Monthly Fact Sheet as at 31 May 2025

20 June 2025

CQS New City High Yield Fund Limited (NCYF or the Company)

Monthly Factsheet as at 31 May 2025

The Company's Fact Sheet as at 31 May 2025 has been submitted and is available for inspection on the Company's website, https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/.

Ian 'Franco' Francis, Investment Manager at New City High Yield Fund comments:

After an abysmal April for the UK, business moved into a moderate May. Although, the S&P Flash UK Composite Output index was still in negative territory at 49.4 against 48.5 in April. More positive news on tariffs and trade deals certainly helped the UK economy, but the negative sentiment from increasing costs of National Insurance, minimum wages and business rates is still subduing confidence and currently having negative effects on more manufacturing-focused employment. The recent strength of Sterling will certainly have a positive effect on inflation figures for now, which may allow the Bank of England to cut rates further in the coming months. But there is still the danger of wage inflation in the public sector running higher as unions flex their muscles again. Towards the end of the month, the media increased the speculation of substantial tax rises to come in the Autumn budget statement, which does not help sentiment or encourage investment in UK businesses. Growth in the economy still seems a distant dream. 

In Europe, the 90-day delay in US tariffs had a positive effect on manufacturers. For the third month in a row, good news came out of Germany and France. Interest rates and oil prices in Germany are also starting to benefit from the expansionary fiscal policy implemented by the new coalition government. Weaker domestic demand in the Services sector saw business activity shrink for the first time this year. This has had a positive knock-on effect on inflation as output prices cool. Input prices in the form of wages are still growing, but are being mitigated to some extent by the lower energy costs. Forecasts that the ECB will continue with rate cuts over the rest of this year seem to be baked into most economists' calculations. 

The figures for the US economy showed that both output growth and business sentiment improved from a weak April (although still in growth territory) and some of the positivity linked to the front running of orders after the 90-day delay in tariffs. This has led to a large increase in input inventories since it was first measured 18 years ago. Output prices have pushed higher as companies pass on tariff costs to end users. It was interesting to note that President Trump chastised Walmart for passing on these tariff-related rises to consumers. Again, the higher level of inflation will make it very difficult for the Federal Reserve Bank to cut rates in the near term. 

The delay in tariff implementation in the hope of trade deals coming pre implementation is setting markets up for a potentially volatile period when markets are less liquid in July and August. The ongoing wars in Ukraine and Gaza could also move markets, as President Trump appears to be losing patience with President Putin and many western governments are worried about potential genocide in Gaza.  

For the Company we paid the third interim dividend of 1penny per share at the end of the month. 

A busier month for the portfolio as we had Aggreko 8.75% 2027 called and a partial call on Bluewater 12% 2026, Shamaran Petroleum 12% 2029 and Tullow oil 10.25% 2026. To replace both yield and currency exposure we added to Cruise Yacht 11.875% 2028. In the Sterling element, we added to Boparan 9.375% 2029, Asda 8.125% 2030 and opened a holding in the niche bank Zopa 12.875% perpetual at new issue. 

-ENDS-

About CQS New City High Yield Fund Limited

CQS New City High Yield Fund Limited aims to provide investors with a high dividend yield and the potential for capital growth by investing in high-yielding, fixed interest securities. These include, but are not limited to, preference shares, loan stocks, corporate bonds (convertible and/or redeemable) and government stocks. The Company also invests in equities and other income-yielding securities.

Since the Fund's launch in 2007, the Board has increased the level of dividends paid every year. As at 31 December 2024, the Company's dividend yield was 8.79%. In addition to quarterly dividend payments, the Fund seeks to deliver investors access to a high-income asset class across a well-diversified portfolio with low duration to help mitigate interest rate risk.

Further information can be found on the Company's website at https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/