TFIF : TwentyFour Income increases CLO exposure as spreads widen
Over the six months to the end of September 2014 TwentyFour Income Fund generated a total return of 6.5% on its net assets. It is paying quarterly dividends of 1.5p, in-line with forecast of 6p dividends for the year as a whole. They say the shares traded at an average premium of 4.85% over the period, enabling them to issue shares, including 18m shares issued at a 5% premium in October.
The manager’s report says they upped exposure to CLOs from 32.7% to 37.1% during the period as spreads widened slightly and the relative value opportunity versus alternatives improved. Spread widening was in response to reduced appetite for CLO paper – the manager says “The only part of the European ABS markets that has not participated in the sustained tightening in spreads has been the new issue CLO market, where at times new issues have struggled to find adequate levels of interest for the deal to be placed. During August spreads on single-B rated tranches of new deals widened as a result of this, although without any weakening in the underlying credit.”