Volta Finance Restricted (VTA / VTAS) – January 2021 month-to-month report
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR PART, IN OR INTO THE UNITED STATES
Guernsey, 9 February 2021
AXA IM has revealed the Volta Finance Restricted (the “Firm” or “Volta Finance” or “Volta”) month-to-month report for January. The total report is hooked up to this launch and will likely be obtainable on Volta’s web site shortly (www.voltafinance.com).
PERFORMANCE and PORTFOLIO ACTIVITY
In keeping with the second half of 2020, 2021 is beginning nicely for Volta with a January efficiency at +3.9%. Though most fairness markets have been hesitating between the optimistic however restricted progress when it comes to vaccination and the resurgence of the Covid-19 pandemic with its new variants, CLO markets have been persevering with to carry out nicely primarily based on extra optimistic market views.
For instance, in December, Moody’s upgraded 38 US CLO debt tranches and placed on look ahead to potential improve 188 extra. Fitch introduced in January that it could take into account optimistic revisions within the coming weeks or months following an general evaluation of the results of the Covid-19 disaster. Round year-end, new forecasts for default charges for the US and European mortgage markets have been revealed they usually have been once more revised downward. Though we’re acutely aware that this default cycle is much from over (we nonetheless anticipate defaults in relation to the pandemic to unfold a minimum of to the top of 2022), default charges might be anticipated to be within the space of three to 4% per 12 months. This degree is clearly manageable for CLO managers. Within the US, for the third consecutive month, we noticed a lower of the trailing 12-month default charge measure to three.4% (2.1% in Europe).
As a consequence, Volta’s January efficiency was pushed by its CLO buckets. The month-to-month asset class performances** have been in euro: +-1.2% for Financial institution Steadiness Sheet transactions, +5.9% for CLO fairness tranches; +4.1% for CLO Debt; +0.7% for Money Company Credit score offers (this bucket includes funds which have a one-month delay in publishing their NAV); and +0.8% for ABS.
For months now we have been highlighting that one consequence of the unfold compression on CLO debt is to open the door for CLO refinancing and reset to scale back the typical price of debt that constitutes the embedded leverage for CLO fairness positions. As of the top of January 2021, the overall price of debt for CLOs is at its lowest degree for the final 2 years and, for Volta, now we have began the method of refinancing or resetting some CLOs the place we management the fairness tranche. Combining US and European CLO markets, January 2021 was essentially the most lively January month in current reminiscence for CLO Refi and Reset exercise and we anticipate the total 12 months to stay very lively.
When it comes to money flows, January was a stable month for Volta. Curiosity and coupons obtained totaled the equal of €7.6m. On a 6-month rolling foundation, Volta obtained the equal of €20.4m to the top of January, representing a 16.1% annualised money move yield, primarily based on the top January NAV (even taking into consideration the rise in NAV). We anticipate this earnings to extend within the coming months.
In January we bought two just lately issued European CLO fairness positions within the secondary marketplace for a complete of €6.8m. On common and below commonplace assumptions, the projected yield of those purchases was near 10.5 (not together with potential upside within the case of Refi/Reset).
This mixture of advantageous elements for our CLO Fairness positions, which account now for a complete of 65% of the NAV, alongside the chance of additional unfold compression in CLO Debt and different positions signifies that the outlook for 2021 and past is favorable for Volta. There’ll, little doubt, be ongoing bouts of volatility in markets however we’re optimistic that the NAV ought to attain €7.00 per share in some unspecified time in the future in 2021 after which to €7.50 per share within the medium time period. This, mixed with an estimate dividend shut to eight% of NAV represents a sexy return stream particularly when contemplating the low cost to the NAV at which the shares are nonetheless buying and selling.
As on the finish of January 2021, Volta’s NAV was €253.5m or €6.93 per share.
The month-end obtainable money place was €10.3m.
*It ought to be famous that roughly 3.0% of Volta’s GAV includes investments for which the related NAVs as on the month-end date are usually obtainable solely after Volta’s NAV has already been revealed. Volta’s coverage is to publish its NAV on as well timed a foundation as attainable to offer shareholders with Volta’s appropriately up-to-date NAV data. Consequently, such investments are valued utilizing essentially the most just lately obtainable NAV for every fund or quoted value for such subordinated observe. Probably the most just lately obtainable fund NAV or quoted value was for 1.9% as at 31 December 2020 and 1.1% as at 30 September 2020.
** “performances” of asset lessons are calculated because the Dietz-performance of the belongings in every bucket, taking into consideration the Mark-to-Market of the belongings at interval ends, funds obtained from the belongings over the interval, and ignoring adjustments in cross-currency charges. However, some residual foreign money results might influence the mixture worth of the portfolio when aggregating every bucket.
For the Funding Supervisor
AXA Funding Managers Paris
+33 (0) 1 44 45 84 47
Firm Secretary and Administrator
BNP Paribas Securities Providers S.C.A, Guernsey Department
+44 (0) 1481 750 853
Cenkos Securities plc
+44 (0) 20 7397 8900
ABOUT VOLTA FINANCE LIMITED
Volta Finance Restricted is integrated in Guernsey below The Corporations (Guernsey) Legislation, 2008 (as amended) and listed on Euronext Amsterdam and the London Inventory Trade’s Primary Marketplace for listed securities. Volta’s dwelling member state for the needs of the EU Transparency Directive is the Netherlands. As such, Volta is topic to regulation and supervision by the AFM, being the regulator for monetary markets within the Netherlands.
