NB Global MBnotthly iCNohmEFand LI amyouD
2021 ANNyouATHE REPORT
AudiyouD FinanciaI Syouayoumandnotyou
Forr the youar En/aandd 31 OfvsandMoandr 2021
Contents |
|
PAGE |
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COMPANY PRESENTATION |
|
Features |
2 |
business model |
4 |
Purpose and values |
4 |
Main activities and structure |
4 |
STRATEGIC REVIEW |
|
Financial Highlights |
14 |
Chairman’s statement |
15 |
Investment manager’s report |
17 |
Wallet Information |
20 |
Top 10 issuers |
20 |
Breakdown of the top 10 S&P sectors |
20 |
Key statistics |
20 |
Strategic report |
21 |
GOVERNANCE |
|
Directors |
27 |
Directors’ report |
28 |
Corporate Governance Report |
35 |
Report of the Audit and Risk Committee |
42 |
Management Engagement Committee Report |
46 |
Report of the Compensation and Appointments Committee |
48 |
Report on directors’ compensation |
50 |
Directors’ liability statement |
53 |
The independent auditor’s report |
54 |
FINANCIAL STATE |
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Statement of assets and liabilities |
60 |
Condensed table of investments |
61 |
Status of operations |
68 |
Statement of changes in net assets |
69 |
Cash flow statement |
70 |
Notes to the audited financial statements |
71 |
ANNEX |
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FUNDS 3.2 Disclosure of information to investors (unaudited) |
88 |
Alternative Performance Measures (APM) |
91 |
FURTHER INFORMATION |
|
Contact details |
93 |
Information to shareholders |
94 |
ANNUAL REPORT 2021 1 |
COMPANY OVERVIEW | Features
Features
NB Global Monthly Income Fund Limited (the “Company”)
The Company is a closed-ended investment company incorporated and registered in Guernsey on 10th March 2011 under company number 53155. The Company is governed by the provisions of the Companies Act (Guernsey) 2008 as amended (the “Act ”), and the Registered Collective Investment Schemes Rules and Guidelines 2021 issued by the Guernsey Financial Services Commission. It is a public limited company limited by shares and has been declared by the Guernsey Financial Services Commission as a registered closed-end collective investment scheme. On April 20, 2011, the Company was admitted to the official list of the UK Listing Authority with a premium listing on the main market of the London Stock Exchange (“LSE”).
Alternative Investment Fund Manager (“AIFM”) and Manager
Investment management services are provided to the Company by Neuberger Berman Investment Advisers LLC (the “AIFM”) and Neuberger Berman Europe Limited (the “Manager”), collectively the “Investment Manager”. The AIFM is responsible for the risk management and discretionary management of the Company’s portfolio and the Manager provides certain administrative services to the Company.
Investment objective
The investment objective of the Company is to provide shareholders of the Company with consistent levels of monthly income, while maintaining or increasing the net asset value (“NAV”) per share over time. Details of the Company’s investment objective and policy are available on the Company’s website,www.nbgmif.com.
Investment policy and strategy
To pursue its investment objective, the Company will invest in credit assets with the following target portfolio allocations: (i) 50-70% in traditional credit, i.e. high yield bonds, floating rate loans and high quality corporate bonds; and (ii) 30-50% in alternative credits, i.e. “special situations” (generally consisting of negotiable but less liquid debt securities, such as tranches of stressed credit and CLO debt), the mezzanine debt, “club” loan transactions (being syndicated loan opportunities presented through the Company’s or the Investment Manager’s relationship with loan arrangers and/or borrowers) and private corporate loans issued directly to borrowers. Investments in alternative credit will not represent more than 50% of the net asset value at the time of investment.
The Company’s investments will be issued in US dollars, pounds sterling and euros by corporations, partnerships and other commercial issuers based primarily in North America, the UK and Europe. At the time of investment, these loans, bonds and other debt securities will often be of lower quality.
The Company generally expects to hold the majority of its assets directly, but where the Investment Manager deems it appropriate, the Company may gain investment exposure to loans, bonds and other debt securities through investments in other collective investment vehicles. The Company will at no time invest more than 15% of its total assets in other listed closed-end investment funds.
Capital structure
As of December 31, 2021, the share capital of the Company consisted of 323,268,152 ordinary shares in pounds sterling (“NBMI”) without par value (of which 76,083,114 were treasury shares).
Features | COMPANY PRESENTATION
Non-Traditional Joint Investments
The Company currently conducts its affairs in such a way that shares issued by the Company may be recommended by independent financial advisers to ordinary retail investors in accordance with the rules of the Financial Conduct Authority (“FCA”) in relation to investment products. non-traditional investment and intends to continue doing so for the foreseeable future.
The shares of the Company are excluded from the FCA restrictions, which apply to non-traditional pooled investment products.
LIBOR
Official industry working groups and committees, including the Financial Stability Board (“FCB”), have established clear timelines to help market participants plan a smooth transition from LIBOR to new risk-free benchmarks . The FCB announced the dates after which the representative LIBOR rates were no longer available. All LIBOR parameters ceased to be provided by an administrator or were no longer representative:
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• immediately after December 31, 2021, for all British Pound, Euro, Swiss Franc and Japanese Yen parameters, and US Dollar 1-week and 2-month parameters; and
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• immediately after June 30, 2023, for the remaining parameters in US dollars
Risk-free alternative benchmark rates, such as SONIA in the UK and SOFR in the US, are robust, stable and anchored in active and liquid underlying markets. SONIA is now widely used in all major sterling markets, supporting a wide range of borrowers across different industries.
Dividends
Dividends are paid monthly. The Company’s dividend policy is detailed on page 28.
The rolling 12-month dividend yield (based on dividends declared for the period and share price as of December 31, 2021) was 5.27%.
2021 ANNUAL REPORT 3
COMPANY OVERVIEW | business model
Purpose and values
The objective of the Company is to operate as an investment company and to provide returns to shareholders by achieving its investment objective as described on page 2.
The Company’s values are discussed and approved by the Board. The Board seeks to lead the company with a culture of openness, high integrity and accountability. It is aware of embodying these values through its behavior both internally and in its relations with its stakeholders. It seeks to act in a spirit of mutual respect, trust and fairness. The board is robust in its challenge of the investment manager and other service providers, but always tries to be constructive and collegial. The board expects its members to be independent-minded and willing to ask tough questions. Moreover, it expects and encourages its major service providers to display similar values.
Main activities and structure
The organizational chart below shows the ownership, organizational and investment structure of the Company.
NBMID
SHAREHOLDERS
ALTERN / AITVIENVESTMENOTJ
UFNOTDMANAALL (“AMFI”)*
(Neuberger Berman Investment Advisers LLC)
MANAALL*
(Neuberger Berman Europe Limited)
COMPAYes
(Alternative investment fund registered in Guernsey)
INVESTMENOTWALLET
(wallet”)
* Further information on the Company’s investment management arrangements can be found on page 25.
Global Diversification
The Investment Manager seeks to manage risk through thorough credit research using proprietary analytical processes. It seeks to build an actively managed and diversified portfolio by region, sector, credit quality and issuer. Sector weightings are adjusted based on economic and market analysis. As a general rule, no industry will represent more than 15% of the net asset value at the time of investment. At the time of investment, no more than 5% of the Net Asset Value will be concentrated in a single issuer.
Defensive qualities
The Company’s investment portfolio is intended to focus on industries considered defensive. Defensive industries are those that the Investment Manager believes are least affected by changes in economic conditions and are likely to demonstrate the strongest preservation of capital. The Company’s investments are generally summarized as traditional credit and alternative credit investments.
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