Interim Management Statement

RNS Number : 7103E

NB Global Floating Rate Income Fund

15 May 2013

 



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

15 May 2013

NB GLOBAL FLOATING RATE INCOME FUND LIMITED

INTERIM MANAGEMENT STATEMENT

NB Global Floating Rate Income Fund Limited (the "Company"), is publishing this Interim Management Statement in accordance with DTR 4.3 of the Financial Conduct Authority ("FCA") Handbook.

This interim management statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the Financial Conduct Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purpose.

This interim management statement contains information that covers the period between 1 January 2013 and the date of publication of this interim management statement, unless otherwise specified.

Fund Objective

The Neuberger Berman Global Floating Rate Income Fund Limited targets income generation whilst seeking to preserve investors' capital and give protection against rising interest rates.

The Fund's managers seek to generate this yield by investing in a global portfolio of below investment grade senior secured corporate loans with selective use of senior secured bonds, diversified by both borrower and industry. The Fund is managed by three accomplished portfolio managers backed by a credit team of over 30 investment professionals.

Market Environment

The loan markets started the year positively in both the US and Europe with the US S&P/LSTA Loan Index producing a total return of 2.11%, and the S&P European Leveraged Loan Index (ELLI) 2.52%.

Flows in the first quarter have come from the usual sources in the US with CLOs and mutual funds bringing in some $38.9bn and pension fund/relative value investors still investing c$1-2bn per month. Additionally, the European CLO market has awoken from its slumber with two new CLOs pricing this quarter which has positive connotations for this market. This demand continues to be met by strong new issuance with a record $150bn of loans coming to market in the quarter versus $90bn in the same period last year. However, new M&A issuance remains limited and whilst Heinz came to the market in March it has yet to be followed by more new deals and so the majority of issuance has been from existing borrowers undertaking opportunistic refinancings which does put pressure on yields. In the secondary market, with the continued flow of funds into the asset class, market bids are high, particularly in the large, liquid segment that we favour. The average institutional flow name bid on the S&P/LSTA Index ended the quarter marginally over par, whilst in Europe the flow names are bid around the 99 level with no impact felt from the issues in Cyprus which dominated the news during March. Default rates in the US temporarily increased to 2.3% as three legacy directories businesses that had been trading at distressed levels commenced their expected restructuring processes. This should revert to below 2.0% during the second quarter. Europe reduced from the year end rate of 6.6% to 5.9% at the quarter end and remains below our maximum 7% forecast. We have had no defaults in the portfolio since inception.

¹ based on dividends and Net Asset Value over the relevant period

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

Portfolio Management

The record new issuance we have seen has been of varying quality but has meant we can continue to be highly selective in our credit picking. During the quarter we have started to see a pick up in quality issuance in Europe with Virgin Media and Kion both returning to market with fixed rate offerings. We participated in both of these and, accordingly, our exposure to the region increased to 7.1% from 4.6% at the year end. As we have maintained Europe will always provide good names to invest in but we will remain selective. As the majority of the new issuance has been refinancing led, we have seen a few more relative value opportunities in secured fixed rate bonds, including the ones mentioned above, and so our bond allocation has increased from 6.5% at the end of 2012 to 11.3% at the first quarter end. Our maximum bond exposure allowable is 20% of NAV.

Outlook

Fundamentals remain strong and the discussions we are having with the borrowers' management teams leads us to believe that 2013 is off to a good start. Despite the marginal increase in default rates in the US, we do not believe that this indicates a deteriorating trend as the names that did enter are all from an industry in structural decline and not symptomatic of more sinister underlying macro issues. We are now expecting more issuance to come out of Europe during 2013, particularly if the new CLO issuance market continues, and arrangers do appear more confident in the pipeline albeit this is likely to be more bond weighted. Whilst we see discussions around the Fed withdrawing QE3 and the recent problems in Cyprus neither event has had a noticeable impact on the loan market and we expect Central Bank intervention to continue for the remainder of the year. We reaffirm our view that the largest contributor to performance in 2013 will be coupon payments.

