Source - RNS
RNS Number : 3735J
Alcentra European Fltng Rate Inc Fd
09 September 2016

Alcentra European Floating Rate Income Fund Limited


Market Commentary

The loan market remained well bid in August, in line with other credit markets. The Credit Suisse Western European Leveraged Loan Index ("CS WELLI") finished the month +0.88% and is now +4.37% for the year to date [1].

The primary market was quiet over the month as is typical in August, with the last of the pre-summer deals wrapping up before the market slow down. Ziggo did manage to place circa. €3.6 billion of term loans to refinance existing loans [2], but this was completed in drive-by fashion with no new paper available to the market.

With primary supply quiet, the secondary market saw continued strong bid for paper as we continue to see inflows into the asset class. In particular, the new CLOs formed in late July were active buyers of loans as they looked to ramp investment portfolios. This demand was supplemented by the announcement of several repayments, with Dell [3], Gala [4] and QuironSalaud [5] all having now entered into transactions which are expected to see the loans repaid in full.

Looking forward the market is looking for primary supply and we expect a number of deals to launch over the first half of September, with R&R's joint venture with Nestle's ice cream business expected to see a significant loan deal [6], and LBOs for Keter [7] and FlaktWoods/DencoHappel [8]also in the 
underwritten pipeline. With volatility associated with Brexit seemingly behind us, at least for now, M&A bankers are sounding relatively positive on the pipeline for the rest of the year. As ever the extent to which this potential pipeline comes to fruition will be important to keep spreads at attractive levels.

Portfolio Update

The best performing two assets were floating rate notes in the industrial and healthcare sectors, which both recovered from some weaker performance earlier in the year, increasing by 9.7% and 5.4% respectively. The third strongest performer was a retail loan which was the weakest performer in July, recovering 5.1% over the month. 

The weakest performer was a pharmaceutical business, which fell 3.1% over the month, after reporting some weaker numbers. The market reacted to some weaker performance in their North American business given some of the market trends in that geography, and the impact of FX on UK earnings following Brexit.




For further information please contact:

Alcentra Limited                                            

Simon Perry                            +44 20 7367 5272


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  


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 pence per £1.00 issue price of the initial offering of shares in the Fund for the first full year of investment, paid quarterly.


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.


This report is aimed at existing investors in the fund and has not been approved by any competent regulatory authority.

The information contained in this document is given as at the date of its publication (unless otherwise marked) and is based on past performance. Past performance is not a guide to future performance and the value of investments and investment value can go down as well as up. The future performance of the Fund will depend on numerous factors which are subject to uncertainty.  Including changes in market conditions and interest rates and exchange rates and in response to other economic, political or financial developments, investment return and principal value of your investment will fluctuate, so that when your investment is sold, the amount you receive could be less than what you originally invested. Past or current yields are not indicative of future yields.

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. Nothing in this document should be construed as a profit or dividend forecast.

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 the beliefs, assumptions and expectations of future performance and market development of Alcentra Limited ("Alcentra"), taking into account information currently available and made as at the date of this document. These 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. By their nature, forward-looking statements involve known and unknown risks and uncertainties. Forward-looking statements are not guarantees of future performance. 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.

An investment in the Fund is suitable only for investors who are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear losses (which may equal the whole amount invested) that may result from such an investment. An investment in the Fund should constitute part of a diversified investment portfolio. Accordingly, typical investors in the Fund are expected to be sophisticated and/or professional investors who understand the risks involved in investing in the Fund.

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 including in relation to any forward-looking statements. 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 is issued by Alcentra Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and whose registered address is at 10 Gresham Street, London EC2V 7JD

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[1] Credit Suisse Western European Leveraged Loan Index, 31st August 2016.

[2] S&P LCD News, "Ziggo allocates €2.6B and $1B TLBs; terms", 15th August 2016.

[3] S&P LCD, "Research Update: Dell Technologies Inc. Rated 'BB+'; Outlook Stable; Dell Inc. 'BB+' Rating  Withdrawn At The Company's Request", 7th September 2016.

[4] Bloomberg News, "Ladbrokes/Coral CMA Statement as Expected, Analysts Say", 26th July 2016.

[5] Bloomberg News, "Ladbrokes/Coral CMA Statement as Expected, Analysts Say", 26th July 2016.

[6] S&P LCD News, "R&R Ice Cream launches €1.02B of senior secured facilities", 8th September 2016.

[7] S&P LCD News, "R&R Ice Cream launches €1.02B of senior secured facilities", 8th September 2016.

[8] S&P LCD, "DencoHappel, Flakt Woods merger debt full MLA line-up", 6th September 2016.

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