Portfolio Update - June 2023

NB Global Monthly Income Fund Ltd

18 July 2023

 

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

18^th July 2023

NB Global Monthly Income Fund

Commentary & Portfolio Update

30^th June 2023:

Key statistics

NAV (GBP)			GBP 0.7990
Current Portfolio Yield*			11.82%
Number of Investments			94
Number of Issuers			80
	Portfolio Assets: Applicable Ratings	Time To Maturity (years)		Market Value %
	Private Debt	5.50		41.1
	B	5.25		2.4
	CCC	5.43		32.8
	NR	5.95		5.9
	Distressed Debt	4.07		11.9
	B	4.09		7.2
	CCC	3.88		3.8
	NR	4.68		0.8
	US High Yield	5.14		11.2
	BB	3.25		0.9
	B	4.59		4.9
	CCC	5.93		5.5
	EUR High Yield	3.17		3.0
	B	2.99		2.8
	CCC	6.55		0.2
	US Loans	2.88		10.9
	BB	3.46		0.5
	B	2.88		10.0
	NR	2.25		0.4
	EUR Loans	3.09		3.3
	B	3.09		3.3
	CLO	8.79		5.7
	BB	7.66		3.2
	B	7.86		0.9
	NR	11.57		1.6

The time to maturity and market value percentage table excludes equity holdings and cash.

Currency Breakdown (excluding cash and FX)

USD 86%

GBP 7%

EUR 7%

Asset Type                Asset Type

Secured 89%              Fixed rate 25%

Unsecured 11%          Floating rate 75%

Market Update

Non-investment grade credit markets finished the month of June, the second quarter and year-to-date periods with strong returns, mostly driven by resilient economic data, a pause in Fed rate hikes and better than expected earnings results from most issuers. High yield spreads tightened significantly over the month of June on receding recession fears and despite a more hawkish tone late in the quarter from some central banks. U.S. loan market weighted average bid prices increased 135 basis points in the month and 85 basis points in the second quarter to close at $94.24. The European loan market saw more modest positive returns in the last month of the quarter as bid prices closed slightly lower at €94.42 compared to the end of May at €94.62 but up from first quarter-end levels where the bid closed at €93.26. Although defaults have risen from last year's lows, the default rate remains low and issuer fundamentals of free cash flow, interest coverage and leverage have stayed in relatively favourable ranges with the default outlook for 2023 still around the long-term average.

In the second quarter, U.S. senior floating rate loans-measured by the Morningstar LSTA U.S. Leveraged Loan Index (the "LLI")-returned 3.15% with the middle and lowest rated credit tiers outperforming as the BB, B and CCC rated segments of the LLI returned 2.81%, 3.25% and 4.39%, respectively. The Morningstar European Leveraged Loan Index ("ELLI") returned 3.13% (excluding currency) in the second quarter with B rated loans outperforming with a return of 3.33% (excluding currency), as compared the BB and CCC index with returns of 3.13% and -0.41%, respectively (excluding currency).  Year to date, the LLI was up 6.48% while the ELLI returned 7.06%.

The global high yield bond market finished the quarter with solid returns. The ICE BofA Global High Yield Constrained Index returned 1.59% in the second quarter. In the quarter, CCCs outperformed with returns of 3.65% compared to BB and B returns of 1.04% and 1.87%, respectively. Year to date, The ICE BofA Global High Yield Constrained Index returned 4.94%.

CLO debt spreads tightened modestly quarter-over-quarter, as various economic data continued to point towards a slowing bias in the pace of rate hikes, with tightening further supported by an increase in the price of loans by around 1 point over the quarter.  The majority of the tightening occurred in June. The CLO BB index gained 4.70% during the quarter and is up 8.44% year to date. Returns have been driven primarily by coupon income and to a lesser extent by modest price appreciation.

