Portfolio Update - Global Shares

RNS Number : 2660H

NB Distressed Debt Invest. Fd. Ltd

16 May 2014

 



NB Distressed Debt Investment Fund Limited

Portfolio Update - Global Shares

NB Distressed Debt Investment Fund Limited ("NBDDIF") is a Guernsey-incorporated closed-ended investment company that launched in June 2010. NBDDIF's primary objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic stressed, distressed and special situation credit-related investments while seeking to limit downside risk.

NBDDIF owns holdings diversified across distressed, stressed and special situations investments, with a focus on senior debt backed by hard assets. The portfolio is managed by the Distressed Debt team at Neuberger Berman, which sits within what we believe is one of the largest and most experienced non-investment grade credit teams in the industry.

The New Global Share Class ("NBDG") was issued in March 2014 and aims to capture the growing opportunity in distressed debt globally.  NBDG is subject to an investment period ending on 31 March 2017, following which the assets will be placed into run-off.

The Global Shares are one of three classes of shares in NBDDIF. The other classes are the Ordinary Share Class and the Extended Life Share Class. The Ordinary Share Class is subject to an investment period which ended on 10 June 2013 and the Extended Life Share Class is subject to an investment period which will end on 31 March 2015.  Separate factsheets are produced for those classes.

Summary

We are pleased with the distressed market environment and the capital deployment to date. We see significant upside potential in the existing portfolio, which we expect to realise as we restructure and exit investments. We believe the pipeline of distressed debt opportunities remains robust in our sectors of interest.

Portfolio

As at 31 March 2014, we had deployed over 22% of NBDG's capital. NBDG had investments in nine names and in five different industries. The largest concentrations were in in the U.S. power generation and lodging & casino industries, while other industries included shipping, industrial equipment and chemicals. We believe that the level of deployment achieved in less than one month is indicative of the healthy opportunity set in distressed debt. Since quarter end we have added exposure to European hotel, shipping and infrastructure names as well as adding to existing positions.  As of April month-end, deployment had reached approximately 36% of NBDG NAV.

NBDG's NAV per share decreased 0.5% in the first quarter of 2014, to £0.9755 from £0.9800 per share. The first quarter NAV decrease was primarily generated by mark-to-market decreases on positions which had been recently acquired. NBDDIF positions are valued on the bid side immediately after acquisition, which was a key factor in the mark-to-market decrease in the quarter. We are working towards key restructuring milestones on existing investments, which we anticipate can ultimately result in profitable exits.

Market Update¹

We are experiencing an improving environment for distressed debt in our sectors of interest. We believe the pipeline of opportunities in real estate, transportation and energy debt is particularly compelling, both in the U.S. and Europe. EU banks in particular increased their disposal of European and U.S. loans and assets to €64 billion in 2013, versus €46 billion in 2012, €36 billion in 2011 and €11 billion in 2010. However, over €1 trillion of non-performing loans remain on EU bank's balance sheets. The ECB is scheduled to assume supervisory authority for all euro-area lenders later in 2014. We believe that an ECB-sponsored harmonization of NPL definitions across countries may facilitate further recognition and disposal of distressed loans. In the U.S. we continue to see a healthy pipeline of distressed assets in real estate, energy and other asset-intensive sectors.

Data as at March 31, 2014. Past performance is not indicative of future returns. All comments unless otherwise stated relate to NBDG.

1.         Source:  Data from PWC Market Update Report dated March 2014.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited                               [phone]

Damian Holland

Anji Stewart

Financial Dynamics                                                            [phone]

Neil Doyle            

Ed Berry

Laura Ewart

An accompanying factsheet on the information provided above can be found on the Company's website www.nbddif.com. 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.

 

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