NB Global Floating Rate Income boosts dividend by 20% in 2018 – NB Global Floating Rate Income increased its dividend by 20% to £4.02p in the year to December 31, 2018.
The company’s chairman, Rupert Dorey, was pleased with the year’s performance. “The board is satisfied with the recent performance of the company’s portfolio which has benefitted from the more defensive positioning taken by the manager. During the year the company’s total return NAV was up (0.88%) and (0.15%) for the sterling ordinary shares (NBLS) and US dollar ordinary shares (NBLU), respectively. During the same period the company’s share price total return was (6.34%) per sterling ordinary share and (2.86%) per US dollar ordinary share. The company’s NAV per share remained relatively stable over the first nine months of 2018. The fourth quarter 2018 experienced risk-off sentiment across capital markets.”
Delivering on income mandate
Ruper further added: “The reduction in NAV during the fourth quarter was driven more by technical factors rather than any diminution in underlying credit quality. The dividend per share continued to increase throughout 2018 and the company’s dividend yield was 4.53% and 4.43% per sterling share and US dollar share respectively (calculated as the last four quarterly dividends expressed as a percentage of the share price as at 31 December 2018). The company continues to meet its broad objective of providing regular and sustained dividends which were consistent with increases in U.S. Libor during 2018.
As at 31 December 2018, the portfolio’s current yield was 5.76%, and the yield to maturity was 6.64%, figures which are both broadly in line with the relevant benchmark, the S&P / LSTA leveraged loan index.
Despite concerns from some quarters about conditions in credit markets, the market saw $435.9b of leveraged loans issued during the year. However, towards the end of the year, loan prices eased, new issuance all but ceased due to overall market volatility and credit spreads widened somewhat as late cycle credit concerns started to assert themselves. The pace of interest rate increases, particularly outside the U.S., was slower than expected, which meant that the cost of hedging returns into Sterling has not fallen as much as we had expected.
Given these headwinds, the board remains satisfied with the performance of the company as well as the more conservative, risk averse approach to portfolio management taken by the manager.”
US and below investment grade focus areas
At the end of 2018, the portfolio’s currency exposure was split 88: 10 US dollar: euro in 359 holdings across 272 issuers. The company invests in below investment grade debt, with B rated paper accounting for 56% of the portfolio by market value in 2018.
NBLS/NBLU: NB Global Floating Rate Income boosts dividend by 20% in 2018