Volta Finance Share Discussion Threads

[deadly] 26/8/2016 09:48

Just very difficult to buy any of these as liquidity is low.

[dendria] 26/8/2016 08:53

I was going to enquire when the quarterly dividends were to start but here it is...

€0.15 dividend declared for Sep 16: ex-div 8 Sep 2016; paid 27 Sep 2016.

[davebowler] 22/8/2016 09:36

Liberum;
CLO funds
Strong July for CLO funds

Event
Carador Income Fund and Blackstone/GSO Loan Financing have both published NAV reports for July with monthly gains of +6.5% and +0.3% respectively. These gains follow large monthly uplifts for Fair Oaks Income Fund (+13.2%) and Volta Finance (+5.5%) over the same period.



CLOs experienced a positive month with junior post-crisis CLO positions rising sharply. BB tranches returned 10.6% and B-rated tranches rose 8.4% as spreads tightened during the month. The JP Morgan CLO Index of post-crisis equity tranches returned 3.2% during the month.

The CLO market is benefiting from positive sentiment in credit markets as evidenced by rising loan prices and an improved outlook from market forecasters. The default rate over the past year in the US market is 2.3% (0.89% excluding energy) and forecasters have raised expectations of CLO issuance in 2016 in Europe and the US. Primary markets have benefited from spread compression as demonstrated by Blackstone GSO's Griffith Park CLO with AAA notes priced at Eurobor +1.23% (27bps tighter than the level achiebved on the Elm Park CLO which closed in April).

Liberum view
We regard the CLO sector as one of the most attractive on a relative basis in our alternatives universe. There is potential for further yield compression in the short-to-medium term and the underlying cash return from CLOs has been strong as defaults remain below historic levels. This is the ultimate driver of returns as CLOs benefit from a term leverage structure. The CLO funds trade on an average 3.7% discount to NAV and offer a 9.7% prospective dividend yield.

[davebowler] 19/8/2016 08:33

Liberum;
CLOs

Volta Finance
5.5% NAV growth on market rally

Event
Volta's NAV per share at the end of July was €7.87 per share, 5.5% higher than the June NAV per share due to improved credit and equity markets in the month after the Brexit vote. The NAV growth mainly derived from favorable mark to market valuation changes of the CLO debt tranches by 8% and the CLO equity tranches by 4.5%. The USD CLO tranches, especially from 2.0 deals, led the market rally in July.

Volta generated €4.9m in interest and coupons and purchased four assets for a total of €10.6m, yielding an average of approximately 10.5%, based on standard market assumptions. The company sold four positions of €8m with a projected yield of about 4.5%. Volta's cash position at the end of July totaled €7.6m.

Liberum view
Volta continues to improve its portfolio and rotate out older positions with lower yields. The company is trading at 11.8% discount to its July NAV with a current yield of 8.9%.

[davebowler] 15/8/2016 09:33

Liberum;
Alternative Funds - Weekly Data and Trends

CLOs were the best-performing sub sector with a 3.6% uplift thanks largely to Fair Oaks Income Fund's 13% NAV increase in July. We expect Volta and Carador will also announce material NAV gains for July in the coming week. Blackstone/GSO Loan Financing (BGLF) is unlikely to benefit as much as the portfolio is valued using an intrinsic valuation model based on future cash flows and does not use secondary market information such as third party broker quotes. As a result, BGLF's NAV outperformed during the market correction in the first half of the year and is now likely to underperform on a relative basis as the market recovers.

[yieldsearch] 12/8/2016 09:36

As an income play, it make all sense to pay quarterly and i never really understood why they have not done that earlierInvestors can also elect to have payment in gbp

[skyship] 12/8/2016 08:15

YS - thnx. Seems as though they rather misread the fact that when rates do finally move up they do so from a very low base!

[dendria] 12/8/2016 07:32

It gets better - we're going to quarterly divs:

'Volta is today pleased to announce a change to the expected frequency of the dividend distributions from semi-annual to quarterly. The Company intends to make dividend distributions in March, June, September and December.'

[yieldsearch] 12/8/2016 00:19

Skyship re your 137, pls see below. Since i posted this, Fair nav went up like 10pc! so may be an article to scare ppl like me..

