sustained high levels of inflation and supply chain
disruption, economic data pointing to a potential cooling of growth
adding to people's concerns. Turnover in the portfolio was lower
than average during the period, partly due to the ongoing subdued
primary market, although we did continue to capitalise on
opportunities to add to more defensive issuers which had been
caught up in the wider market malaise.
Recent Investments
We added exposure to UK breakdown assistance group RAC, as we
sought to increase exposure to companies with non-discretionary
revenue profiles which benefit from a degree of protection from the
weakening economic environment. We viewed this as an opportune time
to add to a UK name in particular given the recent underperformance
of GBP High Yield as fears of sub-par growth and political turmoil
rose. We like the RAC's consistent track record of growth, strong
cash flow generation, high market share protected by significant
barriers to entry, and management's commitment to reduce
leverage.
We also added in secondary to the 5.25% 2030 bond of Realogy,
the largest real estate brokerage franchisor and residential real
estate brokerage firm in the US, with a roughly 10-11% market
share. The company is also the largest US provider of outsourced
employee relocation services as well as a provider of title and
settlement services.
Our positive view of the credit is driven by its high level of
free cash flow generation, improving credit metrics and recurrent
revenue base, the majority of revenues coming from servicing buyers
and sellers of existing homes (greater than 80% of transaction
volumes) rather than new homes.
To access the May 2022 Factsheet, please click here.
http://www.rns-pdf.londonstockexchange.com/rns/2131P_1-2022-6-16.pdf
The Fund's website can be found at the following address:
www.nbgmif.com
* Effective September 9th, 2020, the NB Global Floating Rate
Income Fund Limited was renamed to the NB Global Monthly Income
Fund Limited.
For more information, please refer to here.
** 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 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 realised 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 not a reliable indicator of current or
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 +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
Source of all data and charts (unless stated otherwise):
Neuberger Berman Europe Limited, Bloomberg and Blackrock
Aladdin.
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
professionally advised retail 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.
Full product details, including a Key Information Document, are
available on our website at www.nbgmif.com .
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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