NB Distressed Debt Invest. Fd. Ltd Portfolio Update - Global Shares (5679O)
29 Mayo 2015 - 1:00AM
UK Regulatory
TIDMNBDD TIDMNBDX TIDMNBDG
RNS Number : 5679O
NB Distressed Debt Invest. Fd. Ltd
29 May 2015
NB Distressed Debt Investment Fund Limited
Portfolio Update - Global Shares
NB Distressed Debt Investment Fund Limited ("NBDDIF") is a
Guernsey-incorporated closed-ended investment company that launched
in June 2010. NBDDIF's primary objective is to provide investors
with attractive risk-adjusted returns through long-biased,
opportunistic stressed, distressed and special situation
credit-related investments while seeking to limit downside
risk.
NBDDIF owns holdings diversified across distressed, stressed and
special situations investments, with a focus on senior debt backed
by hard assets. The portfolio is managed by the Distressed Debt
team at Neuberger Berman, which sits within what we believe is one
of the largest and most experienced non-investment grade credit
teams in the industry.
The New Global Share Class ("NBDG") was created in March 2014
and aims to capture the growing opportunity in distressed debt
globally. NBDG is subject to an investment period ending on 31
March 2017, following which the assets will be placed into
run-off.
The New Global Shares are one of three classes of shares in
NBDDIF. The other classes are the Ordinary Share Class and the
Extended Life Share Class. The Ordinary Share Class is subject to
an investment period which ended on 10 June 2013 and the Extended
Life Share Class is subject to an investment period which ended on
31 March 2015. Separate factsheets are produced for those
classes.
Summary
In the first quarter of 2015, we continued to deploy capital in
new and existing positions. We exited three positions which
contributed positively to NAV. We see significant upside potential
in the existing portfolio, which we expect to realise as we
restructure and exit investments.
Portfolio
As at 31 March 2015, we had deployed approximately 78.4% of
NBDG's capital. NBDG had investments in 27 names across 12
industries. The largest sector concentrations were in lodging &
casinos, utilities, shipping and surface transportation. In the
first quarter we added new positions in the oil & gas and air
transportation sectors. We also added incremental exposure to
existing names in the shipping, oil & gas, power, casino and
metals sectors.
NBDG's NAV per share decreased 1.1% in the first quarter of
2015, to GBP 87.66 from GBP 88.60 per share. The primary drivers of
NBDG's NAV decrease were secondary market price declines of
existing positions. We believe that performance comparison versus
other distressed managers is indicated by the HFRI
Distressed/Restructuring Index(1) which returned 0.8% in the
quarter. During the first quarter of 2015 we saw three exits, which
all added positively to NAV and are described in detail below. We
are working towards key restructuring milestones on our existing
investments, which we anticipate can ultimately result in
profitable exits.
.
Market Update(2)
We continue to believe the pipeline of distressed debt
opportunities in real estate, transportation and energy debt is
compelling. EU banks in particular increased their disposal of
European and U.S. loans and assets to EUR91 billion in 2014, versus
EUR64 billion in 2013, EUR46 billion in 2012, EUR36 billion in 2011
and EUR11 billion in 2010. However, over EUR1 trillion of
non-performing loans remain on EU banks' balance sheets. We believe
that the European regulatory environment may continue to facilitate
further recognition and disposal of distressed loans. Additionally,
the recent volatility in energy markets has presented new
opportunities in the U.S.
Exits
In the first quarter we saw three exits in NBDG, our 3(rd) ,
4(th) and 5(th) exits since inception. These exits generated
approximately GBP0.8 million of total return and gains for
NBDG.
Investment 3: We purchased a GBP4.0 million portion of a first
lien debt facility at 87.75% of par, which was secured by the
operating assets of a British ferry company. We expected that the
company would either restructure its debt or would refinance its
existing debt structure. In the case of a debt restructuring and
conversion into post-reorganization securities, we believed that
our cost basis represented a significant valuation discount versus
comparable assets. Ultimately, the company was sold and our debt
paid off at par plus accrued interest. Total return from this
investment was GBP0.6 million generating an IRR of 24%.
Investment 4: We purchased $1.0 million face value of senior
notes at 87.60% of par of a company with oil & gas assets. We
believed that the company would be able to refinance its capital
structure through a combination of asset sales and capital markets
activities. Subsequent to our purchase, the secondary price of the
senior notes increased significantly and we exited via the
secondary market. Total return from this investment was GBP0.1
million generating an IRR of 112%.
Investment 5: We purchased $0.6 million face value of senior
notes at 90.25% of par of a company with oil & gas assets. We
believed that the company would be able to refinance its capital
structure through a combination of asset sales and capital markets
activities. Subsequent to our purchase, the secondary price of the
senior notes increased significantly and we exited via the
secondary market. Total return from this investment was GBP41,000
generating an IRR of 90%.
Data as at March 31, 2015 unless otherwise noted. Past
performance is not indicative of future returns. All comments
unless otherwise stated relate to NBDG.
1. The HFRI Distressed/Restructuring Index reflects distressed
restructuring strategies which employ an investment process focused
on corporate fixed income instruments, primarily on corporate
credit instruments of companies trading at significant discounts to
their value at issuance or obliged (par value) at maturity as a
result of either formal bankruptcy proceeding or financial market
perception of near term proceedings (provided by Hedge Fund
Research, Inc.).
2. Source: Data from PWC dated January 2015.
-ENDS-
For further information please contact:
Neuberger Berman Europe Limited +44 (0)20 3214 9000
Damian Holland
Financial Dynamics +44 (0)20 7269 7297
Neil Doyle
Ed Berry
Laura Ewart
An accompanying factsheet on the information provided above can
be found on the Company's website www.nbddif.com. Neither the
contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other
website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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