Rising benchmark raises borrowing costs for companies

Higher three-month dollar Libor also affects vast universe of collateralised loan obligations
by: Joe Rennison in London and Eric Platt in New York

Companies face their first increase in borrowing costs since the financial crisis as incoming rules for prime money market funds spur higher short- term interest rates.
Payments on floating rate loans issued by dozens of companies are set to increase asUS dollar Libor for a period of three months has risen above 0.75 per cent.
This level, alongside interest rate floors set at 1 per cent, is used on more than nine-in-ten of the loans that comprise the $880bn S&P/LSTA Leveraged Loan Index.
Analysts and investors expect Libor to continue climbing as new rules governingprime money market funds are fully implemented in October. That has reduced participation in commercial paper, pushing up short-term borrowing rates including Libor.
“As Libor crosses these floors, the amount of interest the companies have to pay is going to creep up,” said Meredith Coffey at the industry association LSTA.
The increase in Libor past 0.75 per cent will affect loans issued by Valeant Pharmaceuticals, office supply retailer Staples and fragrance and cosmetics groupCoty, which will reset higher when quarterly interest payments are due in the coming months. The loans include a floating rate component — in this case Libor — and a spread to compensate investors for the underlying credit risk.
“[Rates] will start floating after a very long time and it will be interesting to see how it shakes out,” said Neha Khoda, a credit strategist with Bank of America Merrill Lynch. “For some companies it won’t matter, it will be a drop in the ocean. But for some with limited cash flows, it will be significant.”
The rise will also affect the vast universe of collateralised loan obligations — bonds backed by leveraged loans. For CLO investors in the lowest tranches, known as the “equity” slice of such deals, the impact can be significant.
Equity investors typically receive all income left over after other, more senior, holders in the CLO have been paid. In exchange for the potential upside, these holders must tolerate the greatest risk of loss should the underlying loans default.
As Libor has slowly crept higher, the income that CLO portfolios have collected on corporate loans with floors has stagnated. As the Libor rate paid to senior tranche holders has increased, that has left less to pass on to equity holders.
“The increase in Libor is a net negative for equity holders because it erodes the yield pick-up,” said Oliver Wriedt at CIFC. “The rate has to get above 1 per cent before that negative effect is neutralised.”

[davebowler] 10/8/2016 14:52

There were two defaults in the US CLO Index during the month although none of Fair Oaks' CLO equity positions had exposure to these names. Cumulative default rates in the portfolio are just 0.09% and have materially outperformed projected defaults since inception

Liberum view
The manager’s timing has proven to be opportune in relation to the secondary mezzanine investments which were mostly completed during March and April. These positions have re-rated significantly and still offer considerable upside. The JPM CLO B-rated Index is up 28% from its 2016 lows although it is still only flat YTD. Fair Oak's 12.9% NAV return in 2016 to date compares to a 0.1% return for the CLO B-rated Index.


July's substantial return and the ongoing credit performance of the portfolio should help to cement Fair Oak's premium relative rating to the sector. The shares currently trade on a 4.4% discount to NAV and offer an 11.4% dividend yield.

[skyship] 10/8/2016 10:04

YS - thnx for that, but is it possible to post the Summary para or a few salient individual paras - unable to access as the FT is a sub site these days...

[davebowler] 10/8/2016 10:02

FAIR commentary by Liberum;
Specialist Finance

Fair Oaks Income Fund
Stellar 13% NAV return in July

Event
Fair Oaks Income Fund has announced a stellar NAV uplift of 13.2% to $0.929 for the month of July. The NAV uplift was due to a combination of an improvement in pricing and strong cash flow receipts during the month.

The junior CLO markets had one of the strongest months on record with the JP Morgan CLO B-rated Index up 8.4%. The company's equity positions also repriced significantly and generated substantial cash distributions in the month. All CLO equity positions except one distributed cash-flows in July which were ahead of expectations ($18.1m actual vs. $17.0m expected).

[yieldsearch] 10/8/2016 00:42

FT article:

Rising benchmark raises borrowing costs for companies
Higher three-month dollar Libor also affects vast universe of collateralised loan obligations

Interesting article highlighting that CLO have benefited from libor floor on loans and with interest rate increase in the US, the benefit of this libor floor is reducing.
My understanding below, however may be completely wrong: CLO are libor based vehicle, asset (loans) are paying libor and a spread, and the clo notes are all libor based except the most junior piece, the equity, taking all excess cash
It seems that the loans have libor floor (at 1%), therefore when the libor rate were lower than 1pc, the assets were paying 1pc but the liabilities (clo notes) were using a lower libor, hence creating more excess cash for the most junior tranche, the equity. With the gearing in place, this may be material. With USD libor increasing it seems that this extra cash will potentially not available anymore.

