CVC Credit Partners European Opportunities says its Euro and Sterling Ordinary shares have returned 4.8% and 5.0% respectively on a total return basis for the six months ended 30 June 2015. They have been managing the portfolio with the aim of paying an annual dividend yield of around 5%. A 2.5p / 2.5c semi-annual dividend was declared on 2 July 2015 and paid on 7 August 2015.
As at 30 June 2015, the portfolio held positions in 68 issuers across 25 different industries and 15 different countries, with no individual issuer representing an exposure of more than 3.1% of the portfolio.
The manager says floating rate instruments were 78.8% of the portfolio and the current yield was 5.9% at 30 June. The portfolio has moved from an average of 57% in Core Income assets in 2014 versus a 2015 year to date average of 46%, driven by an increase in the portfolio’s allocation to the Credit Opportunities and Special Situations strategies. This shift was triggered by the Asset Quality Review instituted by the ECB and regulatory changes across the European banking industry where the Investment Vehicle Manager witnessed a significant increase in asset flows from non-core bank holdings. In this regard, the pipeline and flow of stressed and distressed names is growing and the Investment Vehicle Manager anticipates that this will continue to be a significant source of opportunities for the portfolio through to the end of the year.
During Q1 2015, as the HY bond market traded well on the back of the ECB announced stimulus and volumes of new issuance accelerated with positive fund flows, the portfolio continued to capitalise on the opportunities which would benefit from this renewed confidence. Throughout the period, the performing portfolio also actively participated in the new issue and secondary markets, increasingly upgrading its allocation at higher yields.
Through Q2 2015, owing to tighter pricing activity in the new issuance leveraged loan market and with volatility in the HY bond market, much of the quarter’s activity was focused on the Credit Opportunities segment of the portfolio where existing positions were upsized in names with a clear catalyst to create a value event for the portfolio or an improvement in the underlying performance of the asset. In the latter half of the period, steps were taken to reduce exposures to European high beta subordinated HY bonds, increase cash levels and reduce 2nd lien loan holdings in order to manage NAV volatility through late May and early June.
CCPE / CCPG : CVC Credit sees more opportunities in distressed assets