LONDON (Alliance News) - NB Global Floating Rate Income Fund Ltd on Friday hiked its dividend but said the net asset value of its US dollar and sterling shares decreased in 2018 due to unfavourable market sentiment in the fourth quarter.
The closed-ended investment fund's net asset value per dollar share on December 31 was USD0.9468 compared to USD0.9896 the year before, while its net asset value per sterling share fell to GBP0.9215 from GBP0.9702.
This decline occurred primarily in the fourth quarter of the year with "risk-off sentiment across capital markets", the fund said, adding "the reduction in NAV during the fourth quarter was driven more by technical factors rather than any diminution in underlying credit quality".
The company largely invests in senior secured floating rate loans, issued in US dollars, sterling, or euros. The loans are often non-investment grade, which the fund defines as being below the Aaa, Aa, A, and Baa categories, and therefore carry more risk.
In 2018, NB Global Floating Rate paid dividends totalling 4.02p pence per sterling share, up from 3.35p, for an increase of 20%. It also increased its dividend per dollar share by 21% to 4.13 cents from 3.41 cents.
Fund Chair Rupert Dorey said: "We believe the outlook for 2019 remains relatively attractive for short duration asset classes such as senior secured floating rate loans. The investment manager believes that default rates will stay below historical levels and credit quality is expected to remain favourable with the exception of some identifiable areas, such as within the retail sector."
On Brexit, Dorey added that: "A disorderly Brexit situation would not impact our operations in any material manner. Further, we do not believe there is an impact of disorderly Brexit on our portfolio given that only 2.1% of the portfolio has a GBP sterling exposure with 96% of the portfolio having no UK exposure."
Shares in NB Global Floating Rate were up 0.2% at 89.80 pence on Friday morning.