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NB Global Monthly Income exit opportunity looms

NB Global Monthly Income Fund has published results for the year ended 31 December 2021. Over the year, the share price total return was 14.1% and the NAV total return 5.9%.  As of 31 December 2021, the portfolio’s gross yield was 6.3%, and the gross yield to maturity was 6.6%. A monthly dividend of 0.39p was paid for a total of 4.68p for the year, 20% up on the prior year, reflecting the change in investment strategy implemented in 2020

During the period, holdings in the Oil & Gas, Broadcast Radio & TV and Health Care sectors were the most significant drivers of performance whilst the Business Equipment & Services, Utilities and Food & Drug Retailers sector holdings were the biggest detractors. The portfolio’s positioning in B rated issuers contributed the most to performance whilst positioning in CCC rated issuers added the least over the period. 

On 20 January 2022, the board announced an annual dividend target rate for 2022 of 5.25% of NAV as at 4 January 2022, which equates to 0.415 pence per share paid monthly and an increase of 6.4% over the year 2021. In order to avoid having any excess reportable income for 2021, the board has also resolved to increase the May 2022 dividend by 0.205 pence per share.

Portfolio construction

As of 31 December 2021, the allocation in the portfolio was broadly 64% to traditional credit and 36% to alternative credit. The overall exposure to floating rate assets was 70%. Floating Rate Loans remained the portfolio’s largest allocation at just over 35%, followed by High Yield Bonds and Private Debt. In terms of rating by credit quality, as at year end the portfolio held an allocation of 14.0% in BBB/BB rated securities, 46.1% in B rated securities and with an allocation of 33.5% to securities rated CCC and below.

Discount Management

During the year ended 31 December 2021, the discount ranged between 13.8% and 4.3%, finishing the year at a 5.8% discount.

The company may, at the board’s absolute discretion, offer to eligible shareholders the opportunity to tender up to 25% of their holdings at NAV less 2%. Unless the discount narrows to about 25% or less, the board is likely to proceed with the tender. The first cash exit facility offer is expected to close on 30 June 2022 and subsequent offers may be made every six months thereafter.

From the end of June 2022, should the NAV fall below £150m and taking into account market conditions, the directors intend to propose a wind-up of the company. The market cap today is £216m.

NBMI : NB Global Monthly Income exit opportunity looms

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