Volta’s funding targets are to protect capital throughout the credit score cycle and to offer a steady stream of earnings to its shareholders via dividends. Volta seeks to achieve its funding targets predominantly via diversified investments in structured finance belongings. The belongings that the Firm might spend money on both straight or not directly embody, however should not restricted to: company credit; sovereign and quasi-sovereign debt; residential mortgage loans; and, car loans. The Firm’s method to funding is thru autos and preparations that primarily present leveraged publicity to portfolios of such underlying belongings. The Firm has appointed AXA Funding Managers Paris an funding administration firm with a division specialised in structured credit score, for the funding administration of all its belongings.
ABOUT AXA INVESTMENT MANAGERS
AXA Funding Managers (AXA IM) is a multi-expert asset administration firm throughout the AXA Group, a worldwide chief in monetary safety and wealth administration. AXA IM is likely one of the largest European-based asset managers with 753 funding professionals and €801 billion in belongings below administration as of the top of April 2020.
This press launch is revealed by AXA Funding Managers Paris (“AXA IM”), in its capability as different funding fund supervisor (throughout the which means of Directive 2011/61/EU, the “AIFM Directive”) of Volta Finance Restricted (the “Volta Finance”) whose portfolio is managed by AXA IM.
This press launch is for data solely and doesn’t represent an invite or inducement to accumulate shares in Volta Finance. Its circulation could also be prohibited in sure jurisdictions and no recipient might flow into copies of this doc in breach of such limitations or restrictions. This doc isn’t a proposal on the market of the securities referred to herein in the US or to individuals who’re “U.S. individuals” for functions of Regulation S below the U.S. Securities Act of 1933, as amended (the “Securities Act”), or in any other case in circumstances the place such provide could be restricted by relevant legislation. Such securities will not be offered in the US absent registration or an exemption from registration from the Securities Act. Volta Finance doesn’t intend to register any portion of the provide of such securities in the US or to conduct a public providing of such securities in the US.
This communication is just being distributed to and is just directed at (i) individuals who’re outdoors the UK or (ii) funding professionals falling inside Article 19(5) of the Monetary Providers and Markets Act 2000 (Monetary Promotion) Order 2005 (the “Order”) or (iii) excessive web value corporations, and different individuals to whom it could lawfully be communicated, falling inside Article 49(2)(a) to (d) of the Order (all such individuals collectively being known as “related individuals”). The securities referred to herein are solely obtainable to, and any invitation, provide or settlement to subscribe, buy or in any other case purchase such securities will likely be engaged in solely with, related individuals. Any one who isn’t a related particular person mustn’t act or depend on this doc or any of its contents. Previous efficiency can’t be relied on as a information to future efficiency.
This press launch comprises statements which can be, or might deemed to be, “forward-looking statements”. These forward-looking statements might be recognized by means of forward-looking terminology, together with the phrases “believes”, “anticipated”, “expects”, “intends”, “is/are anticipated”, “might”, “will” or “ought to”. They embody the statements relating to the extent of the dividend, the present market context and its influence on the long-term return of Volta Finance’s investments. By their nature, forward-looking statements contain dangers and uncertainties and readers are cautioned that any such forward-looking statements should not ensures of future efficiency. Volta Finance’s precise outcomes, portfolio composition and efficiency might differ materially from the impression created by the forward-looking statements. AXA IM doesn’t undertake any obligation to publicly replace or revise forward-looking statements.
Any goal data is predicated on sure assumptions as to future occasions which can not show to be realised. Because of the uncertainty surrounding these future occasions, the targets should not supposed to be and shouldn’t be considered income or earnings or some other sort of forecasts. There might be no assurance that any of those targets will likely be achieved. As well as, no assurance might be provided that the funding goal will likely be achieved.
The figures supplied that relate to previous months or years and previous efficiency can’t be relied on as a information to future efficiency or construed as a dependable indicator as to future efficiency. All through this evaluation, the quotation of particular trades or methods is meant as an instance a number of the funding methodologies and philosophies of Volta Finance, as carried out by AXA IM. The historic success or AXA IM’s perception sooner or later success, of any of those trades or methods isn’t indicative of, and has no bearing on, future outcomes.
The valuation of monetary belongings can range considerably from the costs that the AXA IM might receive if it sought to liquidate the positions on behalf of the Volta Finance on account of market circumstances and normal financial surroundings. Such valuations don’t represent a equity or comparable opinion and shouldn’t be considered such.
Editor: AXA INVESTMENT MANAGERS PARIS, an organization integrated below the legal guidelines of France, having its registered workplace positioned at Tour Majunga, 6, Place de la Pyramide – 92800 Puteaux. AXA IMP is allowed by the Autorité des Marchés Financiers below registration quantity GP92008 as a substitute funding fund supervisor throughout the which means of the AIFM Directive.