Last checked at 17 Oct 2022 07:00
RNS Number : 9927C NB Global Monthly Income Fun Lt 17 October 2022 160NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.
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17th October 2022
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NB Global Monthly Income Fun
Monthly Commentary Portfolio Upate
30th September 2022:
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Key statistics
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Asset allocation:
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Creit rating breakown: as at 30 September (excluing cash), the portfolio was investe primarily in B (46.78%), BB (11.91%) an CCC (3.62%) rate investments.
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Market Upate
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September was a challenging month for non-investment grae creit markets with returns broaly negative. The rawowns were riven by increasingly hawkish central banks an rising risk of recession especially after Feeral Reserve Boar Chair Powell mentione the wor "pain" several times in his most recent statements an inicate the Fe is more willing to accept a weaker labour market as it moves into a "restrictive range" on target Fe funs. U.S. 10-Year Treasury yiels ene the month at 3.83%, rising 9 basis points since the en of the secon quarter when the yiel stoo at 2.88%. Also, news that the Bank of Englan ha to intervene in the long-en of the gilt curve to restore market functioning fuelle incremental quarter-en volatility. UK gilts experience a significant yiel increase over the quarter moving from 2.10% at the en of the secon quarter to 4.08% as of September 30. Despite the fact that trailing 12-month efault rates have move up from the lows, issuer funamentals of free cash flow, interest coverage an leverage have remaine in relatively favourable ranges with the efault outlook for 2022 an 2023 still below the long-term average.
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In the month, U.S. senior floating rate loans-measure by the Morningstar LSTA U.S. Leverage Loan Inex (the "LLI")-returne -2.27% with the lower rate tiers unerperforming as the BB, B an CCC rate segments of the inex returne -1.19%, -2.77% an -2.36%, respectively. In the thir quarter, the overall loan inex saw positive returns of 1.37% with BB's up 2.4%, an single-B's up 1.18%, outperforming CCCs which saw negative returns of -1.72%. Year to ate, the LLI returne -3.2% with lower rate loans unerperforming as the BB, B an CCC returne -0.90%, -3.76% an -10.16%, respectively.160 The LL100, a measure of the largest, most liqui issuers, returne -2.8% in the month, 1.29% for the quarter an -4.26% year to ate. The Morningstar European Leverage Loan Inex (the "ELLI") returne -3.49% in September, 1.2% for the quarter an -6.34% year to ate, excluing currency effects. The secon lien loan inex returne -3.02% in the month, -1.97% in the thir quarter an -7.22% year to ate. Notwithstaning the macro volatility, the loan market has been relatively resilient compare to other asset classes over the month, quarter an year to ate perios.
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The ICE BofA Global High Yiel Constraine Inex finishe the month with a return of -4.21%, -1.02% in the thir quarter an -1.74% year to ate (Hege USD). In September, returns across creit ratings saw lesser rawowns in the mile-rate creit tiers as the BB, B, CCC lower categories of the ICE BofA Global High Yiel Inex returne -4.26%, -4.03%, an -4.76%, respectively. Year to ate, the BB, B, CCC lower rate categories of the ICE BofA Global High Yiel Inex returne -1.71%, -1.74%, an -16.1%, respectively.
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CLO ebt spreas move wier in the month, as the market rally from July into mi-August-unerpinne by market views of a more ovish Fe an better than expecte corporate earnings-was reverse following hawkish comments from Fe Chairman Powell given persistently elevate inflation. Seconary non-investment grae CLO traing volumes ecline 22% quarter-over-quarter with investors reassessing selling nees as CLO ebt spreas reache local wies in 2022. The CLO BB inex returne -6.81% in September, -2.6% in the thir quarter an -9.63% year to ate.
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Although efault rates have move up moestly from earlier in the year, they remain low across non-investment grae creit which is consistent with healthy balance sheets an positive free cash flow growth. Our outlook for efaults also remains relatively benign with well-below average efault rates expecte in 2022 an 2023. Non-investment grae creit, especially given its lower uration profile an attractive yiels, coul likely see a re-emergence of investor eman as valuations have become very attractive on an absolute an relative basis.
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In our view, non-investment grae yiels are compensating investors for the below average efault outlook, will continue to provie urable income an are attractive compare to other fixe income alternatives. While the tightening of financial conitions, still-elevate inflation an challenging news out of Europe has been creating incremental volatility, real growth is slowing an most supply chains have normalize. That sai, our analysts remaine focuse on the outlook for issuer margins even though some input cost pressures appear to be lessening. Healthy consumer an business balance sheets, growing nominal GDP an soli job growth shoul remain supportive for issuer funamentals. Our global research team has also been closely monitoring the investment thesis for each issuer in the portfolio given the margin impacts relate to input cost pressures exacerbate by the ongoing conflict in Eastern Europe. While inventories are builing as a result of slowing eman, we remain focuse on sector ynamics an iiosyncratic risks to iniviual issuers. Even with the heightene uncertainty of commoity prices, central bank tightening an negative news flow out of Europe, which is resulting in short-term volatility, we believe our bottom-up, funamental creit research focuse on security selection while seeking to avoi creit eterioration an putting only our "best ieas" into portfolios, position us well to take avantage of the increase volatility.
