Portfolio Update - Replacement

NB Global Floating Rate Income Fund Limited (the "Company")

Portfolio Update - Replacement

The full commentary has now been included in the 'Portfolio Update' announcement released on 15 July 2015 at 07.00 BST.

The full amended text is shown below.

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

NB Global Floating Rate Income Fund

Portfolio Update

The NB Global Floating Rate Income Fund Limited's (the "Fund") 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 Fund'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 Fund is managed by four experienced Portfolio Managers backed by what we believe to be one of the largest and most experienced credit teams in the industry.

Market Environment¹

Second quarter returns in the US Loan Market, as measured by the S&P/LSTA Leveraged Loan Index (the "Index"), were 0.69% which leaves year to date returns at 2.83%. These returns peaked at 3.26% in late May but heavy market conditions in early June, primarily caused by expected supply from two $15 billion dollar M&A announcements (Charter Communications and Avago Technologies) and a Greece led risk-off environment towards the end of the month, resulted in a June return of negative 0.42%, the first losing month of the year. The S&P Leveraged Loan 100 Index (the "Loan 100") which consists of the largest loans in the US market, and is reflective of our large cap strategy, has significantly underperformed the Index with a year-to-date return of only 1.76%. The Loan 100 has suffered disproportionately from Millennium Health's outsized decline (down ~50 basis points) and from falling prices in the leveraged loan market's two big distressed names, Energy Future Holdings (fka TXU) and Caesars. The Fund does not own these three issuers.  June's loss notwithstanding, the first half of 2015 is the US loan market's best six-month performance period since October 2013-March 2014. Additionally, year to date US Loan returns are very attractive relative to other fixed income alternatives, including High Yield at 2.49%², 10 Year Treasuries at -0.51%² and Investment Grade at -0.46%² .

The technical picture that emerged in the first quarter of 2015 continued into the second quarter. CLO issuance remained robust at over $28 billion (bringing YTD issuance to $59 billion, versus $61 billion YTD June 2014), retail flows were de minimis and net new issuance was muted. Year to date new issue volumes in the institutional segment of $142 billion are running 40% below last year's volumes. LBO's have been the most constrained portion of the new issue market, as private equity firms are squeezed between high purchase price multiples and regulatory pressure to keep leverage ratios close to 6.0x EBITDA. The unfortunate result of the tight market conditions was a return of repricing activity - repricing volume increased to $67 billion in Q2 2015, the most in a quarter since $84 billion was issued in the first quarter of 2014 and up from just $1 billion in the first quarter this year. Offsetting the repricing wave were two positive factors: 1) many of the repriced term loans were still covered by soft call protection and, as such, investors often received 100bp of fees in conjunction with such transactions and 2) even the post-pricing all-in coupons were attractive, relative to similarly rated issuers. With repricings making up a significant portion of activity, and a substantial amount of repayments (for example, Heinz and Biomet), the loan market only saw modest growth increasing to $836 billion at the end of June 2015 from $830 billion outstanding at year end 2014.

In Europe, the quarterly return, as measured by the S&P European Leveraged Loan Index ("ELLI"), of 0.98% (all ELLI returns exclude currency fluctuations) was more subdued when compared to 2.10% in Q1 2015, but, as in the US, the year to date return of 3.11% was robust and compares well to the 2.14% generated in the first half of 2014. The ELLI lost 0.31% in June, having turned negative right at the end of the month end after the Greek government imposed controls on Greek banks. From an issuance perspective, the second quarter began as the first ended, with a weighting towards existing issuers returning to market with opportunistic transactions and, of the €10bn of institutional issuance during the quarter, over 40% fell into this category. On a positive note, not all of the proposed opportunistic requests passed and, for example, Constantia Flexibles, who we lend to, pulled a re-pricing transaction following investor pushback.  Year to date June 2015 issuance levels were €21.5 billion versus €27.2 billion for the comparable period in 2014 and, with a steady flow of repayments, we have seen the ELLI continue to contract, ending June at €91.5 billion, down from €96.0 billion at the end of March.

As we enter the second half of the year in Europe, all eyes remain focused on negotiations with Greece and, whilst the market has remained relatively stable, new issue launches have been limited, particularly from companies planning to launch with a high yield bond in the capital structure. Additionally CLO issuance, which has been decent throughout the year to date with 19 deals pricing for €7.6 billion (compared to the second quarter of 2014, which had 16 deals pricing for €6.9 billion), appears to be on hold as managers assess the appetite for their latest transactions. 

The US trailing 12 month default rates by amount (1.24%) and number (0.81%) both remained low and below the Index's long term average of approximately 3.22%  (by amount since 1999). Other measures of potential future defaults also remained muted. For example, the shadow default rate - a measure of performing S&P/LSTA Index issuers that have (1) missed a bond payment, (2) entered a forbearance agreement, or (3) hired bankruptcy counsel - increased to a still manageable six-month high of 0.83% in June, from 0.24% in May.

