Alcentra European Fltng Rate Inc Fd Portfolio Update (8900Y)

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RNS Number : 8900Y

Alcentra European Fltng Rate Inc Fd

11 December 2017

Alcentra European Floating Rate Income Fund Limited

Market Commentary

November was an interesting month for credit markets, with some real weakness in High Yield bonds early in the month and then a more stable second half that saw High Yield bonds recover to a modest -0.30% loss for the month as a whole[1]. Much of this was down to weakness in Telecoms names in the period, following weaker results in Wind[2] and Altice[3] and the latter also announcing a series of management changes. But other credits in the sector were also under pressure, including SFR[4]. As you would expect, a more volatile reaction was seen in the equity and High Yield markets, whereas the loans in both borrowers were more stable. At one point the Altice bonds had lost 9.25%, and the equity was down over 50%, whereas the senior secured loans were down about a point(3) .

High Yield bonds had close to EUR1.6 billion of outflows over the second half of the month[5].

Overall loan performance for November was muted but still positive, with demand remaining consistent and new CLOs continuing to price. The Credit Suisse Western European Leveraged Loan Index ("CS WELLI") was up +0.07%, bringing year to date returns to +3.29%[6].

Year to date new issue loan volume hit EUR115 billion, up 72% on the prior year[7]. A meaningful percentage of this was refinancing activity (EUR52 billion) which can see borrowers extracting lower pricing for their debt, but it is still encouraging to see a meaningful pick up in real new deal supply. Nets[8], Paysafe, Ceramtec, Refresco, Picard and TMF all launched new facilities in excess of EUR1 billion7.

Portfolio Update

The majority of the loans in the portfolio were stable over the period, with the weakest performers being a small number of bond positions that were down 2% to 4%. The Fund did not own any of the junior debt in the Telecoms credits that saw much more volatility. The top performers were loans and floating rate notes that were up between 1.3% and 3%.

ENDS.

For further information please contact:

Alcentra Limited

   Simon Perry                            [phone] 

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 pence per GBP1.00 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 160 Queen Victoria Street, London, United Kingdom, EC4V 4LA.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally.

(c) 2017 The Bank of New York Mellon Corporation. All rights reserved. Trademarks and logos belong to their respective owners.

[1] S&P LCD News, Bond prices drop as decliners continue to dominate, 17 November 2017

[2] S&P LCD News, Altice bonds steady on asset-disposal news, 1 December 2017

[3] S&P LCD News, Altice bonds in freefall amid major management reshuffle, 10 November 2017

[4] S&P LCD News, Topical: HY suffers volatility bout, but primary unscathed, 30 November 2017

[5] S&P LCD News, European HY funds record EUR806M outflow, 20 November 2017

[6] Credit Suisse Western European Leveraged Loan Index, hedged to EUR, 30 November 2017

[7] S&P LCD European Weekly, 1 December 2017

[8] S&P LCD News, Nets allocates EUR2.16B buyout financing; terms, 29 November 2017

This information is provided by RNS

The company news service from the London Stock Exchange

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December 11, 2017 02:00 ET (07:00 GMT)