TIDMNBMI
RNS Number : 7678J
NB Global Monthly Income Fund Ltd
15 December 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.
15(th) December 2022
NB Global Monthly Income Fund
Monthly Commentary & Portfolio Update
30(th) November 2022:
Key statistics
NAV (GBP) GBP 0.7996
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Current Portfolio Yield** 10.17%
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Number of Investments 229
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Number of Issuers 178
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Asset allocation:
Global High Yield: 23.79%
Global Floating Rate
Loans: 25.95%
Total Traditional Credit: 49.74%
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Private Debt: 25.45%
CLO Mezzanine Debt: 10.72%
Special Situations: 14.09%
Total Alternative Credit: 50.26%
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Credit rating breakdown: as at 30(th) November (excluding cash),
the portfolio was invested primarily in B (48.17%), BB (12.14%) and
CCC (33.81%) rated investments (.)
Market Update
In November, non-investment grade credit markets saw positive
returns again. The risk-on sentiment was driven by
better-than-expected earnings, supportive technicals, attractive
valuations and easing concerns over inflation. U.S. high yield
retail inflows were some of the largest on record, and that
combined with the limited supply set up a strong technical tailwind
for the asset class. While loans saw outflows in the month, they
did moderate relative to the prior month. U.S. 10-Year Treasury
yields ended the month at 3.68%, falling 42 basis points since the
end of October. Ten-year German Bund and long-dated U.K. Gilt
yields were lower in the month as well. There were no U.S. high
yield defaults in November for the second consecutive month which
had not occurred since 2007 and loan default rates decreased in the
month. The default rates continue to remain modestly higher than
the all-time lows. However, credit 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 averages.
In the month of November, U.S. senior floating rate
loans-measured by the Morningstar LSTA U.S. Leveraged Loan Index
(the "LLI")-returned 1.24% with the middle rated tier outperforming
as the BB, B and CCC rated segments of the index returned 1.21%,
1.50% and -0.29%, respectively. Year to date, the LLI returned
-1.04% with lower rated loans underperforming as the BB, B and CCC
returned 2.13%, -1.47% and -11.26%, respectively. The Leveraged
Loans 100, a measure of the largest, most liquid issuers, returned
1.59% in the month and -1.14% year to date. The Morningstar
European Leveraged Loan Index (the "ELLI") returned 2.25% in
November and -3.53% year to date, excluding currency effects. The
second lien loan index returned 0.88% in the month and -8.26% year
to date.
The ICE BofA Global High Yield Constrained Index finished the
month with a return of 3.31% and -11.33% year to date. In November,
returns across credit ratings were best in the highest-rated tier
as the BB, B, CCC & lower categories of the ICE BofA Global
High Yield Index returned 3.72%, 2.99%, and 1.73%, respectively.
Year to date, the BB, B, CCC & lower rated categories of the
ICE BofA Global High Yield Index returned -11.03%, -11.10%, and
-14.50%, respectively.
CLO debt spreads moved tighter in November following
better-than-expected US CPI data released mid-month, 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 increased 7% month-over-month, as tighter debt
spreads led to increased trading activity. The CLO BB index gained
4.59% during the month and -5.09% 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, has seen a re-emergence of investor
demand as valuations remain 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 supply
chains normalize, but inflation is still higher than the Federal
Reserve ("Fed") Board's target range. We see these and other
factors acting to mitigate 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 1.41 years.
The rally we witnessed in October accelerated in November, as
government bond yields and credit spreads both fell. This was
driven by a variety of factors, the market picking up on CPI data
which suggested inflation could be coming off the boil, and
investors' hopes of a soft landing were aided by a quicker than
expected exit by the Chinese government from their covid zero
policy. These factors, in tandem with a warmer than expected autumn
depressing energy prices, conspired to lift sentiment.
Technical forces in the market also proved constructive during
the month, as fund flows turned positive in many areas of the
leveraged finance space, and investors sought to work down cash
balances so as to maximise carry over the upcoming holiday period.
This occurred against a backdrop of low levels of street inventory
and a general reluctance to build short positions in the face of
the positive technical tailwinds described.
It was notable however, that levels of dispersion in the market
were elevated, issuers posting worse than expected third quarter
earnings were swiftly punished, and investor appetite for lower
rated cyclical credits remained limited. In the portfolio, our
weight in CCC rated holdings fell during the month, whilst the
weight in BB rated exposure increased. That said, trading
conditions, particularly with regards to lower rated credits have
become increasingly challenging in recent months.
Although remaining well below the levels seen in 2021, we did
witness an uptick in primary market issuance during the month, with
sponsors looking to price Amend & Extend deals in the loan
market, and bond issuers also seeking to term out debt. Although
generally pricing at a discount to secondary levels, deals were for
the most part well received.
To access the November 2022 Factsheet, please click here
http://www.rns-pdf.londonstockexchange.com/rns/7678J_1-2022-12-15.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
Will Sanderson +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
$408 billion in client assets as of September 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
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distribution of this document in other jurisdictions may be
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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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