Portfolio Update

RNS Number : 4659K

NB Global Floating Rate Income Fund

15 July 2011

 



NB Global Floating Rate Income Fund

Portfolio Update

NB Global Floating Rate Income Fund (the "Company") today announces an update in relation to the Company's investment portfolio.

As at 30 June 2011, the Company had deployed approximately 83% of its net assets, with 133 investments across 102 issuers. The Company has opportunistically utilised around 19% out of the 20% bond allocation to capitalise on attractive yield-enhancing opportunities, particularly in secured bonds. The Company expects to be 85% committed by mid-July and fully invested by the end of July.

The invested portion of the portfolio is diversified across 28 industries, with no industry representing over 13%, and in terms of currency is split into approximately 81% U.S. Dollars, 12% Euro and 7% Sterling.  As at 30 June 2011, the portfolio is invested primarily in Ba (29.7%) and B (60.0%) rated investments¹ and has a gross yield of approximately 6.24%.

Market Environment²

During the month of June, the US S&P/LSTA Leveraged Loan Index fell 0.37% as investors focused on sovereign debt issues and economic reports that indicated a less than robust global economic recovery. However, loans demonstrated their relative resiliency as the S&P 500 fell 1.67% and Bank of America Merrill Lynch's High-Yield Master Index lost 1.0%. US Loan returns for the second quarter and year-to-date were 0.18% and 2.61% respectively. In Europe in June the S&P European Leveraged Loan Index was down 1.23%. In addition to the weak economic backdrop, technicals in the US loan market were less favourable than previous months as demand for loans via retail mutual funds slowed at the same time as there was significant supply entering the market. The new issue market was particularly attractive as arrangers improved pricing on 47% of new issues versus lowering prices on only 12% in the US market. Furthermore, average first-lien clearing prices in the US hit a five-month high of 5.75% in June, up over 50 basis points from March's low.  We continued to be active in the primary market due to the combination of good structures and attractive yields. Away from technicals, fundamentals remained very strong with the lagging 12-month US default rate by principal amount remaining at the May level of 0.91%. Year-to-date only three US issuers have defaulted on $415 million of loans, an annualized default rate of just 0.17%. In Europe, the lagging 12-month default rate was 2.2% in June, versus 2.4% in May. While a decrease ends two months of increases, the default rate for the S&P European Leveraged Loan Index is above the 30-month low of 1.7% set in March.

Investment Pipeline

While we originally expected to be fully invested by the end of June, due to the recent volatility we continue to be very selective on new investments. That being said, including allocations we have received since quarter end and outstanding commitments, we aim to be approximately 85% invested by mid-July. The forward calendar of US institutional loans remains robust at over $26 billion² and should allow us to be fully invested by the end of July. In Europe leverage loan forward volume stood at €6 billion² at the start of July.

An accompanying factsheet on the information provided above can be found on the Company's website www.nbgfrif.com.  Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

1. Moody's Investors Service.

2. Source: Standard & Poor's.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Anji Stewart

Financial Dynamics                                       [phone]

Neil Doyle                   

Ed Berry

Laura 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 $199 billion in assets as of March 31, 2011. Neuberger Berman provides a broad range of global investment solutions to institutions and individuals through customized separately managed accounts, funds and alternative 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. 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. The target yield should not be taken as an indication of the Fund's expected future performance or results. The target yield is a target only and there is no guarantee that it can or will be achieved and it should not be seen as an indication of the Fund's actual or expected return.

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. © 2011 Neuberger Berman.

 

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