Portfolio Update

RNS Number : 9267K

NB Distressed Debt Invest. Fd. Ltd

25 July 2011

 



NB Distressed Debt Investment Fund Limited

Portfolio Update

NB Distressed Debt Investment Fund Limited ("NBDDIF" or "the Company") today announces an update in relation to the Company's investment portfolio.

We remain pleased with the distressed market environment and the portfolio's performance to date. As at 30 June 2011, approximately 84% of NBDDIF's NAV was invested in distressed assets and we are in exclusive negotiations to purchase assets which would deploy around 10% of additional capital. Going forwards, we expect to maintain between 5% and 10% of the portfolio in cash and cash equivalents as a reserve for investments in existing portfolio companies as well as for new opportunities.

NBDDIF had investments in 47 companies versus an expectation of 40-50 when fully deployed and, accordingly, a significant amount of due diligence has been completed by the team. Sticking to our price discipline has resulted in lower-than-expected prices, with an average price of approximately 55% of face value against the expected level of 60%. Industry diversification remains strong with the portfolio invested across 13 industries. NBDDIF's NAV increased 6.6% in the first half of 2011, from $0.9754 to $1.0401 per share.

We see significant upside potential in the existing portfolio which we expect to realize as we restructure and exit investments. We anticipate a robust environment for redeployment of capital through the end of the investment period in June 2013

Market Environment

The Investment Manager believes that the fundamentals for distressed investing remain favourable. As has been widely reported, the European sovereign debt crisis and related issues have impacted risk appetites globally. We have seen European and other global commercial banks actively offer individual loans and loan portfolios at discounts. In 2011 U.S. larger cap public companies have continued to benefit from improving access to credit markets.  However, smaller private companies still face a constrained commercial lending environment. The public high yield bond market saw $191 billion of issuance in the first half of 2011 vs. $119 billion in the same period of 2010¹.  Conversely, Commercial and Industrial Loans have stagnated, remaining on average at $1.2 trillion in 2011 year to date compared to a peak of $1.6 trillion in 2008². We believe that the relative lack of capital for U.S. private companies will continue to result in opportunities for investing in distressed loans.

Investment Pipeline

We continue to see a strong opportunity set in middle-market and small-cap loans backed by hard assets. The flow of investment opportunities has been strong: in addition to the names owned in the portfolio, we have performed due diligence on more than 120 other companies across multiple sectors. Particularly promising is the activity we see from US and European commercial banks seeking to dispose of distressed loans. We have identified a number of attractive opportunities outside of the US with approximately 24% of the portfolio invested in non-North American investments as of 30 June 2011.

Source: BNP Paribas and Bloomberg. Data as at 30 June 2011. Past performance is not indicative of future returns.
1. The Prospect News High Yield Daily.
2. Source: Board of Governors of the Federal Reserve System.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Nick Hoar

Anji Stewart

Financial Dynamics                                       [phone]

Neil Doyle       

Ed Berry

Laura Pope

An accompanying factsheet on the information provided above can be found on the Company's website www.nbddif.com. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Background Information

NB Distressed Debt Investment Fund Limited is a Guernsey-incorporated closed-ended investment company that launched in June 2010. NBDDIF's primary objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic stressed, distressed and special situation credit-related investments while seeking to limit downside risk.

NBDDIF expects to invest in 40 to 50 holdings diversified across distressed, stressed and special situations investments, with a focus on senior debt backed by hard assets. The portfolio is managed by the Distressed Debt team at Neuberger Berman, which sits within one of the largest and most experienced credit teams in the industry. 

To find out more about the Company and the Neuberger Berman Group, please visit www.nbddif.com .

 

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