TIDMVTA
Volta Finance Limited (VTA / VTAS) -- December 2022 monthly
report
NOT FOR RELEASE, DISTRIBUTION, OR PUBLICATION, IN WHOLE OR PART,
IN OR INTO THE UNITED STATES
*****
Guernsey, 12 January 2023
AXA IM has published the Volta Finance Limited (the "Company" or
"Volta Finance" or "Volta") monthly report for December 2022. The
full report is attached to this release and will be available on
Volta's website shortly (www.voltafinance.com).
PERFORMANCE and PORTFOLIO ACTIVITY
After a very strong performance in November (+6.3%), December
was slightly down with -1%, including the January dividend payment
for which the record date was set in December.
Although CLO debt performed relatively well, Volta suffered from
the underperformance of the USD against the Euro as well as
slightly negative performances in December on Volta non-CLO
exposures.
Volta's underlying sub asset classes monthly performances** were
as follow: -0.3% for Bank Balance Sheet transactions, +0.5% for CLO
Equity tranches, +1.3% for CLO Debt tranches; and -3.6% for Cash
Corporate Credit and ABS (which represent circa 2.3% of the fund's
NAV).
December usually is a relatively quiet month in terms of CLO
Equity distributions. Over the month, Volta received the equivalent
of EUR0.3m of interests and coupons. Over the usual 6-month-basis
time frame Volta received EUR22.5m of interests and coupons, ie. a
21.1% annualized cash flow to NAV.
We purchased two European CLO Equity positions from the
secondary market in December for a total nominal amount of EUR2.5m,
at an average purchase price of 59.75%. The projected yield of said
purchases is - under reasonable assumptions regarding future
underlying losses - in the 22% context.
Fundamentals-wise, December saw significantly more downgrades
than upgrades especially in the US Loan market. Even though we are
still waiting for December trustee reports, expectations are that
CCC/Caa1 loan buckets increased on average by 1.5 to 2% in the US
through the course of the month.
In terms of default rates, we now have the full list of defaults
for 2022. Default rates were still very low, at 0.4% for European
Loans and 0.7% for US loans. After the invasion of Ukraine, rating
agencies were forecasting 2022 default rates to reach between 2%
and 2.5% for the US and European loan markets... We closed the year
far from those levels.
As we regularly highlight in this report, the main reason for
such low default rates is the benefit of inflation, despite the
economic slowdown. When companies' revenues are growing fast, even
if said companies suffer from margins pressure, profits and EBITDA
still manage to grow (at a lower pace than revenues but they still
do grow on average).
When considering rating agencies and most banks' research,
default rates are expected to reach 3.5% to 5.5% for 2023. Our
default rates view for 2023 still lands in the 3% area for both US
and European Loans as we still believe that debt erosion (thanks to
inflation) and significant increase in revenues will help avoiding
some defaults ; despite the fact that margins are already under
pressure and that they should remain under pressure for a few more
quarters. Since the vast majority of loans are covenant lite, the
deterioration of interest coverage ratios - while being a source of
stress - do not mechanically lead to a default. It is the level of
EBITDA and where rates will be when companies need to refinance
their debt that will really matter. We do not see many companies
that have to refinance in 2023.
Such kind of default pattern should not materially impact the
distribution of interests of Volta's assets in the near term. We
believe that we can maintain a high level of coupons in the coming
quarters and are actively looking to seize investment opportunities
with the extra cash that is being generated.
As at the end of December 2022, Volta's NAV was EUR213.5m or
EUR5.84 per share.
*It should be noted that approximately 6.6% of Volta's GAV
comprises investments for which the relevant NAVs as at the
month-end date are normally available only after Volta's NAV has
already been published. Volta's policy is to publish its NAV on as
timely a basis as possible to provide shareholders with Volta's
appropriately up-to-date NAV information. Consequently, such
investments are valued using the most recently available NAV for
each fund or quoted price for such subordinated notes. The most
recently available fund NAV or quoted price was 1.3% as at 30
November 2022, 4.7% was at 30 October 2022, 0.6% was at 30
September 2022.
** "performances" of asset classes are calculated as the
Dietz-performance of the assets in each bucket, taking into account
the Mark-to-Market of the assets at period ends, payments received
from the assets over the period, and ignoring changes in
cross-currency rates. Nevertheless, some residual currency effects
could impact the aggregate value of the portfolio when aggregating
each bucket.
CONTACTS
For the Investment Manager
AXA Investment Managers Paris
Serge Demay
serge.demay@axa-im.com
https://www.globenewswire.com/Tracker?data=dEUFDQcf67OlzPFVlmbZ3IIMxQ6TWDVJcr_2nAsjCgcv4CPB3nHCEOR-FJOggen5QXTyd7U6EgBrOhq17LXbiuI6HtaTLIi99eqCW0bQ2Wk=
+33 (0) 1 44 45 84 47
Company Secretary and Administrator
BNP Paribas S.A, Guernsey Branch
guernsey.bp2s.volta.cosec@bnpparibas.com
https://www.globenewswire.com/Tracker?data=m9Z10FexKwMJvWEuMweoqBCTz5dQLHapZmZwjXek0C64qqjuj_FO0RZzOaVJF9SeYxc2QI1-v_LA8qLc1qM9Wx2Y2t_syG-iD7QiuE7YsWQCjEKbCH85v4Sl6W1gcp7OMOdvgNr_FXyoGzer7U7dDRu_Zb8QZGqZYe_GMG5EONM1UfIXneK2juvjaToaHNO-0Cx9o24KAdb7oHEshqH2JesmYeL50tyjKv13Nd4ThgPj76X7yQgXiCP0t5ZVcNHMlsRdSx5EgNzCSeensYbzex-KKCFYfZ3yoVC-0f9tzhAf-OVa_pNDQ5mQfzY3SmQe0pS_n7IIPkVc-DpjnknYwKfwgxsZMWBd6PD8m4ejONQ9gMmfVJGsqk1LWvs2FYqV
+44 (0) 1481 750 853
Corporate Broker
Cenkos Securities plc
Andrew Worne
Daniel Balabanoff
+44 (0) 20 7397 8900
*****
ABOUT VOLTA FINANCE LIMITED
Volta Finance Limited is incorporated in Guernsey under The
Companies (Guernsey) Law, 2008 (as amended) and listed on Euronext
Amsterdam and the London Stock Exchange's Main Market for listed
securities. Volta's home member state for the purposes of the EU
Transparency Directive is the Netherlands. As such, Volta is
subject to regulation and supervision by the AFM, being the
regulator for financial markets in the Netherlands.
