Interim Management Statement

RNS Number : 6849D

NB Global Floating Rate Income Fund

18 May 2012

 

NB GLOBAL FLOATING RATE INCOME FUND LIMITED

INTERIM MANAGEMENT STATEMENT

18 May 2012

NB Global Floating Rate Income Fund Limited (the "Company"), is publishing this Interim Management Statement in accordance with DTR 4.3 of the FSA Handbook.

This interim management statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the Financial Service Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purpose.

This interim management statement contains information that covers the period between 1 January 2012 and the date of publication of this interim management statement, unless otherwise specified.

Investment Manager's Review

As at 30 April 2012 being the last practicable date prior to the release of this announcement, the Company held 197 investments across 154 issuers. The portfolio was invested across 31 industries, with no industry representing over 11% of net assets and in terms of currency, the split was approximately 91% US Dollar, 5% Euro and 4% sterling. The Company had a gross yield of 5.83%.

Market Environment

The first quarter of 2012 ended with continued positive momentum in the loan asset class, and this has continued into April. The US S&P/LSTA Loan Index returned 0.74% for the month, leading to a YTD return of 4.53%. By rating, single B's continued to lead the way with +0.77% for April and 5.91% YTD.  Europe performed similarly well with the S&P European Leveraged Loan Index (ELLI) posting a YTD result of 4.62% with a 0.25% return for April.

Once again the new issue pipeline was dominated by existing borrowers coming back to market with refinancing and amend-to-extend deals. The result of these types of transactions is the significant erosion of the maturity wall seen as a major issue for the asset class a few years ago. Since the end of 2010, the value of US loans maturing by the end of 2014 has fallen to $114bn from $260bn. It is also apparent that more stable sectors such as cable television, healthcare and telecoms have made the best headway in reducing maturities, whilst more cyclical or problematic sectors, such as directories, have not.

The lagging 12-month default rate for the S&P European Leveraged Loan Index (ELLI) retreated to a three-month low of 4.7% in April, from 5.3% in March, based on par amount outstanding. However, the current reading remains higher than the 2011 year-end rate of 4.1%, and is well above the 2010 year-end rate of 2%.

Investment Pipeline

Given the continued combination of loan market rallies and a steady new issuance pipeline we have been focusing on selling low current yielding assets that were bought at a discount, which has generated capital appreciation, and are reinvesting the proceeds in higher yielding credits.

Whilst we have seen a small amount of acceptable new loan issuance in Europe, the US market remains far stronger in comparison, and as such, dominates our portfolio composition. Over recent weeks the Sovereign debt crisis has come to the fore once again in Europe.  Given the uncertainty, this puts further pressure on new issuance in this region with Arrangers unwilling to underwrite large deals and investors reticent about committing to transactions that may trade down in the secondary market regardless of credit quality.

We expect the respective pipelines to continue their current trends for the foreseeable future and so the portfolio will continue to be heavily weighted towards the US market.

Material Events and Transactions

Conversion of C Shares

On 5 January 2012, the Company announced a Conversion ratio for the conversion of C Shares into Ordinary Shares. The conversion ratio, based on the NAV of each share class as at 31 December 2011, (as calculated in accordance with the Company's prospectus dated 7 September 2011 (the "Prospectus")), was 1.05390 Sterling Ordinary Shares for every one Sterling C Share held, and 1.05199 Dollar Ordinary Shares for every one Dollar C Share held.

On the basis of the Conversion Ratio announced, an application was made to the UK Listing Authority for 122,146,117 Sterling Shares and 5,797,522 US Dollar Shares (together the "New Shares") to be admitted to the Official List.  Application was also made for the New Shares to be admitted to trading on the London Stock Exchange, which became effective from dealings in the New Shares commenced.

The C Shares were permanently removed from trading on the London Stock Exchange with effect from the opening of trading at 8:00 a.m. on 17 January 2012.

Share Issues and conversions

During the period, the following Ordinary Share issues and conversions took place

Event	Effective date	Sterling share	USD Share
Share class conversion as at 31 January 2012	9 February 2012	1,484,063 (250,000)	(2,329,824) 392,473
Issue of shares as a Scrip Dividend	24 February 2012	592,380	68,398
Share class conversion as at 31 March 2012	11 April 2012	16,847	(10,600)

Accordingly, the Company's issued share capital as at 16 May 2012 (being the latest practicable date prior to the release of this announcement) consists of 371,965,838 Sterling Shares 121,465,970 U.S. Dollar Shares.

