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Guernsey, 12 October 2021
PERFORMANCE and PORTFOLIO ACTIVITY
September’s performance, including the €0.14 dividend per share paid at the end of September, was outstanding at 1.9% relative to the negative performance for most equity markets. The year-to-date total return of the company is 15.0%.
This recently observed uncorrelated performance may result from being predominantly invested in floating-rate instruments (corporate loans through CLOs) and having a relatively short duration. Noting that this negative correlation may be temporary.
With ongoing cash flows continuing at a pace close to 20% (annualized), Volta's strategy is expected to differ from investments like equity strategies (especially growth stocks) that may be more sensitive to long-term interest rates. In this way, Volta looks like a perfect complement to classic equity exposure, with a performance that exhibits less dependence on long-term dividend growth and profitability and more on short to medium-term company solvency.
At the end of September, the 12-month default rate was at 0.5% for US loans and 0.8% for European loans. Companies can more easily refinance their debt and M&A activity is frequently providing an exit strategy to some of the stocks that suffered the most from the Covid crisis. Whatever the exit strategy being pursued so far, many loans found a way to refinance and the maturity wall is being extended towards 2027-2028, reducing significantly the probability of default for the coming few years.
Turning to the details, the monthly asset class performances** were: +0.8% for Bank Balance Sheet transactions, +2.1% for CLO equity tranches; +0.2% for CLO debt; +0.3% for Cash Corporate Credit and ABS (together representing 3.0% of NAV). In September, USD appreciation against Euro contributed +0.8% to the overall performance
As usual, September is a relatively low volume month in terms of interest and coupons with the currency equivalent of €1.3m being received. On a 6-month rolling basis, Volta had received the currency equivalent of €26.5m to the end of September, representing a 20.0% annualised cash flow yield, based on the end of the month NAV.
In September, Volta had a €1m BB tranche called and made no new investment. As at the end of September Volta held nearly €12m of cash available for re-investment. The pipeline in the primary market for CLO issuance, both in the US and in
As at the end of
*It should be noted that approximately 8.0% of Volta’s GAV comprises investments for which the relevant NAVs as at the month-end date are normally available only after Volta’s NAV has already been published. Volta’s policy is to publish its NAV on as timely a basis as possible to provide shareholders with Volta’s appropriately up-to-date NAV information. Consequently, such investments are valued using the most recently available NAV for each fund or quoted price for such subordinated notes. The most recently available fund NAV or quoted price was 1.7% as at 31 August 2021, 5.5% as at
** “performances” of asset classes are calculated as the Dietz-performance of the assets in each bucket, taking into account the Mark-to-Market of the assets at period ends, payments received from the assets over the period, and ignoring changes in cross-currency rates. Nevertheless, some residual currency effects could impact the aggregate value of the portfolio when aggregating each bucket.
CONTACTS
For the Investment Manager
serge.demay@axa-im.com
+33 (0) 1 44 45 84 47
Company Secretary and Administrator
BNP Paribas Securities Services S.C.A, Guernsey Branch
guernsey.bp2s.volta.cosec@bnpparibas.com
+44 (0) 1481 750 853
Corporate Broker
Cenkos Securities plc
+44 (0) 20 7397 8900
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ABOUT
Volta’s investment objectives are to preserve capital across the credit cycle and to provide a stable stream of income to its shareholders through dividends. Volta seeks to attain its investment objectives predominantly through diversified investments in structured finance assets. The assets that the Company may invest in either directly or indirectly include, but are not limited to: corporate credits; sovereign and quasi-sovereign debt; residential mortgage loans; and, automobile loans. The Company’s approach to investment is through vehicles and arrangements that essentially provide leveraged exposure to portfolios of such underlying assets. The Company has appointed
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ABOUT
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This press release is published by
This press release is for information only and does not constitute an invitation or inducement to acquire shares in
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This communication is only being distributed to and is only directed at (i) persons who are outside the
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This press release contains statements that are, or may deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "anticipated", "expects", "intends", "is/are expected", "may", "will" or "should". They include the statements regarding the level of the dividend, the current market context and its impact on the long-term return of Volta Finance's investments. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance.
Any target information is based on certain assumptions as to future events which may not prove to be realised. Due to the uncertainty surrounding these future events, the targets are not intended to be and should not be regarded as profits or earnings or any other type of forecasts. There can be no assurance that any of these targets will be achieved. In addition, no assurance can be given that the investment objective will be achieved.
The figures provided that relate to past months or years and past performance cannot be relied on as a guide to future performance or construed as a reliable indicator as to future performance. Throughout this review, the citation of specific trades or strategies is intended to illustrate some of the investment methodologies and philosophies of
The valuation of financial assets can vary significantly from the prices that the AXA IM could obtain if it sought to liquidate the positions on behalf of the
Editor:
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Attachment
- Volta - September Monthly Report
© OMX, source