Company update

RNS Number : 8486H

Axiom European Financial Debt Fd Ld

27 March 2020

 

27 March 2020

Axiom European Financial Debt Fund Limited

Company update

In the last month markets have experienced a significant correction as the severe impact of the coronavirus continues to spread globally. The Board of Axiom European Financial Debt Fund Limited (the "Company") and the Company's investment manager, Axiom Alternative Investments SARL, (the "Investment Manager") wish to provide an update on the Company's portfolio.

As noted in the Company's most recent monthly fact sheet, the Company's portfolio includes a material exposure to various liquid instruments, in addition to 5% in cash. In these unprecedented market conditions, the closed-end structure should prove to be a very efficient format to absorb the price volatility in the underlying portfolio and the Board remains confident in the Investment Manager's ability to capitalise on opportunities in the subordinated financial debt universe.

Commenting on behalf of the Investment Manager, David Benamou commented:

"The current crisis is not a banking crisis but is a public health and economic crisis. European banks are this time not the problem and are expected to play a key role in the solution. Thanks to the efforts over the last 10 years, never before have European banks approached a crisis so well capitalised with an average 14% of CET1 vs 8% in 2008. As shown by the European Banking Authority 2018 stress tests, European banks can afford a significant hit (400 basis points in CET1, corresponding to an 8.3% GDP deviation), leaving them with a strong 10% CET1 capital position, hence they are likely to be immune to a resolution risk.  The support from the states and central banks, combined with measures announced by regulators to soften coupon payment risk, are in our view extremely positive for European Banks' subordinated debt.  I n the current market correction, financial subordinated debt has fallen sharply in recent weeks to levels that we have not seen for a long time. Current spread levels are above 1000 bps on Legacy bonds and above 1400 bps on AT1/RT1 bonds (Source: Solaxicc index). For these reasons we believe that banks subordinated debt is one of the most attractive areas of the credit market, creating a unique window of investments for the Company."

The Board also notes the Company's authority to issue up to 8,545,202 new ordinary shares ("Shares") on a non pre-emptive basis, which was granted at the Company's general meeting held on 5 October 2018, expires on 5 April 2020. Shares issued pursuant to this authority must be issued at a premium to NAV per Share. The Board intends to seek shareholder approval to issue further Shares on a non pre-emptive basis at the Company's AGM, which is expected to be held in July 2020.

For further information please contact:

Axiom Alternative Investments SARL David Benamou, Managing Partner	[phone]
Winterflood Securities Limited Neil Morgan	[phone]

Further details of the Company can be found on its website www.axiom-ai.com

 

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