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Portfolio Positioning
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The overall Fun exposure to floating rate assets is unchange at 67%, with an average uration of 1.4 years. As government bon yiels continue to rise on the back of heightene inflationary concerns, an investors grapple with a range of other challenges, incluing political instability in the UK an a flare up of tensions in Ukraine, creit markets weakene in September. The technical picture in the leverage finance space was negative, investors persistently being hit with outflows, which in concert with reuce street balance sheet saw liquiity iminishe. Decompression was also evient, as accounts sought to reuce exposure to lower rate an cyclical sectors, with several negative iiosyncratic situations resulting in increase price ispersion. During the month our exposure to single B rate holings fell, whilst the weight in BB rate names increase, as i our weight in private ebt.
As activity in the primary market remaine highly subue, we i nevertheless a to selecte lines in seconary, incluing the unsecure bons of energy group Harvest Mistream following the announcement of a strong set of earnings. Harvest operates mistream assets primarily in mature basins, an benefits from a history of extening the useful life an prouctivity of conventional assets, substantial free cash flow generation, a sensible leverage profile an sympathetic covenant structure.
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To access the September 2022 Factsheet, please click here160http://www.rns-pf.lononstockexchange.com/rns/9927C_1-2022-10-14.pf.
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The Fun's website can be foun at the following aress: www.nbgmif.com
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For more information, please refer to here.
** Current Portfolio Yiel is a market-value weighte average of the current yiels of the holings in the portfolio, calculate as the coupon (base rate plus sprea) ivie by current price. The calculation oes not take into account any Fun expenses or sales charges pai, which woul reuce the results. The Current Yiel for the Fun will fluctuate from month to month. The Current Yiel shoul be regare as an estimate of the Fun's rate of investment income, an it may not equal the realise istribution rate for each share class. You shoul consult the Fun's prospectus for aitional information about the Fun's iviens an istributions policy. Past performance is not a reliable inicator of current or future results.
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-ENDS-
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For further information, please contact:
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Backgroun Information
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The Company is a registere close-ene investment company incorporate in Guernsey. It is manage by Neuberger Berman Europe Limite, which has elegate certain of its responsibilities an functions to the AIFM, Neuberger Berman Investment Avisers LLC, both of which are inirect wholly owne subsiiaries of Neuberger Berman Group LLC.
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Neuberger Berman, foune in 1939, is a private, inepenent, employee-owne investment manager. The firm manages a range of strategies-incluing equity, fixe income, quantitative an multi-asset class, private equity, real estate an hege funs-on behalf of institutions, avisors an iniviual investors globally. With offices in 2 countries, Neuberger Berman's iverse team has over 2,300 professionals.
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For seven consecutive years, the company has been name first or secon in Pensions Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more). In 2020, the PRI name Neuberger Berman a Leaer, a esignation aware to fewer than 1% of investment firms for excellence in Environmental, Social an Governance (ESG) practices. The PRI also aware Neuberger Berman an A+ in every eligible category for our approach to ESG integration across asset classes. The firm manages 460 billion in client assets as of December 31, 2021. For more information, please visit our website at www.nb.com.
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RISK CONSIDERATIONS
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Market Risk: The risk of a change in the value of a position as a result of unerlying market factors, incluing among other things, the overall performance of companies an the market perception of the global economy.
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Liquiity Risk: The risk that the Fun may be unable to sell an investment reaily at its fair market value. In extreme market conitions this can affect the Fun's ability to meet reemption requests upon eman.
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Creit Risk: The risk that bon issuers may fail to meet their interest repayments, or repay ebt, resulting in temporary or permanent losses to the Fun.
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Interest Rate Risk: The risk of interest rate movements affecting the value of fixe-rate bons.
Counterparty Risk: The risk that a counterparty will not fulfil its payment obligation for a trae, contract or other transaction, on the ue ate.
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Counterparty Risk: The risk that a counterparty will not fulfil its payment obligation for a trae, contract or other transaction, on the ue ate.
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Operational Risk: The risk of irect or inirect loss resulting from inaequate or faile processes, people an systems incluing those relating to the safekeeping of assets or from external events.
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Derivatives Risk: The Fun is permitte to use certain types of financial erivative instruments ("FDI") (incluing certain complex instruments) which can give rise to particular risks, incluing market risk, liquiity risk an counterparty creit risk. This may increase the Fun's leverage significantly which may cause large variations in the value of your share.
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Currency Risk: Investors who subscribe in a currency other than the base currency of the Fun are expose to currency risk. Fluctuations in exchange rates may affect the return on investment.
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The past performance shown is base on the share class to which this factsheet relates. If the currency of this share class is ifferent from your local currency, then you shoul be aware that ue to exchange rate fluctuations the performance shown may increase or ecrease if converte into your local currency.
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IMPORTANT INFORMATION
Source of all ata an charts (unless state otherwise): Neuberger Berman Europe Limite, Bloomberg an Blackrock Alain.
