Portfolio Update - Replacement

NB Global Monthly Income Fund Ltd

18 January 2024

 

The following replaces the announcement released at 15:00 on 16 January 2024 under RNS Number 8890Z. The footnote under the 'Portfolio Update: Applicable Ratings' table previously stated 'The time to maturity and market value percentage table excludes equity holdings and cash, which represent 0.3% and 18%, respectively, of Market Value as of 29 December 2023.' This has been updated to state 'The time to maturity and market value percentage table excludes equity, quasi-equity holdings and cash, which represent 0.3%, 13.1% and 17.1%, respectively, of Market Value as of 29 December 2023.' All other details of the announcement remain unchanged.  

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 January 2024

NB Global Monthly Income Fund

Commentary & Portfolio Update

29^th December 2023:

Key statistics

NAV (GBP)	GBP 0.7656
Current Portfolio Yield*	14.62%
Number of Investments	30
Number of Issuers	25

Portfolio Assets: Applicable Ratings	Time To Maturity (years)	Market Value %
Private Debt	5.23	48.9
B	5.06	1.5
CCC	5.27	46.7
CC	2.49	0.1
NR	3.21	0.7
Distressed Debt	3.30	12.4
B	3.74	4.5
CCC	2.77	6.6
NR	4.51	1.3
US Loans	3.94	6.8
B	3.92	5.5
NR	4.00	1.3
EUR Loans	4.11	1.4
B	4.11	1.4

The time to maturity and market value percentage table excludes equity, quasi-equity holdings and cash, which represent 0.3%, 13.1% and 17.1%, respectively, of Market Value as of 29 December 2023.  

Currency Breakdown (excluding cash and FX)

USD 91%

EUR 8%

GBP 1%

Asset Type                Asset Type

Secured 100%            Fixed rate 12%

Unsecured 0%            Floating rate 88%

Market Update

Non-investment grade credit markets finished the month of December and the fourth quarter with strong returns driven by risk-on sentiment as markets priced in rate cuts for 2024 despite resilient economic data.  For calendar year 2023, high yield bond and loan market returns were among the highest since 2019. Yields declined across fixed income during the month and quarter, primarily driven by a fall in 10-year U.S. Treasury yields. The yield on U.S. 10-Year Treasuries ended December at 3.87%, declining 36 basis points since the end of November and 71 basis points since the end of the third quarter. Yields on 10-year U.K. Gilts and German Bunds also declined over the month. Broadly, non-investment grade issuer fundamentals of free cash flow, interest coverage and leverage have remained in relatively favourable ranges with most we believe well-positioned to navigate the current environment, but some sectors and issuers are coming under pressure from slower growth, and secular or idiosyncratic challenges. Also, some lower-quality issuers have been experiencing earnings pressure recently.

In December, U.S. senior floating rate loans-measured by the Morningstar LSTA U.S. Leveraged Loan Index (the "LLI")-returned 1.65% with the lowest rated part of the credit spectrum outperforming as the BB, B and CCC rated segments of the LLI returned 1.23%, 1.79% and 2.70%, respectively. The Leveraged Loans 100 Index-a measure of the largest, most liquid issuers-returned 1.97% in December and 13.20% year to date. In 2023, CCCs and single Bs outperformed the overall index with returns of 17.54% and 14.82%, respectively, compared to the BB rating tier's return of 10.18%. The Morningstar European Leveraged Loan Index ("ELLI") returned 1.21% (excluding currency) in December as CCC and BB rated loans underperformed with returns of 0.23% and 1.13% (excluding currency), respectively, compared to the B index with a return of 1.26% (excluding currency). The ELLI returned 13.42% year to date (excluding currency). The second lien loan index returned 3.42% in December and 22.74% in 2023.

The global high yield bond market finished the month, quarter and year with strong returns. The ICE BofA Global High Yield Constrained Index returned 3.47% in December, 6.68% in the fourth quarter and 12.97% year to date. In December, the lowest rated credit tier outperformed as the BB, B, CCC & lower categories of the ICE BofA Global High Yield Index returned 3.22%, 3.42%, and 5.33%, respectively. Year to date, the CCC & below and B rated credit tiers of the index outperformed with returns of 17.70% and 14.18%, as compared to the BB rated segment of the index which returned 11.36%.

CLO debt spreads were meaningfully tighter in the quarter, as economic data and statements from the Federal Reserve indicated a lower probability of future rate hikes, with the market increasingly gravitating to a "soft landing" economic scenario.  Secondary non-investment grade CLO trading volumes declined 13% quarter-over-quarter. The CLO BB index gained 7.33% during the quarter and was up 24.52% for the full year 2023.  Returns have been driven approximately two thirds by coupon income, and one third by price appreciation.

In our view, non-investment grade valuations are compensating investors for the relatively benign default outlook; these instruments will continue to provide durable income and are especially attractive compared to other fixed income alternatives. While the economy remains resilient, slowing real demand has helped inflation continue to move downward. The lagged effects of monetary tightening, higher current interest rates and shifts in consumer behaviour are likely to keep pushing inflation toward central banks' target ranges. However, higher interest rates could put more pressure on the consumer and broader economy. As credit dispersion has been on the rise, our analysts remain keenly focused on the specific fundamentals of individual issuers in their coverage, assessing the base and downside cases in the event of a soft-landing or recession.

Asset Realisation Update

The Managed Wind-down of the Portfolio, as described in the Circular of 20th December 2022, has been in effect since the EGM shareholder approval of 27th January 2023. In the period between from 27th January 2023 to-date there have been five compulsory redemptions reflecting the realisation of a total value of £143.9 million of portfolio assets. This is approximately 79.8% of the NAV as of 27th January 2023 which exceeds the previously stated target of having distributed 75% of that NAV in cash by the year-end.

To access the December 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

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 2,800 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 $463 billion in client assets as of December 31, 2023. For more information, please visit our website at www.nb.com.

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.

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.

© 2024 Neuberger Berman Group LLC. All rights reserved.

 

END