Alcentra European Floating Rate Income Fund Limited
March continued to see volatility in financial markets although loans were again largely unaffected. The Credit Suisse Western European Leveraged Loan Index ("CS WELLI") (hedged to GBP) returned +0.20% for the month, taking the return for the quarter to +1.14%.
European loan issuance was significantly lower in March than seen in January and February, although the strong start to the year has still left issuance slightly ahead of last year at €35.7bn year-to-date (versus €35.4bn for year-to-date 2017). However, the pipeline of larger M&A transactions has
continued to grow with underwritten financings expected to launch over the coming weeks for businesses such as TDC, Thomson Reuters Financial & Risk, Akzo Nobel Specialty Chemicals and MFG/MRH.
On the demand side CLO formation remained robust, although the combination of broader market volatility and significant supply has seen CLO liabilities move wider from the low print of 68bps seen for CLO AAAs in February. On the margin this should provide some upward pressure on loan spreads
to keep the CLO arbitrage working, although given the continued inflows from global investors on an unlevered basis we do not expect a significant change.
Within the Alcentra European Floating Rate Income Fund the top performing credit was up 1.38% with the market continuing to get increasingly comfortable with the profile of the underlying business which has recovered well since having some weakness in 2015/16 performance related to some customers in the Oil & Gas space. The worst performing position was an FRN holding (-3.42%) which saw some weaker trading levels due to the combination of general HY market sentiment and new issuance from the company.
For further information please contact:
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 www.aefrif.com.
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.
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.
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 Credit Suisse Western European Leveraged Loan Index, hedged to GBP, 30 March 2018
 S&P Global Market Intelligence, LCD European Playbook, 3 April 2018
 Bloomberg News, Europe CLO AAAs Back Up as Oversupply Halts Months of Tightening, 5 April 2018
This information is provided by RNS