Interim Management Statement

RNS Number : 0993T

NB Global Floating Rate Income Fund

15 November 2013

 



NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

15 November 2013

NB GLOBAL FLOATING RATE INCOME FUND LIMITED

INTERIM MANAGEMENT STATEMENT

NB Global Floating Rate Income Fund Limited (the "Company"), is publishing this Interim Management Statement in accordance with DTR 4.3 of the Financial Conduct Authority ("FCA") 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 Conduct 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 July 2013 and the date of publication of this interim management statement, unless otherwise specified.

Company Objective

The NB Global Floating Rate Income Fund Limited's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst preserving the capital value of its investment portfolio, utilising the investment skills of the Investment Managers.

The Company's managers seek to generate this yield by investing in a global portfolio of below investment grade senior secured corporate loans with selective use of senior secured bonds, diversified by both borrower and industry. The Company is managed by three experienced Portfolio Managers backed by what the Investment Manager believes to be one of the largest and most experienced credit teams in the industry.

Market Environment

Reduced volatility was seen as the third quarter progressed as credit markets moved further away from the May/June sell-off. For the quarter, loans produced a positive return, with the S&P/LSTA Leveraged Loan Index increasing from a YTD return of 2.28% through 30 June to 3.53% through 30 September. As has been the case throughout much of the year, within this, lower rated credits outperformed with CCCs leading the way with a 7.06% YTD return versus 3.87% for Bs and 2.51% for BBs. In Europe, since dipping into the red in June, the S&P European Leveraged Loan Index (ELLI) posted gains in each of the three contributing months, resulting in the Index being up 3.25% in the third quarter of 2013, its best performance since the first quarter of 2012. The September YTD ELLI return is now 6.15%.

Although down from the second quarter, at $101 billion versus $117 billion, institutional issuance continued to be strong in the third quarter and included some M&A activity. This M&A activity included 5 loans totalling over $2.0 billion (Dell, BMC, Fieldwood, Gardner Denver and HUB International) versus only two for all of 2012. The increase in M&A also had the added benefit of reducing some of the more opportunistic transactions during the quarter, including repricings and dividend recapitalisations. While leverage levels remained reasonable in the opinion of the Investment Managers the share of deals that were covenant-lite increased from earlier in the year. In the third quarter, covenant-lite issuance increased to 64% and the resulting share of the S&P/LSTA Index that is now covenant-lite is at 43% versus 30% at year-end 2012.

As has been the case throughout the year, supply was met with ample demand from both retail investors and CLOs, both exceeding $50 billion YTD September. While CLO creation looks to be challenged in the near term by recent regulatory changes (specifically new FDIC rules that have narrowed the buying base for the most senior tranches), the Investment Managers continue to expect robust demand from both institutional and retail investors seeking attractive income in a short duration instrument. The European CLO market has continued its revival and 15 new CLOs have priced this year in the sum of €5.1 billion. It is the Investment Managers understanding that various managers are working on potential new deals.

Portfolio Management

The Investment Managers took advantage of the stabilisation in the treasury market and resulting rally in high yield bond prices to reduce the Company's bond exposure by just over 3.0%, from 12.65% at the end of Q2 to 9.37% as at the end of October. The Company's exposure to Euro and Sterling assets increased to 11.74% from 8.22% over the same period following a steady flow of issuance and selective investments which included United Biscuits and Vue. From a rating perspective, the Investment Managers maintained the Company's overweight position to single-B credits of 52.73%, given the attractive risk-reward profile of this rating category.

Outlook

The Investment Managers' default outlook remains benign driven by continued earnings growth, free cash flow generation, deleveraging and modest upcoming maturities (as of 27 September, just $20.4 billion of S&P/LSTA Index loans are due by year-end 2015, down from $67.2 billion at the end of 2012). While fundamentals and technicals remain supportive, the Investment Managers do think that the upcoming quarter will be volatile due to the debt ceiling debate that will unfold over the next few months.

