Alcentra European Floating Rate Income Fund Limited
Portfolio Update
The best performing loans in the portfolio were Gala (+3.4%) and Technicolor (+3.2%) which have both been reporting decent results and also announcing deleveraging events. Other good performers included some of the High Yield credits that are in the bond bucket. Several of those credits were up over 2% as the market rallied at the end of the month.
There were no significant under-performers over the period.
Market Commentary
The European leveraged loan market had a positive month in July, with the weighted average bid of the S&P European Leveraged Loan Index ("ELLI") rising from 87.13 to 88.19 over the period.
Once again, the backdrop was continued nervousness around peripheral sovereign debt, followed by intense speculation around central bank support for the Eurozone. Financial markets have remained volatile as a result. But at the end of the month most commentators were forecasting more decisive action and markets rallied over the last few days.
Given all the continuing volatility, the robust performance of loans throughout the course of the year is encouraging. The ELLI has returned 7% for the year to date.
One additional piece of good news for loan investors is that the contractual returns continue to increase. S&P reported that the average institutional spread increased to Euribor +539bp over the past quarter. Recent new issue pricing includes deals for BSN Medical, which proved extremely popular and priced at E+500bp with a 100bp LIBOR floor, and Wood Mackenzie, which priced at L+575bp with a 100bp LIBOR floor. The improving trend for yield continues to illustrate the positive impact of banks and CLOs being unable to commit as much capital to the market as they used to. The market will be hoping for more, good quality, deal flow in September, as the remaining summer pipeline is starting to look thin.
ENDS
For further information please contact:
Alcentra Limited
Simon Perry +44 20 7367 5272
Factsheet
An accompanying factsheet which includes the information above as well as wider commentary on the investments made by the Fund can be found on the Fund's website www.aefrif.com.
Background Information
Alcentra European Floating Rate Income Fund Limited, a Guernsey Authorised Closed-Ended Collective Investment Scheme, regulated by the Guernsey Financial Services Commission and listed on the Main Market of the London Stock Exchange invests predominantly in senior secured loans and senior secured bonds issued by European corporates and targets returns (net of fees and expenses) of 7% to 10% per annum. The Fund targets a dividend yield of 5.5% on the £1.00 issue price of the initial offering of shares in the Fund for the first full year of investment, paid quarterly. In line with the Company's dividend objective, on 12th July 2012 the Fund declared its first interim dividend of 1.06p per ordinary share to be paid to shareholders on 17th August 2012.
Important Notices
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
The information contained in this document is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, the proposals referred to herein are tentative and are subject to verification, material updating, revision and amendment. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this document or on its completeness, accuracy or fairness. This document has not been approved by any competent regulatory authority.
This document is preliminary in nature and made available for information purposes only. This document does not contain any representations, does not constitute or form part of any solicitation of any offer to sell or invitation to purchase any securities of the Fund, nor shall it or any part of it or the fact of its distribution form the basis of or be relied upon in connection with any contract therefor, and does not constitute a recommendation regarding the securities of the Fund.
Alcentra Limited ("Alcentra") gives no undertaking to provide recipients of this document with access to any additional information, or to update this document or any additional information, or to correct any inaccuracies in it which may become apparent and the distribution of this document shall not be deemed to be any form of commitment on the part of Alcentra to proceed with any transaction.
This document includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements include, without limitation, statements typically containing words such as "believes", "considers", "intends", "expects", "anticipates", "targets", "estimates", "will", "may", or "should" and words of similar import. The forward-looking statements are based on Alcentra's beliefs, assumptions and expectations of future performance and market development, taking into account information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known or within Alcentra's control. If a change occurs, the Fund's business, financial condition, liquidity and results of operations may vary materially from those expressed in the forward-looking statements. Some of the factors that could cause the actual results to vary from those expressed in forward-looking statements include, but are not limited to: the rate at which the Fund deploys its capital in investment and the actual rates of return achieved by the Fund; Alcentra's ability to execute the Fund's investment strategy, including through the identification of a sufficient number of appropriate investments; the continuation of Alcentra as the Fund's investment manager; the Fund's financial condition and liquidity; changes in the values of or returns on investments that the Fund makes; changes in financial markets, interest rates or industry, general economic or political conditions; and the general volatility of the capital markets and the market price of the Fund's securities.
By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Forward-looking statements are not guarantees of future performance. Any forward-looking statements are only made as at the date of this document, and Alcentra neither intends nor assumes any obligation to update forward-looking statements included in this document, whether as a result of new information, future events, or otherwise, except as required by law or other applicable regulation. In light of these risks and uncertainties, the events described by any forward-looking statement might not occur. Alcentra qualifies any and all of the forward-looking statements by these cautionary factors. Please keep this cautionary note in mind while reading this document.
Nothing in this document should be construed as a profit or dividend forecast.
This document is issued by Alcentra Limited, which is regulated and authorised in the United Kingdom by the FSA and whose registered address is at 10 Gresham Street, London EC2V 7JD.