Portfolio Update

RNS Number : 4196Q

NB Global Floating Rate Income Fund

19 October 2011

 



NB Global Floating Rate Income Fund

Portfolio Update

NB Global Floating Rate Income Fund (the "Company") today announces an update in relation to the Company's investment portfolio.

The Company's portfolio, as at 30 September 2011 (which, for the avoidance of doubt, was before the admission of C Shares), consisted 187 investments across 150 issuers. The Company has opportunistically utilised around 15% out of the 20% bond allocation to capitalise on attractive yield-enhancing opportunities, particularly in secured bonds.

The portfolio is diversified across 33 industries, with no industry representing over 15% of net asset value, and in terms of currency is split into approximately 84.9% U.S. Dollars, 8.2% Euro and 5.4% Sterling and the remainder is in cash.  As at 30 September 2011, the portfolio is invested primarily in Ba (35.7%) and B (53.2%) rated investments¹ and has a gross yield of approximately 6.01%.

Market Environment²

After suffering a 4.4% drop in August, the US Loan market stabilised in September, ending the month with a positive return of 0.43%. Whilst, through the first three quarters of the year, the S&P/LSTA Leveraged Loan Index returned -1.34%, the larger, more liquid part of the market, which is where the Company's investments are concentrated, fared worse, with the S&P/LSTA Leveraged Loan 100 Index year-to-date return at -2.94%, as the situation in Europe continues to weigh on the market. In Europe, the S&P ELLI Index returned -1.95% in September compared to the -2.76% recorded in August, and year to date the index return is now at -1.54%.

The fundamentals of the underlying companies in the portfolio remain strong and the loan market is offering compelling opportunities at this time. Current spreads imply a default rate that is significantly higher than the Investment Manager, and many non-investment grade strategists, expects to occur. The Investment Manager's expectation of low default rates over the next 24 months remains intact despite the recent negative headlines and subsequent adverse impact on performance; going forward the Investment Manager expects to see capital values increase.

Investment Pipeline

In the US, most of the calendar that was underwritten prior to the August sell-off has been syndicated, or is in the process of being syndicated. The Company continued to invest in deals that met its criteria of low senior secured leverage, strong free cash flow and that provided an appropriate return profile. The Investment Manager believes underwriters will be cautious about financing new transactions until there is more certainty around the macroeconomic themes that have been driving performance in recent months. As such, the Investment Manager expects much of the Company's investment activity over the remainder of the year will be concentrated in the secondary market, where yields are very attractive given the August sell-off. In the US the leveraged loan forward calendar stood at approx $13bn, whilst in Europe it stood at €388m.

1. Moody's Investors Service.

2. Source: Standard & Poor's.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited          [phone]

Anji Stewart

Financial Dynamics                                       [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 $198 billion in assets as of June 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.

 

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