Blackstone Loan Financing (BGLF) has released its annual results for the 12 months ending 31 December 2023.
- BGLF reported a NAV total return of 10.39%, based on its published NAV, ending the period with a NAV of €0.9098 per share. BGLF also reports on an IFRS NAV basis, under which it returned a share price total return of 17.76%, with a NAV of €0.7250 per share. The difference between the published and IFRS NAV total return is the differing valuation bases, with the main driver being the discount rate used. In share price terms BGLF reported a loss of 2.12%, reflecting its widening discount.
- We remind readers that following the decision made at the EGM held on 15 September 2023, BGLF will implement a managed wind-down, and its new investment objective is to realise all existing assets in its portfolio in an orderly manner. The expected timeline for this is approximately 7 years, with capital returned to shareholders in a timely manner via redeeming multiple portions of its issued shares.
- For the 2023 financial year, BGLF paid total dividends of €0.09 per share. For 2024, it is targeting dividends of at least €0.09 per share.
- BGLF traded on a 35.2% discount, versus its published NAV, as of 31 December 2023, widening from the 26.8% it traded on a year prior. During the year, the board bought back 1.8m shares at a cost of €1.2m. On 22 May 2023, the board decided to cease further share buybacks
- As of 31 December 2023, the managers comment that BGLF remained defensively positioned with a portfolio of more than 650 loan issuers, diversified across 28 sectors and 30 countries. The portfolio was concentrated around B1-B2 rated issuers and holds 5.6% Caa rated assets, which is broadly flat from the start of the year. Given that it is now being wound up, the managers will make no further investments, and will instead seek to find optimal and commercially prudent times to redeem their investments.
Steven Wilderspin, BGLF’s char, commented:
“Markets recovered from a weak start and macroeconomic headwinds to record a strong year of performance across most asset classes in 2023. Rate volatility was a persistent theme throughout the year, as central banks continued to aggressively tighten policy, before eventually pausing during the second half. The rate volatility led to periods of market weakness through the year, including during March’s regional banking stress. Against this backdrop, resilient economic data and most corporate fundamentals offered hope of a soft landing in the near future, fueling a late year rally across markets.
“The S&P 500 ended the year at a near-record high, having gained 24% over the course of 2023. Credit markets also benefitted to a slightly lesser extent and loans, which are a natural interest rate and inflation hedge due to their floating rate nature, reversed their 2022 losses to record their best year since 2009.
“Looking ahead to 2024, we believe that floating rate loans and CLOs are likely to remain attractive asset classes, even if central banks pivot, given historically elevated all-in yields, robust corporate balance sheets and default rates remaining within historical averages. We continue to expect an ongoing bifurcation between issuers that are well positioned for slower growth, against those that are more at-risk of cyclical demand and consumer spending. As in any economic cycle, we believe that individual credit selection will be a key driver to performance throughout the year.”