TIDMNBMI
RNS Number : 1828N
NB Global Monthly Income Fund Ltd
19 January 2023
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR
INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES,
AUSTRALIA, CANADA OR JAPAN.
19(th) January 2023
NB Global Monthly Income Fund
Monthly Commentary & Portfolio Update
30(th) December 2022
Key statistics
NAV (GBP) GBP 0.7926
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Current Portfolio Yield** 10.51%
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Number of Investments 227
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Number of Issuers 178
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Asset allocation:
Global High Yield: 24.54%
Global Floating Rate
Loans: 26.78%
Total Traditional Credit: 51.32%
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Private Debt: 25.60%
CLO Mezzanine Debt: 11.08%
Special Situations: 12.01%
Total Alternative Credit: 48.68%
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Credit rating breakdown: as at 30(th) December (excluding cash),
the portfolio was invested primarily in B (48.11%), BB (12.21%) and
CCC (33.81%) rated investments (.)
Market Update
December was a mixed month for non-investment grade credit
markets while the fourth quarter was generally positive. The global
high yield bond market gave back some of the rally from the first
two months of the quarter as returns ended the month in negative
territory. The risk-off sentiment for high yield in the latter part
of December was driven by hawkish comments from the Federal Reserve
("Fed") and the European Central Bank, weaker global economic data
and Bank of Japan's surprise monetary policy normalization.
However, the overall loan market strung together a third
consecutive month of positive returns closing out the fourth
quarter solidly up in what was a volatile year. The risk-on
sentiment for loans late in 2022 was driven by solid fundamentals,
attractive valuations, easing investor concerns over inflation but
with the expectation that interest rates are likely still headed
higher. 10-Year Treasury yields ended the month at 3.88%, rising 20
basis points since the end of November and 225 basis points since
the start of 2022. Weighted average bid prices on the U.S. loan
market rose to $92.44 by the end of the year, up 52 basis points
compared to the end of the third quarter and down 620 basis points
since the start of 2022. The path of average bid prices for loans
in Europe broke the downward trend since the summer peak of
EUR93.68. European bid prices ended the quarter higher closing at
EUR91.34 compared to the end of the third quarter where the bid was
EUR89.55. Importantly, issuer fundamentals of free cash flow,
interest coverage and leverage have remained in relatively
favourable ranges with the default outlook for 2023 still below the
long-term average.
In the month of December, U.S. senior floating rate
loans-measured by the Morningstar LSTA U.S. Leveraged Loan Index
(the "LLI")-returned 0.44% with the highest rated credit tier
outperforming as the BB, B and CCC rated segments of the index
returned 0.84%, 0.40% and -0.83%, respectively. In the fourth
quarter, the LLI returned 2.74% with the lowest rated loans
underperforming as the BB, B and CCC returned 3.93%, 2.80% and
-2.05%, respectively. Year to date, the LLI returned -0.60% with
lower rated loans underperforming as the BB, B and CCC returned
2.99%, -1.07% and -12.00%, respectively. The Leveraged Loans 100
("LL100"), a measure of the largest, most liquid issuers, returned
0.54% in the month, 3.82% in the fourth quarter and -0.60% year to
date. The Morningstar European Leveraged Loan Index (the "ELLI")
returned 0.30% in December, 3.51% in the fourth quarter and -3.06%
year to date, excluding currency effects. The second lien loan
index returned -0.99% in the month, -2.10% in the fourth quarter
and -9.17% year to date. Notwithstanding the macro volatility, the
loan market has been relatively resilient compared to other asset
classes over the month, quarter and year to date periods.
The ICE BofA Global High Yield Constrained Index finished the
month of December with a return of -0.05%, 5.18% in the fourth
quarter and -11.38% for 2022 (Hedged USD). In December, returns
across credit ratings were mixed with the BB, B, CCC & lower
categories of the ICE BofA Global High Yield Index returning 0.16%,
-0.53%, and 0.20%, respectively. The fourth quarter saw the best
returns in higher quality as BB's outperformed with a return of
5.72% compared to B and CCC & below rated credit tiers of the
index returning 4.95% and 2.60%, respectively. For the full year,
the BB, B, CCC & lower rated categories of the ICE BofA Global
High Yield Index returned -10.89%, -11.56%, and -14.33%,
respectively.