The recently implemented US Interagency Leveraged Lending Guidelines continue to reduce the leverage on new credits entering the loan market. The average debt multiples of large LBOs (those for issuers with $50 million or more of annual EBITDA) eased to 5.6x in the first half of 2015 versus 5.8x in 2014.  In addition, the market is seeing fewer deals with ultra-high debt multiples, as the average leverage for the most-geared quintile of LBOs has receded to 6.7x year to date 2015 from a post-credit crunch high of 7.0x in 2014 and a peak of 8.4x in 2007. We believe these regulations will have a positive impact on the future default rate for the US loan market.

The European trailing 12 month default rate continued to reduce, falling to 2.1% by volume and 2.0% by issuer at the end of June, down from 3.6% and 2.9% respectively at the end of March. This has been primarily driven by last year's two large defaults, Vivarte and Autobar, no longer being included in the calculation.

Portfolio Management

The overall profile of the portfolio has remained relatively constant over the past 6 months, with our bond allocation remaining low at 3.55% against the 20% of NAV allowable, non-USD assets accounting for 5.33% and a continued single B overweight. Barring a significant sell-off in high yield, our bond allocation is likely to remain in this range as we move closer to interest rate increases in the US. Our European weight, as has been the case in the past, will likely be driven by new issuance volumes which have been depressed as of late. And finally, our Single B overweight will remain driven by our default outlook, which continues to be benign.

Outlook

Whilst we do currently see a level of uncertainty/nervousness in the credit markets, given the Greece discussions and the fact that they may lead to some volatility, we maintain our full year asset class return forecast of 4-6%. This is comprised mostly of income, with the potential for some capital appreciation as we believe there may be some further upside from the June closing S&P/LSTA Index price of 96.58. The potential for interest rate rises in the US should clearly have a positive effect on the asset class too. While we might see some defaults in the Energy space, the overall default outlook remains very benign, as the companies in our investable universe maintain strong credit profiles and have very few near term maturities.

The Portfolio, as at 30 June 2015 (excluding cash):

• was split 94.67% USD, 3.03% EUR, 2.30% GBP
• had 3.55% allocated to bonds out of the maximum 20% allowable
• was invested primarily in B (50.93%) and BB (38.91%) rated investments³

1. Source: S&P LCD.
2. Source: BoA Merrill Lynch
3. Source: Standard & Poor's.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited           [phone]
Joanna Pope

Background Information

The Company is a registered closed-ended investment company incorporated in Guernsey. 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 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. To pursue its investment objective, the Company will invest mainly in floating rate senior secured loans issued in U.S. Dollars, Sterling, and Euros by North American and European Union corporations, partnerships and other business issuers.

Established in 1939, Neuberger Berman is one of the world's leading private, independent employee-controlled asset management firms, managing approximately $251 billion in assets as of March 31, 2015. Neuberger Berman provides a broad range of global investment solutions to institutions and individuals through customized separately managed accounts, funds and alternative investment products.  

Non-Mainstream Pooled Investments
The Company confirms that it conducts its affairs, and intends to continue to conduct its affairs, so that the Company's shares will be excluded securities under these the new rules and will therefore be excluded from the FCA's restrictions which apply to non-mainstream investment products.

This document is intended only for the person to whom it has been delivered. No part of this document may be reproduced in any manner without the written permission of NB Global Floating Rate Income Fund Limited ("NBGFRIF"). The securities described in this document may not be eligible for sale in some states or countries and it may not be suitable for all types of investors. Securities in the fund may not be offered or sold directly or indirectly into the United States or to U.S. Persons. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The price of investments may fall as well as rise and investors may not get back the full amount invested. Statements contained herein, including without limitation, statements regarding the credit markets, are based on current expectations, estimates, projections, opinions and/or beliefs of the managers. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Such statements are necessarily speculative in nature, as they are based on certain assumptions. It can be expected that some or all of the assumptions underlying such statements will not reflect actual conditions. Accordingly, there can be no assurance that any projections, forecast or estimates will be realized. This document is not intended to be an investment advertisement or sales instrument; it constitutes neither an offer nor an attempt to solicit offers for the securities described herein. This document was prepared using the financial information available to NBGFRIF as at the date of this document. This information is believed to be accurate but has not been audited by a third party. This document describes past performance, which may not be indicative of future results. NBGFRIF does not accept any liability for actions taken on the basis of the information provided in this document. Neuberger Berman is a registered trademark. © 2015 Neuberger Berman.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: NB GLOBAL FLOATING RATE INCOME FUND LIMITED (GBP) via Globenewswire

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