Dividends

The following dividends were declared to the shareholders during the reporting period:

Period	Date declared	Payment date	USD Share	Sterling Share
Quarter ended 31 December 2011	5 January 2012	24 February 2012	$0.01187	£0.01187
Special dividend (to C shareholders only at the Conversion of C Shares)	5 January 2012	24 February 2012	$0.00323	£0.00323
Quarter ended 31 March  2012	12 April 2012	25 May 2012	$0.01260	£0.01260

Report and Accounts

On 24 April 2012, the Company announced its final results for the period between incorporation on 10 March 2011 to 31 December 2011. On 30 April 2012, the Company posted its first Annual Report and Accounts for the period between incorporation on 10 March 2011 and 31 December 2011 to shareholders.

Financial Highlights

	16 May 2012	30 March 2012	31 December 2011	30 September 2011	30 June 2011
NAV per Ordinary Share
- Sterling (£)	0.9750XD	0.9809	0.9479	0.9278	0.9744
- US Dollars ($)	0.9797XD	0.9861	0.9497	0.9297	0.9734
NAV per C Share
- Sterling (£)	n/a	n/a	0.9912	n/a	n/a
- US Dollars ($)	n/a	n/a	0.9913	n/a	n/a

Background Information

The Company is a non-cellular company limited by shares incorporated in Guernsey and has been declared by the Guernsey Financial Services to be a registered closed-ended collective investment scheme. The Company is managed by Neuberger Berman Europe Limited, which has delegated certain of its responsibilities and functions to the sub-investment manager, Neuberger Berman Fixed Income LLC, both of which are indirect wholly owned subsidiaries of Neuberger Berman Group LLC.

The Company's share capital consists of Ordinary Shares denominated in U.S. Dollar and Sterling.

Investment objective, policy and strategy

The Company's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst growing the capital value of its investment portfolio over the long term, utilising the investment skills of the Investment Manager and the Sub-Investment Manager.

To pursue its investment objective, the Company invests mainly in floating rate senior secured loans issued in US Dollars, Sterling and Euros by North American and European Union corporations, partnerships and other business issuers.

The financial information covered herein for the period between 1 January 2012 and the date of publication of this interim management statement has not been audited.

By order of the Board

BNP Paribas Fund Services (Guernsey) Limited, for and on behalf of

NB Global Floating Rate Income Fund Limited

as Company Secretary

This document is intended only for the person to whom it has been delivered. No recipient may distribute, or make available, this document (directly or indirectly) to any other person and no part of this document may be reproduced in any manner without the written permission of NB Global Floating Rate Income Fund Limited ("NBGFRIF").  This document and the information contained herein is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia or Japan or to any "US person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. It does not constitute an offer of securities for sale anywhere in the world, including in or into the United States, Canada, Australia or Japan.  Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this document may in certain jurisdictions be restricted by law. Accordingly, recipients represent that they are able to receive this document without contravention of any applicable legal or regulatory restrictions in the jurisdiction in which they reside or conduct business.

This document has been prepared by NBGFRIF and is the sole responsibility of NBGFRIF. No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted and no representation, warranty or undertaking, express or implied, is or will be made by NBGFRIF or Neuberger Berman Europe Limited ("NBEL") or Neuberger Berman Fixed Income LLC ("NBFI") or Oriel Securities Limited ("Oriel Securities") or Dexion Capital plc ("Dexion") or any of their respective directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements. None of Neuberger Berman LLC, NBEL, NBFI, Oriel Securities, Dexion nor any of their respective Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to NBGFRIF or as to the truth, accuracy or completeness of this document, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this document and nothing in this document is or should be relied on as a promise or representation as to the future.

NBGFRIF will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and investors will not be entitled to the benefits of that Act. The securities described in this document have not been and will not be registered under the Securities Act, or the laws of any state of the United States. Consequently, such securities may not be offered, sold or otherwise transferred within the United States or to or for the account or benefit of U.S. persons (as such term is defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, applicable state laws and under circumstances which will not require NBGFRIF to register under the Investment Company Act. No public offering of the securities is being made in the United States.

Neuberger Berman Europe Limited is authorised and regulated by the United Kingdom Financial Services Authority and whose registered address is at Lansdowne House, 57 Berkeley Square, London, W1J 6ER. Neuberger Berman LLC is a registered Investment Adviser and Broker Dealer and member of the New York Stock Exchange, the Financial Industry Regulation Authority and the Securities Investor Protection Corporation. Neuberger Berman Fixed Income LLC is a US registered Investment Adviser. Neuberger Berman is a registered trademark. All rights reserved. © 2012 Neuberger Berman.

 

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