TIDMNBMI
RNS Number : 0928W
NB Global Monthly Income Fund Ltd
16 August 2022
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR
INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES,
AUSTRALIA, CANADA OR JAPAN.
16(th) August 2022
NB Global Monthly Income Fund*
Monthly Commentary & Portfolio Update
29(th) July 2022:
Key statistics
NAV (GBP) GBP 0.8363
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Current Portfolio Yield** 8.40%
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Number of Investments 238
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Number of Issuers 184
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Asset allocation:
Global High Yield: 23.77%
Global Floating Rate
Loans: 27.12%
Total Traditional Credit: 50.89%
----------------------------- -------
Private Debt: 26.26%
CLO Mezzanine Debt: 11.11%
Special Situations: 11.74%
Total Alternative Credit: 49.11%
----------------------------- -------
Credit rating breakdown: as at 29 July (excluding cash), the
portfolio was invested primarily in B (47.56%), BB (10.09%) and CCC
(36.25%) rated investments (.)
Market Update
Non-investment grade credit ended the month of July in positive
territory with a strong rebound driven by better than expected
earnings results, the potential for less aggressive central bank
tightening cycles and a lack of supply given lower new issuance.
While 2022 has seen its share of volatility, loan prices recovered
from recent lows. Weighted average bid prices on the U.S. loan
market peaked at $99.08 in late January 2022, troughed at $91.75 on
July 6th and ended the month at $93.64 with the rally continuing
into August. In July, the U.S. high yield market had the strongest
returns since October 2011 and saw significant spread tightening
with yields ending the month back under 8%. U.S. high yield spreads
tightened by 94 basis points which is the largest decline in
spreads in one month since 2020. Despite the slowing real growth in
the U.S. and Europe as a result of higher inflation, issuer
fundamentals have supported the recent price action in
non-investment grade credit markets. While managements remained
somewhat guarded in their forward guidance, issuer operating
results exceeded expectations. Free cash flow, interest coverage
and leverage ratios remained in relatively healthy ranges with the
default outlook for 2022 and 2023 still well below the long-term
average.
In July, U.S. senior floating rate loans-measured by the
S&P/LSTA Leveraged Loan Index (the "S&P LLI")-returned
2.14% with the lowest rated loans underperforming as the BB, B and
CCC rated segments of the index returned 2.27%, 2.30% and -0.28%,
respectively. Year to date, the S&P LLI returned -2.51% with
the lowest rated loans underperforming as the BB, B and CCC
returned -1.08%, -2.69% and -8.84%, respectively. The LL100, a
measure of the largest, most liquid issuers, returned 3.10% in the
month and -2.55% year to date. The European Leveraged Loan Index
(the "ELLI") returned 2.56% in July and -5.14% year to date,
excluding currency effects. The second lien loans returned 0.01%%
in July and -5.35% year to date.
The global high yield market had very strong returns and saw
significant spread tightening with yields ending the month of July
just under 8%. The ICE BofA Global High Yield Constrained Index
finished the month with a return of 4.95%% and -10.66% year to
date. In July, returns across credit ratings saw underperformance
versus the index in the lowest credit tier. The BB, B, CCC &
lower rated categories of the ICE BofA Global High Yield Index
returned 5.16%, 4.98%, and 3.47%, respectively. Year to date, the
BB, B, CCC & lower rated categories of the ICE BofA Global High
Yield Index returned -10.23%, -10.75%, and -13.38%,
respectively.
CLO debt spreads moved tighter month-over-month after hitting
wides of the year in mid-July, after global recessionary fears
waned as investors became more optimistic on a dovish tilt in
central bank policies amidst weaker economic data, combined with
better than expected corporate earnings in the midst of the current
high inflation environment. Secondary non-investment grade CLO
trading volumes declined 40% month-over-month as the market rally
kept potential selling volume on the sidelines. The CLO BB index
gained 1.53% during the month and declined -5.83% year to date.
Default rates remained just above all-time lows across
non-investment grade credit which is consistent with healthy
balance sheets and positive free cash flow growth. Our outlook for
defaults also remains benign with well-below average default rates
expected in 2022 and 2023. Non-investment grade credit, especially
given its lower duration profile and attractive yields, could
likely continue to see solid investor demand.