CLO debt spreads moved modestly tighter in December, benefitting
from continued momentum following the better-than-expected US CPI
data released in mid-November, which the market interpreted as a
positive datapoint towards a potential slowdown in the pace of rate
hikes. Secondary non-investment grade CLO trading volumes declined
73% month-over-month, consistent with seasonally lower volumes due
to year-end market holidays. The CLO BB index returned 1.35% in
December, 6.43% in the third quarter and -3.82% year to date.
Although default rates have moved up modestly from earlier in
the year, they remain low across non-investment grade credit which
is consistent with healthy balance sheets and positive free cash
flow growth. Our outlook for defaults also remains relatively
benign with well-below average default rates expected in 2023.
Non-investment grade credit, especially given its lower duration
profile and attractive yields, could likely see a re-emergence of
investor demand as valuations have become very attractive on an
absolute and relative basis.
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 has
caused real GDP growth to slow and slowing demand has helped
inflation come off the boil, but it is still higher than the Fed's
target range. Normalizing supply chains and changes in consumer
behaviour, among other factors, are likely to continue to mitigate
upward inflationary pressures, which could eventually lead to a
less aggressive path for Fed policy. That said, our analysts
remained focused on the specific credit fundamentals of individual
issuers in their coverage, assessing the base and downside cases in
the event of a soft-landing or recession. Relatively healthy
consumer and business balance sheets and growing nominal GDP should
remain supportive for issuer fundamentals. While inventories are
building as a result of slowing demand, we remain focused on
sector-specific dynamics and idiosyncratic risks to individual
issuers. Despite short-term volatility resulting from heightened
uncertainty on economic growth and central bank tightening, we
believe our bottom-up, fundamental credit research that focuses on
security selection, avoiding credit deterioration, and putting only
our "best ideas" into portfolios, will position us well to take
advantage of the increased volatility.
Portfolio Positioning
The overall Fund exposure to floating rate assets remained
unchanged at 67%, with an average duration of 1.36 years.
Despite intra-month swings credit spreads ended the period not
far off unchanged, whilst rising government bond yields contributed
to negative total returns for some duration assets. The credit
market somewhat entered consolidation mode, having rallied some
distance relatively quickly in the preceding months. Sentiment on
the whole continued to be more constructive than it had been in the
autumn, with investors taking positively tentative signs of
decelerating inflation, the reopening of the Chinese economy post
Covid, together with falling energy prices in Europe as
temperatures stood above normal.
Technical forces in the market continued to be supportive, as
fund flows remained in positive territory, and desks were generally
keen to work down cash to maximise carry over the holidays.
Liquidity in the secondary market persisted in being challenging in
certain areas, particularly in lower rated more cyclical
credits.
At the beginning of the month we continued to see above average
activity in the primary market for the time of year. This was
heavily focused on refinancing deals as opposed to LBO led
transactions with material new money components. In the loan space
Amend & Extend style transactions predominated, as sponsors
sought to trade higher margins in exchange for pushing maturities
further out. In the bond market deals tended to be heavily
pre-marketed and issued at a notable discount to secondary
levels.
To access the December 2022 Factsheet, please click here:
http://www.rns-pdf.londonstockexchange.com/rns/1828N_1-2023-1-18.pdf
The Fund's website can be found at the following address:
www.nbgmif.com
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 26 countries, Neuberger Berman's diverse team has
over 2,600 professionals. For eight 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). Neuberger Berman is a PRI Leader, a
designation, since last assessed, that was awarded to fewer than 1%
of investment firms for excellence in Environmental, Social and
Governance (ESG) practices. In the 2021 PRI Assessment, the firm
obtained the highest possible scoring for its overarching approach
to ESG investment and stewardship, and integration across asset
classes.
The firm manages $427 billion in client assets as of December
30, 2022. 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) 2023 Neuberger Berman Group LLC. All rights reserved.
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END
PFUNKFBBOBKDBDD
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January 19, 2023 02:00 ET (07:00 GMT)
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