Portfolio Update

RNS Number : 8208T

NB Global Floating Rate Income Fund

13 December 2011

 



13 December 2011

NB Global Floating Rate Income Fund Limited

C Share 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.

In September 2011 it raised an additional $187m of capital via a C Share raise and this Factsheet is specific to that raise and should be read in conjunction with the C Share update release of 28th October 2011.

We are in the process of investing the $187m C Share proceeds and, as at the 30th November, were 74.90% invested. The specific portfolio detail as at this date is:

u was split 89% USD and 11% EUR¹

u was diversified across 27 industries with no industry representing over 14% of the invested portfolio¹

u was invested primarily in B (54.08%) and Ba (43.27%) rated investments^1,2

Market Environment³

With the broader capital markets wobbling in response to the European Union's sovereign debt travails, the S&P/LSTA Leveraged Loan Index lost 0.49% in November. The negative return follows a 2.89% gain the previous month, the largest since 2009, which leaves returns for the first 11 months of the year at 1.01%. 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, saw a more severe monthly loss of 1.34%, and as a result, this segment of the loan population remains marginally in the red for the year to date at -0.08%. In Europe, after a strong October, we saw slightly weaker performance during November, with the S&P European Leveraged Loan Index returning -0.22% for the month and -0.17% for the year to date. While sovereign concerns led to negative returns for the asset class, fundamentals remain strong. The US loan market default rate shrunk further in November. With no defaults among S&P/LSTA Index loans during the month, the rate fell to a 53-month low of 0.17% by principal amount (from 0.32% in October), and to a 47-month low of 0.62% by number of loans (from 0.75%). The US default rate remains well inside the historical averages of 3.53% by amount and 3.35% by number. In fact, November's reading by amount is the third-lowest on record, just a tick above the all-time low of 0.15% in June 2007. Through the 11 months of 2011, only four S&P/LSTA Index issuers have defaulted on a total of just $824 million, and at this pace, the default rate will close 2011 at 0.19% by amount and 0.68% by number. As we expected, the default rate has remained low due to the strong performance of the underlying companies. Among the S&P/LSTA Index issuers that have filed quarterly earnings reports with the SEC, EBITDA grew on average 16% year on year during the third quarter, which was down slightly from 17% in the second quarter, but impressive nonetheless. We continue to believe that the default rate will remain low in the US as companies have built up a significant financial cushion, as a result of their continued strong operating performance and limited near term maturities (only $23 billion due through the third quarter of 2013).

Investment Pipeline

In the US, the forward calendar of institutional loans is $11.9 billion, up from $10 billion at the end of last month. We expect the forward calendar to remain muted given the year-end and continuing global uncertainty, however, we continue to see opportunistic financings, and we have participated in many of these, as they have offered attractive relative value. As previously stated, the European pipeline remains limited as arrangers work to clear the unsold deals that were partially syndicated in the summer.

Source: BNP Paribas and Bloomberg. Data as at 30 November 2011. Past performance is not indicative of future returns.

1.     Excluding cash.

2.     Source: Moody's Investors Service.

3.     Source: Standard & Poor's.

4.     Based on the current level of investment excluding cash.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Anji Stewart

FTI Consulting                                              [phone]

Neil Doyle                   

Ed Berry

Laura Pope

www.nbgfrif.com

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 NB Group. 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.

This document is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia or Japan or to any "U.S. person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. This document is not an offer to sell or a solicitation of any offer to buy the securities referred to herein in the United States, Australia, Canada or Japan or in any other jurisdiction where such offer or sale would be unlawful. No recipient may distribute, or make available, this document (directly or indirectly) to any other person. Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this document may in certain jurisdictions be restricted by law. Accordingly, recipients represent that they are able to receive this document without contravention of any applicable legal or regulatory restrictions in the jurisdiction in which they reside or conduct business.

This document has been prepared by NB Global Rate Income Fund Limited ("NBGFRIF") and is the sole responsibility of NBGFRIF. No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted and no representation, warranty or undertaking, express or implied, is or will be made by NBGFRIF, Neuberger Berman Europe Limited ("NBEL"), Oriel Securities Limited ("Oriel Securities") or Dexion Capital plc ("Dexion") or any of their respective directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements. None of Neuberger Berman L.L.C., Neuberger Berman Group LLC, Neuberger Berman Fixed Income LLC ("NBFI"), Oriel Securities, Dexion nor any of their respective Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to NBGFRIF or as to the truth, accuracy or completeness of this document, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this document and nothing in this document is or should be relied on as a promise or representation as to the future. The name "Neuberger Berman" is used interchangeably throughout these materials for a number of entities associated with the Neuberger Berman Group and NBGFRIF and when used in this notice includes all such entities.

This document is an advertisement and does not constitute a prospectus or offering memorandum or an offer in respect of any securities and is not intended to provide the basis for any decision in respect of NBGFRIF or other evaluation of any securities of NBGFRIF or any other entity and should not be considered as a recommendation that any investor should subscribe for or purchase any such securities. Neither the issue of this document nor any part of its contents constitutes an offer to sell or invitation to purchase any securities of NBGFRIF or any other entity or any persons holding securities of NBGFRIF and no information set out in this document or referred to in other written or oral information are intended to form the basis of any contract of sale, investment decision or any decision to purchase any securities in it. An investment decision must be made solely on the basis of the prospectus published by NBGFRIF. Copies of the prospectus may be obtained, subject to applicable law, at no cost from the registered office of NBGFRIF and are available for viewing at the National Storage Mechanism, www.hemscott.com/nsm.do.