In our view, non-investment grade yields are compensating
investors for the below average default outlook, will continue to
provide durable income and are attractive compared to other fixed
income alternatives. The tightening of financial conditions and
ongoing concerns over inflation continue to create incremental
volatility, but as real growth slows and supply chains normalize,
inflationary pressures are likely to wane. That said, our analysts
continue to focus on the outlook for issuer margins. Healthy
consumer and business balance sheets, growing nominal wages and
solid job growth should remain supportive for issuer fundamentals.
Our global research team has also been closely monitoring the
investment thesis for each issuer in the portfolio given the
impacts related to rising cost pressures exacerbated by the ongoing
conflict in Eastern Europe and a tighter labor market in the U.S.
While supply chain discontinuities are moderating as a result of
slower demand, we remain focused on how any disruptions within some
sectors might impact individual issuers. Even with the heightened
uncertainty, commodity price swings and central bank tightening,
which is resulting in short-term volatility, we believe our
bottom-up, fundamental credit research focused on security
selection while seeking to avoid credit deterioration and putting
only our "best ideas" into portfolios, position us well to take
advantage of the increased volatility.
Portfolio Positioning
The overall Fund exposure to floating rate assets is at 67%,
with an average duration of 1.55 years. Credit markets rallied
strongly in July, despite concerns regarding inflation, supply
chain disruption, energy security and economic growth persisting.
This was due to investor positioning having become very bearish in
the previous month, and with outflows falling below market
expectations, many investors sought to put higher than average cash
balances to work ahead of the summer break. In the context of
illiquid market conditions with low street inventory and little
primary issuance, this conspired to squeeze prices higher. All
trading activity required to fund the Cash Exit Facility Offer
announced on 1 June 2022 was conducted in July with the vast
majority (over 95%) being completed by 15 July 2022. Investors
should note that the portfolio sectoral weightings currently are
not materially different from the pre-tender portfolio, and any
changes have been driven by investment considerations and not for
reasons of liquidity. The move higher in allocation to Special
Situations from 9.3% to 11.7% as of 29 July 2022 was in large part
explained by the impact of market movements which resulted in
certain instruments being reclassified into that category. Where
relative value changes made sense we took advantage of the market
strength to rotate holdings, the exposure to single B and CCC rated
credit rising at the margin as a result.
As primary markets in Europe slowly returned to life, we
participated in a first-lien EUR term loan from Optigroup, which
performed strongly on the break having been priced at a material
discount to secondary. Optigroup is a distribution business focused
on predominately defensive markets in the facility, safety &
food service, packaging and medical sectors. We like the business
given its strong market shares and free cash flow profile, together
with the high value of the intermediation service they provide to
their predominately SME customer base.
To access the July 2022 Factsheet, please click here
http://www.rns-pdf.londonstockexchange.com/rns/0928W_1-2022-8-15.pdf.
The Fund's website can be found at the following address:
www.nbgmif.com
* Effective September 9th, 2020, the NB Global Floating Rate
Income Fund Limited was renamed to the NB Global Monthly Income
Fund Limited.
For more information, please refer to here.
** Current Portfolio Yield is a market-value weighted average of
the current yields of the holdings in the portfolio, calculated as
the coupon (base rate plus spread) divided by current price. The
calculation does not take into account any Fund expenses or sales
charges paid, which would reduce the results. The Current Yield for
the Fund will fluctuate from month to month. The Current Yield
should be regarded as an estimate of the Fund's rate of investment
income, and it may not equal the realised distribution rate for
each share class. You should consult the Fund's prospectus for
additional information about the Fund's dividends and distributions
policy. Past performance is not a reliable indicator of current or
future results.
-S-
For further information, please contact:
Neuberger Berman Europe Limited (Manager)
Elizabeth Papadopoulos +44 (0) 20 3214 9078
Numis Securities Limited (Broker)
Hugh Jonathan
Matt Goss +44 (0) 20 7260 1000
Praxis Fund Services Limited (Company Secretary)
Matt Falla
Gemma Woods +44 (0) 1481 737 600
KL Communications (PR)
Charles Gorman
Charlotte Francis +44 (0) 20 7995 6673
Background Information
The Company is a registered closed-ended investment company
incorporated in Guernsey. It is managed by Neuberger Berman Europe
Limited, which has delegated certain of its responsibilities and
functions to the AIFM, Neuberger Berman Investment Advisers LLC,
both of which are indirect wholly owned subsidiaries of Neuberger
Berman Group LLC.
