Portfolio Update

RNS Number : 0979Z

NB Global Floating Rate Income Fund

12 March 2012

 



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

NB Global Floating Rate Income Fund Limited (the "Fund") is a Guernsey incorporated closed-ended investment company. The Fund targets an annualised net yield per share 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, excluding cash, as at 29 February 2012:

·     was split 88.6% USD, 6.1% EUR and 3.6% GBP

·     was diversified across 32 industries with no industry representing over 14% of the portfolio

·     had 12% allocated to bonds out of the maximum 20% allowable

·     was invested primarily in B (53.7%) and Ba (37.2%) rated investments¹

Market Environment²

The strong performance we reported at the start of the year continued in February with the US S&P/LSTA Loan Index returning 0.77% for the month, which improved the YTD result to 2.95%. Europe has been similarly robust with the S&P European Leveraged Loan Index (ELLI) posting a YTD result of 2.99% with a 0.35% return for the month.

Within the S&P/LSTA, the firms that saw the greatest gains were a handful of large pre-crisis LBO names that pushed out their maturities through Amend to Extend requests and/or bond issuance (First Data, Harrah's, Clear Channel). The one pre-crisis LBO that continues to lag is TXU which suffered further losses in February due to the continued decline in natural gas prices.

By rating, single B's (where the portfolio has its largest exposure and largest over-weight) lead the way with +1.28% for February and 4.09% YTD. CCC's were the worst performing in February, driven largely by TXU's under-performance.

The new issuance to date has been primarily refinancings and demand is being driven by paydowns via new high yield bond issuance. While flows into loan retail funds have been negligible this year, CLO creation has picked up with YTD issuance of $3.5bn and this is the incremental driver of demand to date.

The default rates in the US and Europe remain below our full year estimates at present, at 0.21% and 4.90% respectively.

Investment Pipeline

We are using the loan and high yield rallies to reduce the beta in the portfolio and using the proceeds from these sales to re-invest in new issue given we see limited value in the secondary market at present.

Since last July we have reduced our exposure to high yield bonds, now down to 12% of the portfolio against the 20% allowable, and made limited investments in Europe given our concerns regarding the macro situation. Additionally, whilst we remain strategically overweight in the single B rated category, within this, we have gradually up-tiered and, at the end of February, 82% of our portfolio was rated B2 or above versus 76% at the end of July.

1. Moody's Investors Service.

2. Source: Standard & Poor's.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Anji Stewart

FTI Consulting                                              [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 $193 billion in assets as of December 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. © 2012 Neuberger Berman.

 

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