10 May 2018 10:06
Alcentra European Floating Rate Income Fund Limited
Market Commentary
April was a strong month for European loans, with decent new issue flow and few negative headlines. The Credit Suisse Western European Leveraged Loan Index ("CS WELLI") (hedged to GBP) returned +0.55% for the month, taking the return YTD to +1.70%1.
European loan and bond issuance remained steady during the month, with YTD loan volume still tracking well ahead of last year at $50.9bn (versus $44.7bn for YTD 2017)2.
New issue spreads for the past three months were 3.72% for Europe plus 0.06% from LIBOR floors, versus 3.58% for the US plus 0.66% from floors. Therefore we still prefer the relative value of Europe in a currency hedged portfolio2.
The default rate was down slightly at 1.18%3 at the end of March.
Portfolio Manager's Commentary
The top and bottom performing credits were high yield bonds and floating rate notes, which remain more volatile than loans. The top two were up 4.5% and 3.1% following improved buyer sentiment, the bottom two were -6.4% and -1.5% after weaker results.
ENDS.
1 Credit Suisse Western European Leveraged Loan Index, hedged to GBP, April 2018
2 S&P Global Market Intelligence, LCD Global View, 3 May 2018
3 S&P Global Market Intelligence, 12 April 2018
For further information please contact:
Alcentra Limited
Simon Perry +44 20 7367 5272
Factsheet
An accompanying factsheet which includes the information above as well as wider commentary on the investments made by the Fund can be found on the Fund's website www.aefrif.com.
Background Information
Alcentra European Floating Rate Income Fund Limited, a Guernsey Authorised Closed-Ended Collective Investment Scheme, regulated by the Guernsey Financial Services Commission and listed on the Main Market of the London Stock Exchange invests predominantly in senior secured loans and senior secured bonds issued by European corporates and targets returns (net of fees and expenses) of 7% to 10% per annum. The Fund targets a dividend yield of 5.5 pence per £1.00 issue price of the initial offering of shares in the Fund for the first full year of investment, paid quarterly.
Important Notices
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This report is aimed at existing investors in the fund and has not been approved by any competent regulatory authority.
The information contained in this document is given as at the date of its publication (unless otherwise marked) and is based on past performance. Past performance is not a guide to future performance and the value of investments and investment value can go down as well as up. The future performance of the Fund will depend on numerous factors which are subject to uncertainty. Including changes in market conditions and interest rates and exchange rates and in response to other economic, political or financial developments, investment return and principal value of your investment will fluctuate, so that when your investment is sold, the amount you receive could be less than what you originally invested. Past or current yields are not indicative of future yields.
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