Neuberger Berman, founded in 1939, is a private, independent,
employee-owned investment manager. The firm manages a range of
strategies-including equity, fixed income, quantitative and
multi-asset class, private equity, real estate and hedge funds-on
behalf of institutions, advisors and individual investors globally.
With offices in 25 countries, Neuberger Berman's diverse team has
over 2,300 professionals.
For seven consecutive years, the company has been named first or
second in Pensions & Investments Best Places to Work in Money
Management survey (among those with 1,000 employees or more). In
2020, the PRI named Neuberger Berman a Leader, a designation
awarded to fewer than 1% of investment firms for excellence in
Environmental, Social and Governance (ESG) practices. The PRI also
awarded Neuberger Berman an A+ in every eligible category for our
approach to ESG integration across asset classes. The firm manages
$460 billion in client assets as of December 31, 2021. For more
information, please visit our website at www.nb.com .
RISK CONSIDERATIONS
Market Risk : The risk of a change in the value of a position as
a result of underlying market factors, including among other
things, the overall performance of companies and the market
perception of the global economy.
Liquidity Risk: The risk that the Fund may be unable to sell an
investment readily at its fair market value. In extreme market
conditions this can affect the Fund's ability to meet redemption
requests upon demand.
Credit Risk: The risk that bond issuers may fail to meet their
interest repayments, or repay debt, resulting in temporary or
permanent losses to the Fund.
Interest Rate Risk: The risk of interest rate movements
affecting the value of fixed-rate bonds.
Counterparty Risk: The risk that a counterparty will not fulfil
its payment obligation for a trade, contract or other transaction,
on the due date.
Counterparty Risk: The risk that a counterparty will not fulfil
its payment obligation for a trade, contract or other transaction,
on the due date.
Operational Risk: The risk of direct or indirect loss resulting
from inadequate or failed processes, people and systems including
those relating to the safekeeping of assets or from external
events.
Derivatives Risk: The Fund is permitted to use certain types of
financial derivative instruments ("FDI") (including certain complex
instruments) which can give rise to particular risks, including
market risk, liquidity risk and counterparty credit risk. This may
increase the Fund's leverage significantly which may cause large
variations in the value of your share.
Currency Risk: Investors who subscribe in a currency other than
the base currency of the Fund are exposed to currency risk.
Fluctuations in exchange rates may affect the return on
investment.
The past performance shown is based on the share class to which
this factsheet relates. If the currency of this share class is
different from your local currency, then you should be aware that
due to exchange rate fluctuations the performance shown may
increase or decrease if converted into your local currency.
IMPORTANT INFORMATION
Source of all data and charts (unless stated otherwise):
Neuberger Berman Europe Limited, Bloomberg and Blackrock
Aladdin.
This document has been issued by NB Global Monthly Income Fund
Limited (the "Company"), and should not be taken as an offer,
invitation or inducement to engage in any investment activity and
is solely for the purpose of providing information about the
Company. This document does not constitute or form part of, and
should not be construed as, any offer for sale or subscription of,
or solicitation of any offer to buy or subscribe for, any share in
the Company or securities in any other entity, in any jurisdiction.
This product is only suitable for institutional, professional and
professionally advised retail investors, private client fund
managers and brokers who are capable of evaluating the merits and
risks of the product and who plan to stay invested until the end of
the recommended holding period and can bear loss of capital. An
investor with reasonable knowledge of loans and alternative credit
would need to be assessed by the advisor or distributor to
establish suitability for this product.
Full product details, including a Key Information Document, are
available on our website at www.nbgmif.com .
Due to the inherent risk of investment in the debt market
particularly related to alternative credit, it is expected that a
qualified investor would be able to understand the risks in such
security types and the potential impact of investing in the
product. This product is designed to form part of a portfolio of
investments.