Material Events and Transactions

On 21 March 2013, the Board of the Company announced that the Company had raised gross proceeds of approximately £363 million (approximately $550 million) by means of a Placing and Offer for Subscription of C Shares. On 26 March 2013, 363,549,886 Sterling C Shares were admitted to trading on the Main Market of the London Stock Exchange. The Company announced at the beginning of May that as of 30 April that it had invested over 90% of the net proceeds of the C Share. The Investment Manager expects conversion to take place shortly after the declaration of the June dividend.

Share Issues and Conversions

During the period, the following Ordinary Share issues and conversions took place.

Event	Effective date	Sterling share	USD Share
Share class conversion as at 31 December 2012	9 January 2013	12,253,541	(19,808,690)
Share class conversion as at 31 January 2013	12 February 2013	(100,000)	157,420
Share class conversion as at 28 February 2013	11 March  2013	(48,441)	73,043
Issue of shares as a Scrip Dividend	22 February 2013	821,100	25,900
Share class conversion as at 28 March 2013	11 April 2013	222,637	(335,830)

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

Accordingly, the Company's issued share capital as at 10 May 2013 (being the latest practicable date prior to the release of this announcement) consists of 414,234,299 Sterling Ordinary Shares, 57,546,375 U.S. Dollar Ordinary Shares and 363,549,886 Sterling C Shares.

Dividends

The following dividends were declared to the shareholders during the reporting period:

Period	Date declared	Payment date	USD Share	Sterling Share
Quarter ended 31 December 2012	9 January 2013	22 February 2013	$0.0116	£0.0116
Quarter ended 31 March 2013	8 April 2013	24 May 2013	$0.0122	£0.0122

Report and Accounts

On 15 April 2013, the Company announced its results for the year ended 31 December 2012. On 24 April 2013, the Company posted its Annual Report and Financial Statements for the year ended 31 December 2012 to shareholders.

Financial Highlights

	10        May 2013	31 December 2012	28 September 2012	29 June 2012	30 March 2012
NAV per Ordinary Share
- Sterling (£)	1.0047	0.9952	0.9922	0.9760	0.9809
- US Dollars ($)	1.0115	1.0007	0.9969	0.9804	0.9861
NAV per C Share
- Sterling (£)	0.9883	n/a	n/a	n/a	n/a

Background Information

The Company is a non-cellular company limited by shares incorporated in Guernsey and has been declared by the Guernsey Financial Services to be a registered closed-ended collective investment scheme. 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 share capital is denominated in U.S Dollars and Sterling and consists of U.S Dollar Ordinary Shares, Sterling Ordinary Shares and Sterling C Shares.

Investment objective, policy and strategy

The Company's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst preserving the capital value of its investment portfolio over the long term, utilising the investment skills of the Investment Manager and the Sub-Investment Manager.

To pursue its investment objective, the Company invests mainly in floating rate senior secured loans issued in US Dollars, Sterling and Euros by North American and European Union corporations, partnerships and other business issuers.

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

The financial information covered herein for the period between 1 January 2013 and the date of publication of this interim management statement has not been audited.

By order of the Board

BNP Paribas Fund Services (Guernsey) Limited, for and on behalf of

NB Global Floating Rate Income Fund Limited

as Company Secretary

This document is intended only for the person to whom it has been delivered. No recipient may distribute, or make available, this document (directly or indirectly) to any other person and no part of this document may be reproduced in any manner without the written permission of NB Global Floating Rate Income Fund Limited ("NBGFRIF").  This document and the information contained herein is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia or Japan or to any "US 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. It does not constitute an offer of securities for sale anywhere in the world, including in or into the United States, Canada, Australia or Japan.  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 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 or Neuberger Berman Europe Limited ("NBEL") or Neuberger Berman Fixed Income LLC ("NBFI") or 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 LLC, NBEL, 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.

NBGFRIF 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. The securities described in this document have not been and will not be registered under the Securities Act, or the laws of any state of the United States. Consequently, such securities may not be offered, sold or otherwise transferred within the United States or to or for the account or benefit of U.S. persons (as such term is defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, applicable state laws and under circumstances which will not require NBGFRIF to register under the Investment Company Act. No public offering of the securities is being made in the United States.

Neuberger Berman Europe Limited is authorised and regulated by the United Kingdom Financial Conduct 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 US registered Investment Adviser. Neuberger Berman is a registered trademark. All rights reserved. © 2013 Neuberger Berman.

 

END

 

 

IMSGGUCWAUPWGAC