Portfolio Update

RNS Number : 8205T

NB Global Floating Rate Income Fund

13 December 2011

 



NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

13 December 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 30 November 2011:

u was split 87.6% USD, 7.1% EUR and 5.3% GBP

u was diversified across 31 industries with no industry representing over 16% of the portfolio

u has allocated 13% of the fund to bonds out of the maximum 20% allowable

u was invested primarily in Ba (39.9%) and B (49.9%) rated investments¹

Market Environment²

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.

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 $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.

 

END

 

 

PFUBLBDDIUBBGBD