This document, any presentation made in conjunction with this document and any accompanying materials (the "Information Materials") are preliminary and made available for information purposes only. The Information Materials, which are not a prospectus or listing particulars or an admission document, do not contain any representations, do not constitute or form part of any offer or invitation to sell or transfer, or to underwrite, subscribe for or acquire, any shares or other securities, and do not constitute or form any part of any solicitation of any such offer or invitation, nor shall they are or any part of them or the fact of their distribution form the basis of or be relied upon in connection with any contract therefore, and do not constitute a recommendation regarding the securities of NBGFRIF.

Neuberger Berman gives no undertaking to provide the recipient with access to any additional information, or to update this document or any additional information, or to correct any inaccuracies in it which may become apparent and the distribution of this document shall not be deemed to be any form of commitment on the part of Neuberger Berman to proceed with any transaction.

The securities described in this document have not been and will not be registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) absent registration or an applicable exemption from the registration requirements of the Securities Act. NBGFRIF has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and investors will not be entitled to the benefits of that Act. No offering of the securities is being made in the United States.

The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of Neuberger Berman. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities. Recipients of this document are recommended to seek their own independent legal, tax, financial and other advice and should rely solely on their own judgment, review and analysis in evaluating Neuberger Berman, its business and its affairs. Potential investors and their representatives are invited to ask questions of, and receive answers from, NBEL and NBFI concerning the contemplated investment to the extent the same can be acquired without unreasonable effort or expense, in order to verify the accuracy of the information herein.

This document may contain certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, forward-looking statements can be indentified by terms such as "anticipate", believe", "could", "estimate", "expect", "intend", "may", "plan", "potential", "should", "will", and "would", or the negative of those terms or other comparable terminology. The forward-looking statements are based on Neuberger Berman's beliefs, assumptions, and expectations of future performance and market developments, taking into account all information currently available. These beliefs, assumptions, and expectations can change as a result of many possible events or factors, not all of which are known or are within Neuberger Berman's control. If a change occurs, the NBGFRIF's business, financial condition, liquidity, and results of operations may vary materially from those expressed in forward-looking statements. Some of the factors that could cause actual results to vary from those expressed in forward-looking statements, include, but are not limited to: the factors described in this document; the rate at which NBGFRIF deploys its capital in investments and achieves expected rates of return; NBGFRIF, NBEL and NBFI's ability to execute NBGFRIF's investment strategy, including through the identification of a sufficient number of appropriate investments; the continuation of NBEL and NBFI as investment manager and subinvestment manager, respectively, of NBGFRIF's investments, the continued affiliation with Neuberger Berman of its key investment professionals; NBGFRIF's financial condition and liquidity; changes in the values of or returns on investments that the Company makes; changes in financial markets, interest rates or industry, general economic or political conditions; and the general volatility of the capital markets and the market price of NBGFRIF's shares.

By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events, and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. Any forward-looking statements are only made as at the date of this document, and Neuberger Berman neither intends nor assumes any obligation to update forward-looking statements set forth in this document whether as a result of new information, future events, or otherwise, except as required by law or other applicable regulation. In light of these risks, uncertainties, and assumptions, the events described by any such forward-looking statements might not occur. Neuberger Berman qualifies any and all of their forward-looking statements by these cautionary factors. Please keep this cautionary note in mind while reading this document.

Oriel Securities and Dexion, each of which is authorised and regulated in the United Kingdom by the Financial Services Authority, are acting for NBGFRIF and no-one else in connection with the offering of securities by NBGFRIF and will not be responsible to anyone other than NBGFRIF for providing the protections afforded to customers of Oriel Securities and Dexion or for providing advice in relation to the offer of securities by NBGFRIF. By reading this document you will be deemed to have represented, warranted and undertaken for the benefit of Neuberger Berman, Oriel Securities and Dexion and others that (a) you are outside of the United States, (b) you have read and agree to comply with the contents of this notice, you will keep the information in this document and delivered during any accompanying document and all information about Neuberger Berman confidential, and will not reproduce or distribute, in whole or in part, (directly or indirectly) any such information, until such information has been made publicly available and take all reasonable steps to preserve such confidentiality, and (c) you are permitted, in accordance with applicable laws, to receive such information.

This document is issued by Neuberger Berman Europe Limited, which is authorised and regulated by the United Kingdom Financial Services Authority and whose registered address is at Lansdowne House, 57 Berkeley Square, London, W1J 6ER. Neuberger Berman LLC is a registered Investment Adviser and Broker Dealer and member of the New York Stock Exchange, the Financial Industry Regulation Authority and the Securities Investor Protection Corporation. Neuberger Berman Fixed Income LLC is a U.S.-registered Investment Adviser. Neuberger Berman is a registered trademark.

 

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