Edison issues flash on EJF Investments (EJFI)

RNS Number : 0194L

EJF Investments Ltd

27 April 2020

 

London, UK, 27 April 2020

Edison issues flash on EJF Investments (EJFI)

EJF Investments (EJFI) has announced that it will pay its 2.675p quarterly dividend on 29 May as scheduled. The decision to maintain the dividend contrasts with most of its peers, which are either suspending or reducing them. This reflects the cash-generative nature of EJFI's portfolio and that it has remained in relatively good shape. Its NAV fell by 13.6% in March, but 7.5% was FX related. COVID-19 has clouded the economic outlook and affects the high-yield credit collateral backing the CLO tranches. This in turns leads to lower valuations in the CLO equity investments that account for most of the EJFI's portfolio. However, the impact has been exacerbated by primary dealers de-risking and collateral confusion regarding what could be used for US Fed repo operations and what was eligible for the US government's Troubled Asset Relief Program. EJFI believes that with greater clarity the market disruption should subside and notes that there have been no crystallised losses in its portfolio. The current dividend yield is 7.8%.

EJFI decided to cancel most of its forward FX hedging, which led to the 7.5% FX loss. This was done to preserve liquidity and in the face of mounting margin calls due to global funding market stresses. Currently, 25% of EJFI's US-denominated assets are hedged back to GBP.

Click here to view the full report.

Subscribe to Edison's content to receive reports by email.

All reports published by Edison are free-to-access and available on the website .

About Edison:   Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Edison is authorised and regulated by the Financial Conduct Authority .

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information please contact Edison:

Pedro Fonseca, [phone]

Andrew Mitchell, [phone]

[e-mail]

Learn more at   www.edisongroup.com   and connect with Edison on: 

LinkedIn  https://www.linkedin.com/company/edison-group-  

Twitter   www.twitter.com/Edison_Inv_Res  

YouTube  www.youtube.com/edisonitv  

 

END

 

 

NRAFLFESSSIDFII