Portfolio Update

RNS Number : 8242R

NB Global Floating Rate Income Fund

10 November 2011

 



NB Global Floating Rate Income Fund

Portfolio Update

NB Global Floating Rate Income Fund Limited (the "Fund") is a Guernsey incorporated closed-ended investment company. This Fund targets an annualised net yield per share (net of fees and expenses) in the region of 5% on the issue price in the first full year of investment, plus capital appreciation, while seeking to protect investors from rising interest rates.

The Fund's managers expect to generate this yield by investing in a global portfolio of more than 100 senior secured corporate loans with selective use of senior bonds, diversified across at least 15 industry sectors. The Fund is managed by three accomplished portfolio managers backed by a credit team of over 30 investment professionals.

The Portfolio as at 31 October 2011:

u held 183 investments across 147 different issuers

u was split 86.8% USD, 7.7% EUR and 5.5% GBP

u was diversified across 32 industries with no industry representing over 16% of the portfolio

u had opportunistically utilised around 15% out of the 20% allowable allocation to bonds

u had a gross yield of 5.82%

u was invested primarily in Ba (38.7%) and B (50.2%) rated investments¹

Market Environment²

Improving technical conditions and a broader rally in the capital markets lifted the US Loan market in October, with the S&P/LSTA Leveraged Loan Index hitting its highest level in 22 months at 2.89%, a favourable comparison to the 0.43% return generated in September. Year to date loan returns have now reversed from the negative 1.34% recorded up to September, to a positive 1.51% at the end of the month. The S&P/LSTA Leveraged Loan 100 Index, which represents the more liquid part of the market and is where the Fund's investments are concentrated, generated a return of 4.35% for October, taking the year to date figure to 1.28%. In Europe, the S&P ELLI Index also reversed a September decline of
-1.95%, as the index regained ground in October returning a positive 1.43% for the period to 27th October. Currently, the year-to-date return stands at 0.04%, compared to -1.54% at the start of the month. As per previous updates, we continue to believe that the fundamentals of the underlying companies in our portfolio remain strong, and this is being reaffirmed by the Q3 earnings reports that are being published at present. Current spreads continue to imply a default rate that is in excess of what we expect and our view of low default rates over the next 24 months remains intact.

Investment Pipeline

In the US, the forward calendar stood at $10 billion at the end of October, a nine month low and $4 billion down on September. This level is unlikely to grow to any great degree over the remainder of the year as arrangers continue to look at keeping new underwriting mandates to a minimum as we head towards year end. What we have seen recently are a number of opportunistic financings for existing issuers. These additional tranches have been attractively priced versus current yields on offer in the secondary market for the same issuers, therefore we have participated in most. As of October 28th, in Europe the forward calendar stood at a low €590 million. We do not expect any further issuance in Europe through to year end as arrangers have a number of protracted syndications in the market that need to clear, prior to new business being underwritten.

Market uncertainty remains less acute in the US than in Europe and it therefore stands as the primary focus of our investments at present. We anticipate that the majority of our investment focus for the remainder of the year will be centered around the previously mentioned opportunistic financings and the secondary market.

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 $183 billion in assets as of September 30, 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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