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QuotedData’s morning briefing 21 September 2022

Henderson High Income Trust - Robust high yield

In QuotedData’s morning briefing 21 September 2022:

  • Henderson High Income (HHI) produced returns in line with its benchmark (80% All-Share Index/20% ICE BofAML Sterling Non-Gilts Index) over the six months ended 30 June 2022, both returning -6.1%. It helped that UK equities beat bonds over the period as the trust began the year with an underweight exposure to bonds relative to the benchmark. However, the fund’s gearing amplified the fall in the market. The gearing has been reduced and the exposure to bonds increased, buying US investment grade credit to take advantage of the move higher in yields and widening of credit spreads. Bonds were purchased in typically higher quality, non-cyclical businesses such as Abbvie (pharma), Amazon and T-Mobile (telecommunications). The fund’s revenue account is healthy, with a revenue return of 5.93p compared with dividends totalling 5.1p for the period.
  • Augmentum Fintech (AUGM) notes that HSBC Ventures has invested $35m in Monese, as part of a broader strategic partnership that will focus on Monese’s cloud-based banking Platform-as-a-Service (PaaS) business launched in September 2021. In addition, Habito (www.habito.com), the digital mortgage broker and home-buying service, has raised about £5m from existing investors, including Augmentum, in its latest funding round. This latest funding will allow Habito to complete its move to focus on core services.
  • TwentyFour Income Fund (TFIF) will increase its minimum annual dividends from 6p to 7p per share with minimum quarterly dividends increasing from 1.5p to 1.75p per share beginning in respect of quarter end 30 September 2022. The fund invests in floating rate loans and is benefiting from the rise in interest rates.
  • Riverstone Credit Opportunities Income (RCOI) has been repaid the loan it made to FS Crude LLC, generating a 14.8% realised IRR and 1.23x realised MOIC. In March 2020, RCOI committed $5.9m for a first lien delayed-draw term loan to sponsor-backed FS Crude, a company which provides crude gathering, storage and blending services to a diversified footprint of producers in the core of the Delaware Basin. On 16 September 2022, FS Crude fully refinanced this loan with a new source of financing.
  • Unite Students (UTG) has sold a portfolio of six properties in Aberdeen, comprising 1,050 beds, for £33m (Unite share: £20m) to Clearbell Property Partners III LP. The disposal is priced in line with prevailing book value, which reflects a yield of 6.0% for the 2022/23 academic year. The group says the disposal sees it exit several smaller and less operationally efficient assets whilst retaining 911 beds across two properties in close proximity to each other in Aberdeen. The group has now completed the sale of a total £339m (Unite share: £256m) of properties in 2022, completing the group’s planned disposal activity for the year.
  • Schroder UK Public Private (SUPP) says that, due to an administrative error, the valuation of its holding in BenevolentAI has not been updated to reflect the quoted price of that company since BenevolentAI listed by way of a combination with Odyssey Acquisition on 26 April 2022. The impact of the adjustment to reflect the quoted price of BenevolentAI in the most recently published daily indicative unaudited NAV as at 15 September 2022 is a reduction of 2.41 pence per share to 33.59 pence. [That’s quite a big drop!] The daily quoted price for BenevolentAI will be reflected in the daily indicative unaudited NAV as at 16 September 2022, to be announced today, and thereafter. The company recently fired Link Fund Solutions as AIFM and Northern Trust as fund administrator and depositary.

We also have results from JPMorgan Mid Cap and Supermarket Income REIT, plus news of new management for Tritax Eurobox, a potential equity raise and acquisition by LXI REIT and a large disposal by Landsec

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