Edison issues review on The Brunner Inv. Trust

London, UK, 13 June 2018

Edison issues review on The Brunner Investment Trust (BUT)

The Brunner Investment Trust (BUT) has recently announced a refinancing of its second (and last) tranche of high-cost debt (£28m). It placed a £25m note at a record low rate of 2.84% for 30-year debt, made possible due to declining UK government bond yields as a result of recent political concerns in Italy. The remaining £14.4m costs (including accrued interest) to repay the debt will be financed by existing assets and bank debt, and will meaningfully lower BUT's overall weighted average interest costs from 7.7% to 2.9% pa. Manager Lucy Macdonald describes this as an exciting development, as it will allow the trust to have a more efficient balance sheet and provides greater flexibility to increase the dividend in real terms. Coupled with the lower cost of debt, a potentially higher yield could lead to a narrowing in the trust's discount. BUT has a distinguished distribution track record, growing dividends for the last 46 consecutive years.

BUT is trading at a 9.6% discount to cum-income NAV, with debt at fair value. This is narrower than the averages of the last one, three, five and 10 years (range of 10.6% to 13.0%). There is room for the discount to narrow further following the meaningful reduction in the trust's cost of debt and the potential for higher dividend growth. BUT's current dividend yield is 2.1%.

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Mel Jenner, +44 (0)20 3077 5720

Sarah Godfrey, +44 (0)20 3681 2519

Investmenttrusts@edisongroup.com

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