Chenavari Toro Income Fund (TORO) has released its annual results for the year ending 30 September 2023:
- TORO reported a NAV total return of 11.25% for the year, and a negative share price total return of (4.27%). TORO’s NAV return exceeded the 10% target it sets itself.
- Gross performance contribution for the year can be broken down per strategy as follows: Direct Origination Strategy contributed 4.38%, Public ABS/CLOs contributed 8.44% and the performance of the Private Asset Backed Finance Strategy was 0.08% during the year.
- The largest change in TORO’s portfolio came from the 17% increase in its exposure to the Public ABS strategy. It was primarily funded by a fall in exposure to the Direct Origination Strategy.
- Over the year TORO’s share price fell by (16.42%), with its discount widening to 31.36%, compared to the 17.25% discount it traded on at the end of September 2022.
- A total dividend of 6.39p per share was declared for the year. TORO’s dividend yield of 12%, as of 30 September, was ahead of its annualised 10% dividend yield target. However its dividend payout has fallen when compared to the 6.97p paid in the previous financial year.
Frederic Hervouet, chairman, commented:
“In the next 12 to 24 months the Portfolio Manager expects the European leveraged loan market to witness further deterioration in credit quality, with further rating downgrades and pick up in default risk. The Portfolio Manager is therefore taking preventive action to minimise that risk. In line with this view our prospective gross returns have been reduced, taking into account a higher level of stress in our assumptions. Given the current market, we believe there will be significant opportunities to invest in European ABS and CLOs in the next few quarters. The Portfolio Managers have already been deploying capital in that space in what they believe are very attractive investment opportunities. The Board believes the Company still represents an attractive investment in European ABS and CLOs, including attractive risk
adjusted returns provided by the CLO retention, as well as the new Vertical Retention Financing Strategy. Additionally, the Dividend Policy, provides an attractive Dividend Play with over 14.4% dividend yield on the 30 September 2023 Share price. Importantly the Portfolio Manager’s large and increased shareholding in the Company ensures a strong alignment of interest with investors: The Portfolio Manager has reiterated their belief in the Company by continuously reinvesting in the Company since December 2020.”