This ocument has been issue by NB Global Monthly Income Fun Limite (the "Company"), an shoul not be taken as an offer, invitation or inucement to engage in any investment activity an is solely for the purpose of proviing information about the Company. This ocument oes not constitute or form part of, an shoul not be construe 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 jurisiction. This prouct is only suitable for institutional, professional an professionally avise retail investors, private client fun managers an brokers who are capable of evaluating the merits an risks of the prouct an who plan to stay investe until the en of the recommene holing perio an can bear loss of capital. An investor with reasonable knowlege of loans an alternative creit woul nee to be assesse by the avisor or istributor to establish suitability for this prouct.
Full prouct etails, incluing a Key Information Document, are available on our website at www.nbgmif.com.
Due to the inherent risk of investment in the ebt market particularly relate to alternative creit, it is expecte that a qualifie investor woul be able to unerstan the risks in such security types an the potential impact of investing in the prouct. This prouct is esigne to form part of a portfolio of investments.160160
The Company is a close-ene investment company incorporate an registere in Guernsey an is governe uner the provisions of the Companies (Guernsey) Law, 2008 (as amene), an the Registere Collective Investment Scheme Rules 2008 issue by the Guernsey Financial Services Commission ("GFSC"). It is a non-cellular company limite by shares an has been eclare by the GFSC to be a registere close-ene collective investment scheme. The Company's shares are amitte to the Official List of the UK Listing Authority with a premium listing an are amitte to traing on the Premium Segment of the Lonon Stock Exchange's Main Market for liste securities.
Neuberger Berman Europe Limite is authorise an regulate by the Financial Conuct Authority an is registere in Englan an Wales, at The Zig Zag Builing, 70 Victoria Street, Lonon, SW1E 6SQ.
This ocument is presente solely for information purposes an nothing herein constitutes investment, legal, accounting or tax avice, or a recommenation to buy, sell or hol a security. We o not represent that this information, incluing any thir-party information, is complete an it shoul not be relie upon as such. Any views or opinions expresse may not reflect those of the Company as a whole. All information is current as of the ate of this material an is subject to change without notice. No part of this ocument may be reprouce in any manner without prior written permission of the Company.160
An investment in the Company involves risks, with the potential for above average risk, an is only suitable for people who are in a position to take such risks. No recommenation or avice is being given as to whether any investment or strategy is suitable for a particular investor. Each recipient of this ocument shoul make such investigations as it eems necessary to arrive at an inepenent evaluation of any investment, an shoul consult its own legal counsel an financial, actuarial, accounting, regulatory an tax avisers to evaluate any such investment. It shoul not be assume that any investments in securities, companies, sectors or markets ientifie an escribe were or will be profitable. Investment in the Company shoul not constitute a substantial proportion of an investor's portfolio an may not be appropriate for all investors. Diversification an asset class allocation o not guarantee profit or protect against loss.
Past performance is not a reliable inicator of current or future results. The value of investments may go own as well as up an investors may not get back any of the amount investe. The performance ata oes not take account of the commissions an costs incurre on the issue an reemption of units.
The value of investments esignate in another currency may rise an fall ue to exchange rate fluctuations in respect of the relevant currencies. Averse movements in currency exchange rates can result in a ecrease in return an a loss of capital.
Tax treatment epens on the iniviual circumstances of each investor an may be subject to change, investors are therefore recommene to seek inepenent tax avice.
This ocument, an the information containe therein, is not for viewing, release, istribution or publication in or into the Unite States, Canaa, Japan, South Africa or any other jurisiction where applicable laws prohibit its release, istribution or publication, an will not be mae available to any national, resient or citizen of the Unite States, Canaa, Japan or South Africa. The istribution of this ocument in other jurisictions may be restricte by law an persons into whose possession this ocument comes must inform themselves about, an observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the feeral securities law of the Unite States an the laws of other jurisictions.
The Company's shares have not been an will not be registere uner the US Securities Act of 1933, as amene (the "Securities Act"), or with any securities regulatory authority of any state or other jurisiction of the Unite States. The shares may not be offere, sol, resol, plege, elivere, istribute or otherwise transferre, irectly or inirectly, into or within the Unite States, or to, or for the account or benefit of, US persons (as efine in Regulation S uner the Securities Act). No public offering of the shares is being mae in the Unite States.
The Company has not been an will not be registere uner the US Investment Company Act of 1940, as amene (the "Investment Company Act") an, as such, holers of the shares will not be entitle to the benefits of the Investment Company Act. No offer, sale, resale, plege, elivery, istribution or transfer of the shares may be mae except uner circumstances that will not result in the Company being require to register as an investment company uner the Investment Company Act. In aition, the shares are subject to restrictions on transferability an resale in certain jurisictions an may not be transferre or resol except as permitte uner applicable securities laws an regulations. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisictions.
The "Neuberger Berman" name an logo are registere service marks of Neuberger Berman Group LLC.
169 2022 Neuberger Berman Group LLC. All rights reserve.
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