Net Asset Value(s)

RNS Number : 2402N

Sequoia Economic Infra Inc Fd Ld

15 May 2015

 



15 May 2015

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 30 April 2015 and Investment Update

The Board of Directors of the Company is pleased to announce the unaudited net asset value per Ordinary Share ("NAV") as at 30 April 2015 of 97.79 pence.  The NAV includes income for the period since Admission.

As at 30 April 2015, the Company owned eight infrastructure bonds and one loan collectively valued at £41.9 million, including accrued interest. The annualised yield to maturity (or yield-to-worst in the case of callable bonds) for the portfolio was 6.9% and the average life was approximately 11.0 years.  Of these nine assets, six were indicated to investors in the Prospectus as being part of the Target Portfolio and three are new transactions.

In addition, the Company has recently purchased three loans and a further bond, with an aggregate acquisition value of approximately £23.7 million. These transactions are in the process of settling and as such are not currently reflected in the NAV as at 30 April 2015.

In aggregate, the acquisition value of these 13 transactions will represent approximately 45% of the net proceeds of the IPO.  The underlying investment projects are located in the UK, Western Europe and the US and include the road, rail, shipping, utility and aircraft leasing sectors.  The Company has not disposed of any assets since the IPO.

The decrease in the Company's NAV since 31 March 2015 of approximately 0.4% arises from a number of factors:

-       Marking the purchased assets to the bid side of the market reduced the NAV by approximately 0.1%.

-       A sharp decline in the value of the US dollar versus Sterling (down 3.6% month-on-month) reduced the NAV by approximately 0.6%.

-       Partially offsetting these declines was interest accretion and some moderate mark-to-market valuation gains on acquired bond investments.

April was an active month in the infrastructure debt sector in general with 14 transactions closing in the UK and Europe.  Notable deals included the £144 million Channel Tunnel Rail Link (HS1) refinancing, a £598 million Transport for London bond issue, a €1.6 billion refinancing for the French energy syndicate Exeltium, and a €329 million privatisation of the Toulouse-Blagnac airport in France.

Infrastructure spreads held steady during April after having tightened for most of 1Q2015.  Several large insurance companies and pension funds continue to look at infrastructure debt as an investment asset class and we believe a few additional European insurance companies will invest later this year.  Although core senior secured infrastructure debt has tightened to LIBOR+100-150 bps, there continue to be opportunities for spread pick-up against comparable corporates in select sectors such as transportation, utilities and energy, particularly in the mezzanine market where yields in the 5-7%+ range are available.

Sterling strengthened against the US dollar, moving from US$1.48 to US$1.53, as US economic data proved softer than expected during 1Q2015 and into April.  Sterling was flat against the Euro during the month at £0.73-0.725. Corporate spreads were stable but rates rallied:  10-year US Treasury yields increased 17bps to 2.03% on expected stronger economic data over the summer.  Euro rates rallied strongly, with 10-year Bund yields more than doubling to 37bps as consumer prices in the Eurozone rose for the third consecutive month and the economy continued to gather momentum.

Summary Portfolio at end April 2015

Transaction name	Currency	Type	Value £mm	% of NAV	Sector	Sub-sector	Yield to maturity / worst (%)
Dulles Greenway 2029	USD	Public	7.8	5.3%	Transport	Road	6.51
North Las Vegas Water 6.572% 2040	USD	Public	7.0	4.8%	Utility	Water	7.57
Global Ship Lease 10% 2019	USD	Public	6.8	4.7%	Transport assets	Shipping	8.13
Ascendos Rail 2nd lien	EUR	Private	4.9	3.3%	Transport assets	Rail	6.07
Bristow Group 6.25% 2022	USD	Public	4.5	3.0%	Transport assets	Aircraft	6.68
Viridian 7.5% 2020	EUR	Public	3.8	2.6%	Power	Electricity Generation	6.94
First Energy Solutions 6.8% 2039	USD	Public	3.4	2.3%	Power	Electricity Generation	6.33
NRG Energy Inc 6.25% 2024	USD	Public	2.0	1.3%	Power	Electricity Generation	5.91
West Atlantic 8% 2018	SEK	Public	1.2	0.9%	Other	Freight	5.31
Portfolio total / average			41.4	28.2%			6.88

The Company's monthly investor report will be made available at http://www.seqifund.com/

Sequoia Investment Management

Randall Sandstrom / Steve Cook                         Telephone [phone]

Stifel Nicolaus Europe Limited

Neil Winward / Mark Bloomfield / Gaudi Le Roux              Telephone [phone]

About Sequoia Economic Infrastructure Income Fund Limited

The Company is a Guernsey registered closed-ended investment company that seeks to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. The Company is advised by Sequoia Investment Management Company Limited.

 

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