NB Global Floating Rate Income Fund, the FTSE 250-listed, closed-ended investment company, said its portfolio at the end of March had 11.32 per cent allocated to bonds out of the maximum 20 percent allowed.
The portfolio was split as follows; 92.65% in US dollars, 4.1% in Euros, 2.95% in British pounds, and 0.3% in cash.
Loan markets got the year off to a positive start in both the US and Europe, with new issuance reaching a record £150bn of loans, compared to $90bn in the same period last year, the group said.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, new mergers and acquisitions issuance has remained "limited", it warned, meaning the majority of issuance has been from existing borrowers undertaking opportunistic refinancings, something which has put pressure on yields.
"The record new issuance we have seen has been of varying quality but has meant we can be even more selective in our credit picking which we believe is a strong position to be in," the company said in a statement.
"During the quarter we have started to see a pick up in quality issuance in Europe with Virgin Media and Kion both returning to market with fixed rate offerings. We participated in both of these and, accordingly, our exposure to the region increased to 7.1% from 4.6% at the year end. As we have maintained Europe will always provide good names to invest in but we will remain selective.
"As the majority of the new issuance has been refinancing led, we have seen a few more relative value opportunities in secured fixed rate bonds, including the ones mentioned above, and so our bond allocation has increased from 6.5% at the end of 2012 to 11.3%. Our maximum bond exposure allowable is 20% of net asset value."
Looking ahead, the group has a positive outlook for the bank loan market, and is expecting more issuance to come out of Europe during 2013 and for Central Bank intervention to continue for the remainder of the year.
"We reaffirm our view that the largest contributor to performance in 2013 will be coupon payments," it added.
NR
Investors should buy into the nuclear power renaissance – Merryn Somerset Webb
ETFs are getting active - is your portfolio ready?