Material Events and Transactions

On 4 July 2013, 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 28 June 2013 (as calculated in accordance with the Company's prospectus dated 19 February 2013), was 0.99167089 Sterling Ordinary Shares for every one Sterling C Share held. The resulting Sterling Ordinary Shares were admitted to the Official List and to trading on the London Stock Exchange on 16 July 2013. The Sterling 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 16 July 2013.

On 22 July 2013, the Company announced that it had raised gross proceeds of £45.3 million (approximately $70 million) through the issue for cash, subject to Admission, of 41,054,257 new Sterling Shares and 5,761,807 new U.S. Dollar Shares.  The issue price was 100.9p and 101.9c, a 2% premium to the NAV calculated at close of business on 17 July 2013. The Shares were admitted to the Official List and to trading on the London Stock Exchange on 25 July 2013. 

On 30 September 2013, the Board of Directors of the Company announced the publication of the prospectus and Circular for the proposed placing and offer for subscription for a target issue in excess of £200,000,000 worth of C Shares at an issue price of £1.00 per Sterling C Share.

On 24 October 2013, the Board of the Company announced that the Company had raised gross proceeds of approximately £425 million (approximately $672 million) by means of a placing an offer for subscription of C Shares. On 29 October 2013, 425,571,132 Sterling C Shares were admitted to the Official List and to trading on the Main Market of the London Stock Exchange ("Admission").

It is expected that the proceeds of the issue of C Shares will be invested within three months of Admission.  

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 28 June 2013	9 July 2013	(295,059)	444,686
C Share Conversion	15 July 2013	360,521,605	-
Tap Issue	25 July 2013	41,054,257	5,761,807
Share class conversion as at 31 July 2013	9 August 2013	8,073,076	(12,128,147)
Issue of shares as a Scrip Dividend	16 August 2013	221,317	28,237
Share class conversion as at 30 August 2013	10 September 2013	398,153	(610,261)
Share class conversion as at 30 September 2013	10 October 2013	43,503	(69,819)

Accordingly, the Company's issued share capital as at 11 November 2013 (being the latest practicable date prior to the release of this announcement) consists of 824,278,387 Sterling Ordinary Shares, 51,060,370 U.S. Dollar Ordinary Shares and 425,571,132 Sterling C 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 30 June 2013 - C shares	4 July 2013	26 July 2013	-	£0.0055
Quarter ended 30 June 2013	4 July 2013	16 August 2013	$0.0111	£0.0111
Quarter ended 30 September 2013	7 October 2013	22 November 2013	$0.0089	£0.0089

Report and Accounts

On 15 August 2013, the Company announced its interim results for the period ended 30 June 2013. On 30 August 2013, the Company posted its Interim Report and Financial Statements for the period ended 30 June 2013 to shareholders.

Financial Highlights

	11  November 2013	30 September 2013	30     June 2013	28     March 2013	31 December 2012	28 September 2012
NAV per Ordinary Share
- Sterling (£)	0.9961	0.9942	0.9907	1.0051	0.9952	0.9922
- US Dollars ($)	1.0047	1.0032	0.9970	1.0118	1.0007	0.9969
NAV per C Share
C shares issued on 26 March 2013
- Sterling (£)	n/a	n/a	0.9770	n/a	n/a	n/a
C shares issued on 29 October 2013
- Sterling (£)	0.9812	n/a	n/a	n/a	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 is denominated in U.S Dollars and Sterling and consists of U.S Dollar Ordinary Shares, Sterling Ordinary Shares and Sterling C Shares.

The financial information covered herein for the period between 1 July 2013 and the date of publication of this interim management statement has not been audited.

Investment objective, policy and strategy

The Company's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst preserving 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 July 2013 and the date of publication of this interim management statement has not been audited.

By order of the Board

BNP Paribas Securities Services S.C.A., Guernsey Branch

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 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, 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 Conduct 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. © 2013 Neuberger Berman.

 

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