Portfolio Update

RNS Number : 3424B

NB Global Floating Rate Income Fund

16 April 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 31 March 2012:

·     was split 89.8% USD, 5.8% EUR and 3.5% GBP

·     was diversified across 31 industries with no industry representing over 11% of the portfolio

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

·     was invested primarily in B (52.5%) and Ba (38.4%) rated investments¹

Market Environment²

The first quarter of 2012 ended with continued positive momentum in the loan asset class. The US S&P/LSTA Loan Index returned 0.77% for the month, leading to a first quarter return of 3.76%. By rating, single B's (where the portfolio has its largest exposure and largest over-weight) continued to lead the way with +0.96% for March and 5.09% YTD.  Europe performed similarly well with the S&P European Leveraged Loan Index (ELLI) posting a quarterly result of  4.36% with a 0.99% return for March.

Once again the new issue pipeline was dominated by existing borrowers coming back to the market with refinancing and amend-to-extend deals. The result of these type of transactions is the significant erosion of the maturity wall that was seen as a major issue for the asset class a few years ago. Since the end of 2010, the value of US loans maturing by the end of 2014 has fallen to $114bn from $260bn. In Europe, the maturity wall has halved from €54bn at the start of 2010 to €25bn twelve months later. It is also apparent that more stable sectors such as cable television, healthcare and telecoms have made the best headway in reducing maturities, whilst more cyclical or problematic sectors, such as directories, have not.

Given the above, and as a reflection of the continued solid performance of our portfolio companies, our view on default rates for 2012 is sustained, with the US below 2.0% and Europe at 7.0%, with current trailing 12m default rates of 0.8% and 5.3% respectively.  

Investment Pipeline

Given the continued combination of loan market rallies and a steady new issuance pipeline we have been focusing on selling low current yielding assets that were bought at a discount, which has generated capital appreciation, and are reinvesting the proceeds in higher yielding credits.

Whilst we have seen a small amount of acceptable new loan issuance in Europe, the US market remains far stronger in comparison, and as such, dominates our portfolio composition. This is a view we do not expect to change in the foreseeable future.

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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