Not sure what is/will be the impact on clo funds like Vta, Cifu, Fair, fair to say that it is most likely negative. Really based on their exposure to clo equity piece, and if this increasing interest rate environment was priced in the valuation of those assets.

[skyship] 01/8/2016 12:57

As ever - many thnx for yr post on the NBDG thread.

[skyship] 01/8/2016 10:16

DB - a favour - could you take a look and see if Liberum have issued a view post the Qtly Portfolio Update by NBDD, NBDX, NBDG - actually only interested in the last - NBDG. If so, could I ask you to post it on the NBDG thread...

[davebowler] 01/8/2016 09:31

Liberum;
Alternative Funds - Weekly Data and Trends

We will be publishing data on a weekly basis to help identify sector trends. We welcome feedback at [e-mail]

CLO funds dominate the list of the top 10 high-yielding funds. This is partly due to the inherent gearing within the investments but also reflects NAV (and share price) declines over the past year as CLO equity and mezzanine tranches were marked down. The underlying cash return from CLOs has been strong as defaults remain below historic levels and this is the ultimate driver of returns as CLOs benefit from a term leverage structure. We regard the CLO sector as one of the most attractive on a relative basis.

[davebowler] 21/7/2016 10:59

Liberum view
The CLO funds trade on an average 5.4% discount to NAV and offer a 10.4% prospective dividend yield. We believe this represents one of the more attractive sub-sectors in the alternative funds universe given relatively low default outlook for the market. Asset prices have continued to recover into July which should lead to further NAV growth in the short-term. Our favoured plays in the sector are Fair Oaks Income Fund and Volta Finance.

[davebowler] 24/6/2016 12:54

About 2/3 of its assets are in Euros and 1/3 in Dollars.

[davebowler] 22/6/2016 07:59

Liberum;
CLO Funds
Market recovery continues in May

Event
Three of the CLO funds (Carador, Volta Finance and Blackstone/GSO Loan Financing) released positive NAV updates this morning for May with Blackstone/GSO Loan Financing producing the highest return at +2.3%.

Figure 1: CLO NAV total return performance*


May-16
2016 YTD
12 months
Carador Income Fund
1.6%
0.6%
-12.9%
Fair Oaks Income Fund
-0.2%
0.5%
-3.7%
Volta Finance
1.3%
0.3%
-1.3%
Blackstone/GSO Loan Financing
2.3%
6.5%
9.5%


Source: Company data, Liberum *Assumes dividends are not reinvested



In the US loan market, the default rate moved up slightly to 2.26% although much of this is due to the energy and mining sectors. The default rate excluding these sectors was 0.94%. European loan spreads tightened in the month and there was a slight divergence in the US between the senior and junior tranches, as spreads tightened for the higher rated tranches but widened for the junior tranches.

Liberum view
On a headline level, Blackstone/GSO Loan Financing has delivered the strongest NAV performance over the past year. This is partly due to the company's valuation policy. The majority of the company's peers value their portfolios on the basis of independent broker quotes or independent pricing providers. BGLF's CLO securities are valued using an intrinsic valuation model (performed by a third party) based on future cash flows and do not use secondary market information such as third party broker quotes. In volatile markets with significant mark-to-market declines such as in Q4 2015 and Q1 2015, BGLF will outperform peers because of the smoothing effect the valuation policy will have on NAV.

The CLO funds trade on an average 4.7% discount to NAV (range is -10.4% discount for Volta to 1.4% premium for Fair Oaks). We attribute Fair Oaks' premium rating to the company's shareholder-friendly structure and strong underlying credit performance of the portfolio to date.

[skyship] 25/5/2016 08:49

Agreed - DB - thnx for the continued Liberum posts.

Here at VTA the rise from 650c bid to 680c bid is entirely currency related reflecting the move from EUR/GBP of 1.25 to the current 1.31.

Nevertheless, good to see the NAV recovery.

Seeing the same with the other debt funds, finally including NBDG - the one I believe to be the best value - offered at 65p v. the 74p NAV. They enter their redemption period after Mar'17. A comparison with the two earlier capital class payouts (NBDD & NBDX) suggests payouts will start quite quickly. A read through the Update of c10days ago suggests we could well be looking at a Gross Redemption Yield for NBDG of in excess of 12%pa.

Sp appears to be underwritten by the buybacks, as they are currently on a 12% NAV discount, compared to the target of 5%. They held off from aggressive buybacks during the Nov-Feb Mark-to-Market pricing slump across the sector.

[cerrito] 24/5/2016 18:37

davebowler: Thanks for these posts..appreciated by me