Investment company NB Global Floating Rate Income Fund has achieved the double whammy of growing net assets while churning out the high dividends it was set up to yield.
In the six months to June 30th, the net asset value (NAV) total return per ordinary share increased by 3.23% from $0.9497 at the end of 2011 to $0.9804 per US dollar share, and by 2.96% from £0.9479 to £0.9760 per sterling share.
The value of the company's investments at the end of June stood at $668.2m, up from $647m at the end of 2011.
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As at 30th June, the shares had achieved the rare feat for an investment company of trading at a premium to NAV, both in US dollar (0.10%) and sterling (0.86%) terms.
"I am pleased to report that the share price has continued to trade at a premium to NAV for a large majority of the period," said William Frewen, NB Global's Chairman.
"I am also pleased to report that the investment manager, despite a difficult market environment, has been able to maintain its target net dividend yield of 5%. The investment manager expects to continue to declare dividends on a quarterly basis," Frewen added. The portfolio yield was 5.99% as at 30th June.
The company ended the half-year fully invested in 184 investments across 143 issuers, with a strong bias to US investments.
The credit quality of the portfolio remains in line with the investment manager's expectations, with 37.04% of the fund being invested in BA-rated investments, and 55.52% in B-rated investments.
Industry diversification remains a feature with the company invested across 31 industries, with no single one representing more than 13% of the portfolio. The company has made selective bond investments, which accounted for 11.56% of the portfolio at the half-way point of the year.
The new issue pipeline has remained robust in the US and continues to provide good investment opportunities, in the view of the fund's investment management firm, Neuberger Berman Europe. Current pricing remains attractive with BB-rated assets pricing in excess of 5.0% and single B above 7.0%.
"We expect our investment focus will remain in the US primary market, where we see a steady pipeline of new transactions with attractive pricing. The US pipeline currently stands at just over $15bn, the majority M&A [mergers & acquisitions] related, whilst Europe continues to disappoint at €1.0bn," Neuberger Berman Europe said.
"With the relative stability in the loan market since the Q1 [first quarter] rally, we feel that secondary market opportunities are limited, therefore we will continue our strategy of selling low current yielding assets that were bought at a discount, and reinvesting the proceeds in higher yielding new issues," the investment manager added.
JH
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