13th Aug 2019 12:01
(Alliance News) - NB Global Floating Rate Income Fund Ltd Tuesday said it was "satisfied" with its first half performance, which benefited from the defensive positioning of its portfolio.
London-listed NB Global Floating Rate invests about 90% of its portfolio in dollar denominated assets, with the rest in euro and sterling denominated assets.
The FTSE 250-listed investment company's sterling share class net asset value declined 18% to USD703.8 million from USD857.0 million at the end of 2018. The fund's dollar class NAV slipped 31% to USD37.7 million from USD54.9 million.
The company has 656.3 million sterling class shares compared to 39.8 million dollar class shares.
Net asset value per share increased 3.1% in sterling class terms to GBP0.9513 from GBP0.9215 in the first half. The fund's dollar class increased 3.5% to USD0.9795 from USD0.9468.
In the six months to June 30, NB Global Floating Rate acquired 159.2 million sterling shares and 6.7 million dollar shares.
In the sterling class, the company's NAV per share total return was 5.8%, and in the dollar shares the total return was 6.0%.
The fund's comparative indices, the S&P/LSTA Leveraged Loan Index and European Leveraged Loan Index, gained 5.7% and 2.8%, respectively.
NB Global Floating Rate declared a 2.46 pence sterling class interim dividend and a 2.53 US cents interim payout for its dollar shares - which represents a 39% reduction for both payouts.
The fund noted, however, its annualised dividend based on the previous four quarters is up 15% compared to the end of 2018.
At June 30, NB Global Floating Rate had 333 investments from 267 issuers, with a gross portfolio yield of 5.79%.
"The board remains satisfied with the performance of the company's portfolio in the first half of the year which has benefited from the more defensive positioning taken by the investment manager," said Chair Rupert Dorey. "The portfolio continues to be highly diversified," he added.
The fund said it is underweight in CCC-rated loans, which make up 5% of the US market compared to 2% of the funds' portfolio. The fund is overweight in the BB to B+ buckets, the company said.
"We have seen opportunities in both primary and secondary markets to increase exposure to BB/B+ rated loans, as many of those issues have passed the investment manager's portfolio screening process," Dorey added.
The fund's investment manager, Neuberger Berman Investment Advisers, said: "Market fundamentals have remained stable, and while leverage rose modestly, interest coverage remains strong, and refinancing activity has significantly reduced the amount of loans maturing in the near term."
The manager continued: "Since December 2018, the portfolio showed a lower volatility profile than its benchmark. Despite this, it performed in-line with the index. We continue to see evidence that in periods of increased volatility, our portfolio is significantly less volatile than the index, but delivers a very similar return to the index over a long period."
"We continue to believe fundamentals and valuations are compensating investors for a benign default environment and that the current yield investors receive from the loan market is attractive versus other asset classes," the manager added.
NB Global Floating Rate's sterling shares were marginally higher in London on Tuesday at 89.53p, the fund's dollar shares were down 0.3% at USD0.92 each.
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