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Annual results for NB Global Monthly Income as it begins wind down

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NB Global Monthly Income Fund, which has put forward proposals to be placed in managed wind down, has announced its annual results for the year ended 31 December 2022. In what was a challenging year for fixed income, NAV fell -10.1% while shares dropped -13.60%. While the company does not list a benchmark, returns for the ICE BofA Global High Yield Index were -11.39% for the same period.

Chairman Robert Dorey commented on the performance:

”It was a very challenging year for credit markets and for fixed income more broadly and this was reflected in the company’s results. In 2022, global credit and government bond markets experienced significant drawdowns as a result of rising interest rates, high inflation, the war in Ukraine, rising recession risk and spiking energy prices. Central banks and the U.S. Federal Reserve hiked interest rates to fight multi-year highs in inflation. The U.S. Fed raised policy rates at the fastest pace in recent history. In fact, it was twice as fast as in 1988/1989. CPI inflation in the U.S. and Europe reached 40-Year highs in many countries. The Bank of England and the European Central Bank also conducted aggressive rate hike campaigns. As rates started to impact the interest rate sensitive sectors, many investors started to anticipate a recession in 2023/2024. In fact, the probability of U.S. recession went from ~20% at the start of 2022 to just over 75% as of year-end 2022. 

“Clearly there was no recession in 2022 as U.S. real GDP growth remained positive on the year, but recession risk estimates for 2023 have remained relatively elevated. Adding to the market volatility last year was the invasion of Ukraine by Russia, which pushed up energy and other commodity prices impacting Europe more severely. However, the market’s major fear last year that Europe was facing a winter of energy shortages, which could have led to rationing for industry and power outages for consumers, was not realised. In fact, with gas usage lower than expected thanks to favourable weather conditions, energy prices in Europe have dropped dramatically from the 2022 highs. Going forward, we believe this reads positively not only for inflation, but for corporate earnings in general, especially in more cyclical areas of the market where demand disruption and exposure to energy input costs is highest. Even if top line growth is impacted by slower economic conditions, lower energy prices should help support margins.”

NBMI : Annual results for NB Global Monthly Income as it begins wind down

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