Information  X 
Enter a valid email address

CQS RIG Finance Fund LTD (RIG)

  Print      Mail a friend

Tuesday 14 October, 2008

CQS RIG Finance Fund LTD

Monthly Shareholder Fact Sheet


                         CQS RIG FINANCE FUND LIMITED                          

                        Monthly Shareholder Fact Sheet

14 October 2008

CQS Rig Finance Fund Limited (the "Company") a closed-ended investment company
incorporated in Guernsey, is pleased to announce that its Monthly Fact Sheet
for September 2008 is now available on the Company's website:

www.cqsrigfinance.com

The investment manager's commentary in the Fact Sheet is as follows:

September 2008 will without doubt go down in history as one of the most
volatile and challenging trading environments ever observed in financial
markets. Fannie Mae and Freddie Mac had to look for US government support,
Lehman Brothers filed for liquidation, Merrill Lynch was purchased by Bank of
America, Goldman Sachs and Morgan Stanley converted to commercial bank status,
AIG required an $85billion credit line from the US Treasury and Washington
Mutual failed and was seized by the US FDIC. Investor panic became intense and
real concerns swirled around many financial institutions and indeed the
financial system itself. As a result, many global regulators introduced
short-selling restrictions, primarily in financial names and globally
authorities introduced a range of bailout programmes designed to support the
financial system. In spite of these actions, stock markets fell dramatically
around the world during the month with the FTSE falling 13%, the Oslo Stock
Exchange (OSE) dropping 29%, the S&P 500 falling 9.1%, Eurostox down 9.7% and
the Nikkei down 13.9%. Credit markets were similarly affected, as credit
spreads widened and were volatile. Cash fixed income instruments fared even
worse in the face of recession/depression fears. The Merrill Lynch European
high yield index dropped 10.03 % in September. Simultaneously, pressure in the
banking system forced Libor spreads to widen dramatically.

The turmoil in financial markets accelerated during the first weeks of October.
From 1 October to 10 October, there was a further dramatic acceleration in
declines in many markets, with the FTSE having fallen 20%, the OSE 25% and the
Merrill Lynch European High Yield index declined a further 15%. At present,
governments and central banks around the world are taking actions to inject
liquidity to support the banking system, with recent announcements by the UK
Treasury that it has pledged £37bn for RBS, Lloyds and HBOS.

In such a market environment, the Company's portfolio continued to be impacted
by market liquidity factors, rather than fundamentals. The Company's NAV per
share declined 11.95p in September and, as reported to shareholders on October
8, fell a further estimated 4.07p at the close of business on 6 October. These
falls are not believed to be attributable to any specific news about the
positions held by the Company or the sector in general, but are a reflection of
a further significant markdown in high yield bond markets. Additionally, given
the largely US dollar denominated asset base and matching US dollar funding,
continued depreciation of the pound against the dollar generated an increase in
the Company's borrowings in sterling terms.  These factors combined to increase
the leverage in the portfolio, which the manager has taken steps to reduce.

With what appear to be dislocated markets, valuations do not now appear to be a
function of any fundamental analysis of the long term growth or otherwise in
the demand for oil, the need for infrastructure to support offshore oil and gas
exploration, but rather a function of the forced selling of assets into the
market by many market participants.

All market data is sourced from Bloomberg

For further information, please contact:


Lynette LeProvost                           Alastair Moreton
Secretary                               Director, Corporate Finance

Kleinwort Benson (Channel Islands) Arbuthnot Securities
Fund Services Limited                 

01481 727111 020 7012 2000