Volta's investment objectives are to preserve capital across the
credit cycle and to provide a stable stream of income to its
shareholders through dividends. Volta seeks to attain its
investment objectives predominantly through diversified investments
in structured finance assets. The assets that the Company may
invest in either directly or indirectly include, but are not
limited to: corporate credits; sovereign and quasi-sovereign debt;
residential mortgage loans; and, automobile loans. The Company's
approach to investment is through vehicles and arrangements that
essentially provide leveraged exposure to portfolios of such
underlying assets. The Company has appointed AXA Investment
Managers Paris an investment management company with a division
specialised in structured credit, for the investment management of
all its assets.
*****
ABOUT AXA INVESTMENT MANAGERS
AXA Investment Managers (AXA IM) is a multi-expert asset
management company within the AXA Group, a global leader in
financial protection and wealth management. AXA IM is one of the
largest European-based asset managers with 2,460 professionals and
EUR887 billion in assets under management as of the end of December
2021.
*****
This press release is published by AXA Investment Managers Paris
("AXA IM"), in its capacity as alternative investment fund manager
(within the meaning of Directive 2011/61/EU, the "AIFM Directive")
of Volta Finance Limited (the "Volta Finance") whose portfolio is
managed by AXA IM.
This press release is for information only and does not
constitute an invitation or inducement to acquire shares in Volta
Finance. Its circulation may be prohibited in certain jurisdictions
and no recipient may circulate copies of this document in breach of
such limitations or restrictions. This document is not an offer for
sale of the securities referred to herein in the United States or
to persons who are "U.S. persons" for purposes of Regulation S
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), or otherwise in circumstances where such offer would be
restricted by applicable law. Such securities may not be sold in
the United States absent registration or an exemption from
registration from the Securities Act. Volta Finance does not intend
to register any portion of the offer of such securities in the
United States or to conduct a public offering of such securities in
the United States.
*****
This communication is only being distributed to and is only
directed at (i) persons who are outside the United Kingdom or (ii)
investment professionals falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the "Order") or (iii) high net worth companies, and other
persons to whom it may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons together
being referred to as "relevant persons"). The securities referred
to herein are only available to, and any invitation, offer or
agreement to subscribe, purchase or otherwise acquire such
securities will be engaged in only with, relevant persons. Any
person who is not a relevant person should not act or rely on this
document or any of its contents. Past performance cannot be relied
on as a guide to future performance.
*****
This press release contains statements that are, or may deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "anticipated",
"expects", "intends", "is/are expected", "may", "will" or "should".
They include the statements regarding the level of the dividend,
the current market context and its impact on the long-term return
of Volta Finance's investments. By their nature, forward-looking
statements involve risks and uncertainties and readers are
cautioned that any such forward-looking statements are not
guarantees of future performance. Volta Finance's actual results,
portfolio composition and performance may differ materially from
the impression created by the forward-looking statements. AXA IM
does not undertake any obligation to publicly update or revise
forward-looking statements.
Any target information is based on certain assumptions as to
future events which may not prove to be realised. Due to the
uncertainty surrounding these future events, the targets are not
intended to be and should not be regarded as profits or earnings or
any other type of forecasts. There can be no assurance that any of
these targets will be achieved. In addition, no assurance can be
given that the investment objective will be achieved.
The figures provided that relate to past months or years and
past performance cannot be relied on as a guide to future
performance or construed as a reliable indicator as to future
performance. Throughout this review, the citation of specific
trades or strategies is intended to illustrate some of the
investment methodologies and philosophies of Volta Finance, as
implemented by AXA IM. The historical success or AXA IM's belief in
the future success, of any of these trades or strategies is not
indicative of, and has no bearing on, future results.
The valuation of financial assets can vary significantly from
the prices that the AXA IM could obtain if it sought to liquidate
the positions on behalf of the Volta Finance due to market
conditions and general economic environment. Such valuations do not
constitute a fairness or similar opinion and should not be regarded
as such.
Editor: AXA INVESTMENT MANAGERS PARIS, a company incorporated
under the laws of France, having its registered office located at
Tour Majunga, 6, Place de la Pyramide - 92800 Puteaux. AXA IMP is
authorized by the Autorité des Marchés Financiers under
registration number GP92008 as an alternative investment fund
manager within the meaning of the AIFM Directive.
*****
Attachment
-- Volta - Monthly Report - December 2022
https://ml-eu.globenewswire.com/Resource/Download/ef6ecdfe-d865-4eec-b2a5-8313ed0ae2c9
(END) Dow Jones Newswires
January 12, 2023 12:15 ET (17:15 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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