In our view, non-investment grade valuations are more than compensating investors for the benign default outlook; these instruments will continue to provide durable income and are especially attractive compared to other fixed income alternatives. The lagged effects of monetary tightening, rising inventories and changes in consumer behaviour are likely to continue to push the rate of inflation in a downward trend which has already led to a pause in some central banks' rate hike campaigns. Importantly, our analysts remain focused on the specific credit fundamentals of individual issuers in their coverage, assessing the base and downside cases in the event of a soft landing or recession. Relatively healthy consumer and business balance sheets and growing nominal GDP should continue to remain supportive for issuer fundamentals, in our view. While the incoming macroeconomic data and overall credit cycle dynamics can move non-investment grade credit markets day-to-day, we remain very focused on industry-specific trends and idiosyncratic risks to individual issuers.

Asset Realisation Update

The Managed Wind-down of the Portfolio, as described in the Circular of 20th December, has been in effect since the EGM shareholder approval of 27th January 2023.  In the period between 27th January and 30th June, a total value of £100.4 million of portfolio assets were disposed of being approximately 55.6 % of NAV as of 27th January 2023.  In July, further progress has been made in realising assets at the earliest opportunity consistent with maintaining shareholder value.  Credit Markets in the US and Europe have continued to be volatile however in recent weeks we have seen some improvement in risk sentiment.

To access the June 2023 Factsheet, please click here.

The Fund's website can be found at the following address: www.nbgmif.com

* Current Portfolio Yield is a market-value weighted average of the current yields of the holdings in the portfolio, calculated as the coupon (base rate plus spread) divided by current price. The calculation does not take into account any Fund expenses or sales charges paid, which would reduce the results. The Current Yield for the Fund will fluctuate from month to month. The Current Yield should be regarded as an estimate of the Fund's rate of investment income, and it may not equal the realised distribution rate for each share class. You should consult the Fund's prospectus for additional information about the Fund's dividends and distributions policy.

Past performance is not a reliable indicator of current or future results.

-ENDS-

For further information, please contact:

Neuberger Berman Europe Limited (Manager) Elizabeth Papadopoulos	[phone]
Numis Securities Limited (Broker) Hugh Jonathan Matt Goss	[phone]
Sanne Fund  Services (Guernsey) Limited (Company Secretary) Matt Falla Gemma Berry	[phone]

Background Information

The Company is a registered closed-ended investment company incorporated in Guernsey. It is managed by Neuberger Berman Europe Limited, which has delegated certain of its responsibilities and functions to the AIFM, Neuberger Berman Investment Advisers LLC, both of which are indirect wholly owned subsidiaries of Neuberger Berman Group LLC.

Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies-including equity, fixed income, quantitative and multi-asset class, private equity, real estate and hedge funds-on behalf of institutions, advisors and individual investors globally. Neuberger Berman's investment philosophy is founded on active management, engaged ownership and fundamental research, including industry-leading research into material environmental, social and governance factors. Neuberger Berman is a PRI Leader, a designation awarded to fewer than 1% of investment firms. With offices in 26 countries, the firm's diverse team has over 2,750 professionals. For nine consecutive years, Neuberger Berman has been named first or second in Pensions & Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more).

The firm manages $443 billion in client assets as of June 30, 2023. For more information, please visit our website at www.nb.com

RISK CONSIDERATIONS

Market Risk: The risk of a change in the value of a position as a result of underlying market factors, including among other things, the overall performance of companies and the market perception of the global economy.

Risks associated with Managed Wind-Down:  The Portfolio will be reduced and concentrated in fewer less liquid holdings.  The Company might experience increased volatility in its Net Asset Value and/or its Share price as a result of changes to the Portfolio Structure.

Liquidity Risk: The risk that the fund may be unable to sell an investment readily at its fair market value.

Credit Risk: The risk that bond issuers may fail to meet their interest repayments, or repay debt, resulting in temporary or permanent losses to the Fund.

Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.

Counterparty Risk: The risk that a counterparty will not fulfil its payment obligation for a trade, contract or other transaction, on the due date.

Counterparty Risk: The risk that a counterparty will not fulfil its payment obligation for a trade, contract or other transaction, on the due date.

Operational Risk: The risk of direct or indirect loss resulting from inadequate or failed processes, people and systems including those relating to the safekeeping of assets or from external events.

Derivatives Risk: The Fund is permitted to use certain types of financial derivative instruments ("FDI") (including certain complex instruments) which can give rise to particular risks, including market risk, liquidity risk and counterparty credit risk. This may increase the Fund's leverage significantly which may cause large variations in the value of your share.

