Portfolio Update

RNS Number : 2064F

NB Distressed Debt Invest. Fd. Ltd

20 April 2011

 



NB Distressed Debt Investment Fund Limited

Portfolio Update

NB Distressed Debt Investment Fund Limited ("NBDDIF" or "the Company") today announces an update in relation to the Company's investment portfolio.

We remain pleased with the distressed market environment and the portfolio's performance to date. As at 31 March 2011, 64% of the Company's net assets had been deployed in accordance with its investment strategy. NBDDIF had investments in 40 names versus an expectation of 40-50 when fully deployed and, accordingly, a significant amount of due diligence has been completed by the team. Sticking to our price discipline has resulted in lower than expected prices, with an average cost of 54% of face value against an expected level of 60%. Industry diversification remains strong with the portfolio invested across 12 industries. Our bids on existing and new names and pipeline of additional opportunities give us confidence that the portfolio will be fully invested by the end of the second quarter 2011.

NBDDIF's NAV increased by 4.34% in the first quarter, from $0.9754 to $1.0177 per share. This performance was due to capital appreciation of distressed investments. The 4.34% return is inclusive of the cash position of the portfolio and net of expenses. Therefore the return achieved on the deployed capital was significantly higher than 4.34%.

Market Environment

In 2010 and 2011 year-to-date larger cap public companies have benefited from improving access to credit markets. However, smaller private companies continue to face a constrained commercial lending environment. In 2010 the public high yield bond market saw record issuance of $277 billion compared to $181 billion in 2009, while bank lending to private companies declined. Total US Commercial and Industrial Loans on banks' balance sheets were $1.2 trillion at year-end 2010, compared to a peak of $1.6 trillion in 2008. This trend has continued in the first quarter, with $90 billion of high yield issuance in the first three months of 2011 compared to $67 billion in the same period of 2010. Conversely, Commercial and Industrial Loans have stagnated at $1.2 trillion in 2011 year-to-date. We believe that the relative lack of capital for private companies will continue to result in opportunities for investing in distressed loans.

Investment Pipeline

We continue to see a strong opportunity set in middle-market and small cap loans backed by hard assets. The flow of investment opportunities has been strong: in addition to the names owned in the portfolio, we have performed due diligence on more than 100 other companies across multiple sectors. Particularly promising is the activity we see from US commercial banks seeking to dispose of distressed loans. In addition we have identified a number of attractive opportunities outside of the US. As of 31 March 2011, approximately 17% of the portfolio was invested in non-North American investments.

We have bids out on new names as well as for additional exposure to existing investments. Current sectors of interest include Utilities, Lodging, Healthcare, Commercial Mortgages and Building & Development. We will continue to maintain our rigorous price discipline which to date has resulted in low acquisition costs.     

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Nick Hoar

Damian Holland

Financial Dynamics                                       [phone]

Nick Henderson                     

Ed Berry

Laura Pope

An accompanying factsheet on the information provided above can be found on the Company's website www.nbddif.com. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Background Information

NB Distressed Debt Investment Fund Limited is a Guernsey-incorporated closed-ended investment company that launched in June 2010. NBDDIF's primary objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic stressed, distressed and special situation credit-related investments while seeking to limit downside risk.

NBDDIF expects to invest in 40 to 50 holdings diversified across distressed, stressed and special situations investments, with a focus on senior debt backed by hard assets. The portfolio is managed by the Distressed Debt team at Neuberger Berman, which sits within one of the largest and most experienced credit teams in the industry. 

To find out more about the Company and the Neuberger Berman Group, please visit www.nbddif.com .

 

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