The Company is a closed-ended investment company incorporated
and registered in Guernsey and is governed under the provisions of
the Companies (Guernsey) Law, 2008 (as amended), and the Registered
Collective Investment Scheme Rules 2008 issued by the Guernsey
Financial Services Commission ("GFSC"). It is a non-cellular
company limited by shares and has been declared by the GFSC to be a
registered closed-ended collective investment scheme. The Company's
shares are admitted to the Official List of the UK Listing
Authority with a premium listing and are admitted to trading on the
Premium Segment of the London Stock Exchange's Main Market for
listed securities.
Neuberger Berman Europe Limited is authorised and regulated by
the Financial Conduct Authority and is registered in England and
Wales, at The Zig Zag Building, 70 Victoria Street, London, SW1E
6SQ.
This document is presented solely for information purposes and
nothing herein constitutes investment, legal, accounting or tax
advice, or a recommendation to buy, sell or hold a security. We do
not represent that this information, including any third-party
information, is complete and it should not be relied upon as such.
Any views or opinions expressed may not reflect those of the
Company as a whole. All information is current as of the date of
this material and is subject to change without notice. No part of
this document may be reproduced in any manner without prior written
permission of the Company.
An investment in the Company involves risks, with the potential
for above average risk, and is only suitable for people who are in
a position to take such risks. No recommendation or advice is being
given as to whether any investment or strategy is suitable for a
particular investor. Each recipient of this document should make
such investigations as it deems necessary to arrive at an
independent evaluation of any investment, and should consult its
own legal counsel and financial, actuarial, accounting, regulatory
and tax advisers to evaluate any such investment. It should not be
assumed that any investments in securities, companies, sectors or
markets identified and described were or will be profitable.
Investment in the Company should not constitute a substantial
proportion of an investor's portfolio and may not be appropriate
for all investors. Diversification and asset class allocation do
not guarantee profit or protect against loss.
Past performance is not a reliable indicator of current or
future results . The value of investments may go down as well as up
and investors may not get back any of the amount invested. The
performance data does not take account of the commissions and costs
incurred on the issue and redemption of units.
The value of investments designated in another currency may rise
and fall due to exchange rate fluctuations in respect of the
relevant currencies. Adverse movements in currency exchange rates
can result in a decrease in return and a loss of capital.
Tax treatment depends on the individual circumstances of each
investor and may be subject to change, investors are therefore
recommended to seek independent tax advice.
This document, and the information contained therein, is not for
viewing, release, distribution or publication in or into the United
States, Canada, Japan, South Africa or any other jurisdiction where
applicable laws prohibit its release, distribution or publication,
and will not be made available to any national, resident or citizen
of the United States, Canada, Japan or South Africa. The
distribution of this document in other jurisdictions may be
restricted by law and persons into whose possession this document
comes must inform themselves about, and observe, any such
restrictions. Any failure to comply with the restrictions may
constitute a violation of the federal securities law of the United
States and the laws of other jurisdictions.
The Company's shares have not been and will not be registered
under the US Securities Act of 1933, as amended (the "Securities
Act"), or with any securities regulatory authority of any state or
other jurisdiction of the United States. The shares may not be
offered, sold, resold, pledged, delivered, distributed or otherwise
transferred, directly or indirectly, into or within the United
States, or to, or for the account or benefit of, US persons (as
defined in Regulation S under the Securities Act). No public
offering of the shares is being made in the United States.
The Company has not been and will not be registered under the US
Investment Company Act of 1940, as amended (the "Investment Company
Act") and, as such, holders of the shares will not be entitled to
the benefits of the Investment Company Act. No offer, sale, resale,
pledge, delivery, distribution or transfer of the shares may be
made except under circumstances that will not result in the Company
being required to register as an investment company under the
Investment Company Act. In addition, the shares are subject to
restrictions on transferability and resale in certain jurisdictions
and may not be transferred or resold except as permitted under
applicable securities laws and regulations. Any failure to comply
with these restrictions may constitute a violation of the
securities laws of any such jurisdictions.
The "Neuberger Berman" name and logo are registered service
marks of Neuberger Berman Group LLC.
(c) 2022 Neuberger Berman Group LLC. All rights reserved.
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END
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