Currency Risk: Investors who subscribe in a currency other than the base currency of the Fund are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment.

The past performance shown is based on the share class to which this factsheet relates. If the currency of this share class is different from your local currency, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency.

IMPORTANT INFORMATION

Source of all data and charts (unless stated otherwise): Neuberger Berman Europe Limited, Bloomberg and Blackrock Aladdin.

This document has been issued by NB Global Monthly Income Fund Limited (the "Company"), and should not be taken as an offer, invitation or inducement to engage in any investment activity and is solely for the purpose of providing information about the Company. This document does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any share in the Company or securities in any other entity, in any jurisdiction. This product is only suitable for institutional, professional and professionally advised retail investors, private client fund managers and brokers who are capable of evaluating the merits and risks of the product and who plan to stay invested until the end of the recommended holding period and can bear loss of capital. An investor with reasonable knowledge of loans and alternative credit would need to be assessed by the advisor or distributor to establish suitability for this product.

Full product details, including a Key Information Document, are available on our website at www.nbgmif.com.

Due to the inherent risk of investment in the debt market particularly related to alternative credit, it is expected that a qualified investor would be able to understand the risks in such security types and the potential impact of investing in the product. This product is designed to form part of a portfolio of investments.  

The Company is a closed-ended investment company incorporated and registered in Guernsey and is governed under the provisions of the Companies (Guernsey) Law, 2008 (as amended), and the Registered Collective Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission ("GFSC"). It is a non-cellular company limited by shares and has been declared by the GFSC to be a registered closed-ended collective investment scheme. The Company's shares are admitted to the Official List of the UK Listing Authority with a premium listing and are admitted to trading on the Premium Segment of the London Stock Exchange's Main Market for listed securities.

Neuberger Berman Europe Limited is authorised and regulated by the Financial Conduct Authority and is registered in England and Wales, at The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ.

This document is presented solely for information purposes and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. We do not represent that this information, including any third-party information, is complete and it should not be relied upon as such. Any views or opinions expressed may not reflect those of the Company as a whole. All information is current as of the date of this material and is subject to change without notice. No part of this document may be reproduced in any manner without prior written permission of the Company. 

An investment in the Company involves risks, with the potential for above average risk, and is only suitable for people who are in a position to take such risks. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of any investment, and should consult its own legal counsel and financial, actuarial, accounting, regulatory and tax advisers to evaluate any such investment. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. Investment in the Company should not constitute a substantial proportion of an investor's portfolio and may not be appropriate for all investors. Diversification and asset class allocation do not guarantee profit or protect against loss.

Past performance is not a reliable indicator of current or future results. The value of investments may go down as well as up and investors may not get back any of the amount invested. The performance data does not take account of the commissions and costs incurred on the issue and redemption of units.

The value of investments designated in another currency may rise and fall due to exchange rate fluctuations in respect of the relevant currencies. Adverse movements in currency exchange rates can result in a decrease in return and a loss of capital.

Tax treatment depends on the individual circumstances of each investor and may be subject to change, investors are therefore recommended to seek independent tax advice.

This document, and the information contained therein, is not for viewing, release, distribution or publication in or into the United States, Canada, Japan, South Africa or any other jurisdiction where applicable laws prohibit its release, distribution or publication, and will not be made available to any national, resident or citizen of the United States, Canada, Japan or South Africa. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes must inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the federal securities law of the United States and the laws of other jurisdictions.

The Company's shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States. The shares may not be offered, sold, resold, pledged, delivered, distributed or otherwise transferred, directly or indirectly, into or within the United States, or to, or for the account or benefit of, US persons (as defined in Regulation S under the Securities Act). No public offering of the shares is being made in the United States.

The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act") and, as such, holders of the shares will not be entitled to the benefits of the Investment Company Act. No offer, sale, resale, pledge, delivery, distribution or transfer of the shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act. In addition, the shares are subject to restrictions on transferability and resale in certain jurisdictions and may not be transferred or resold except as permitted under applicable securities laws and regulations. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.

The "Neuberger Berman" name and logo are registered service marks of Neuberger Berman Group LLC.

© 2023 Neuberger Berman Group LLC. All rights reserved.

 

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