Volta Finance Limited: Net Asset Value as at 30 June 2020
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE
OR PART, IN OR INTO THE UNITED STATES
***** Guernsey, 10 July 2020
AXA IM has published the Volta Finance Limited
(the “Company” or “Volta Finance” or “Volta”) monthly report for
June. The full report is attached to this release and will be
available on Volta’s website shortly (www.voltafinance.com).
PERFORMANCE and PORTFOLIO
ACTIVITY
June delivered another month of strong
performance after May and April, helping further to recover the
mark-to-market impact of the COVID-19 pandemic. Accounting for the
€0.10 per share dividend paid 16th of June, Volta’s NAV* total
return performance in June was +6.9%.
With the increased confidence around cash flows
from underlying assets over the medium term, not only was the
Company able to restore the dividend ordinarily payable in April
but has further declared a dividend of €0.11 per share payable on
29th July 2020, which is a return to the Company’s original payment
timetable.
The monthly performances** were, in local
currency: +0.8% for Bank Balance Sheet transactions, +9.5% for CLO
Equity tranches; +13.0% for CLO Debt; -0.6% for Cash Corporate
Credit deals (this bucket compromises of funds that have a
one-month delay in publishing their NAV); and -6.2% for ABS.
At the end of the month, the average price for
USD CLO debt was 71.8%. All the company’s USD CLO debt positions
are receiving their coupons in full, none of them has been
downgraded and 10 of them are “Watch Neg” either with Moody’s or
S&P (none with Fitch). We continue to be highly confident that
all these positions will go through the current crisis without any
loss and continue to think that the latest prices do not reflect
the embedded value of these positions.
Regarding our CLO Equity positions, the July
cash flow payments are due over the coming weeks. Of all our
positions, only one is expected to suffer a diversion of cash flow
in July. It is a position from 2013 that has already significantly
amortized. In normal market conditions, this position would have
been called as the arbitrage in favor of the equity is less and
less attractive now that all the original AAA debt tranche has been
prepaid.
Of the other CLO equity positions, 3 out of 46
came close to breaching a reinvestment test but all three have now
seen improvement in May and June and now have larger cushions.
So far, the consequences of the COVID-19 crisis
are being smoothed through time as the increase in default rates is
very slow. This means that CLO managers have more time to
re-arrange portfolios to avoid diversion of cash flows and generate
added value.
There has been widespread comment that private
equity funds raised billions of new capital in recent months. For
Loans and CLOs, it means that we should expect an acceleration of
M&A activity over the coming months. Some loans, even some
trading at a discount, will be called at par and that will permit
an acceleration in reinvestment opportunities for CLO managers. As
a reminder, in 2009 even though default rates peaked near 10%, the
prepayment rate in the US loan market was close to 10% rising to
nearly 20% in 2010.
This comment is not to suggest that the future
is rosy but it might be far less dark than it appeared just a few
months ago and less gloomy than current CLO pricing suggests.
As usual, June was a quiet month in terms of interest and cash
flows received with only the equivalent of €0.6m received. On a
six-month basis, we are still close to Volta’s historical high with
the equivalent of €21.5m received as at the end of June.
In June Volta invested €4.1m through one newly
issued EUR BB CLO tranche and additional capital was called by the
existing CMV.
As at the end of June 2020, Volta’s NAV was
€214.9m or €5.87 per share.
The month-end cash position was €4.3m.
Considering the payment of the dividend in July and the necessity
to maintain a working capital balance to cover potential margin
calls from currency hedging positions and further capital calls
from pre-existing investments, Volta was almost fully invested as
of the end of June. With the cash flows due in July, Volta will
have again some room for investments.
*It should be noted that approximately 11.4% 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 note. The most
recently available fund NAV or quoted price was for 5.7% as at 31
May 2020, 5.7% as at 31 March 2020.
** “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 ManagerAXA
Investment Managers ParisSerge Demayserge.demay@axa-im.com+33 (0) 1
44 45 84 47
Company Secretary and
AdministratorBNP Paribas Securities Services S.C.A,
Guernsey Branch guernsey.bp2s.volta.cosec@bnpparibas.com +44
(0) 1481 750 853
Corporate Broker Cenkos Securities plc Andrew
WorneDaniel BalabanoffRob Naylor+44 (0) 20 7397 8900
***** ABOUT VOLTA FINANCE
LIMITED
Volta Finance Limited is incorporated in
Guernsey under The Companies (Guernsey) Law, 2008 (as amended) and
listed on Euronext Amsterdam and the London Stock Exchange's Main
Market for listed securities. Volta’s home member state for the
purposes of the EU Transparency Directive is the Netherlands. As
such, Volta is subject to regulation and supervision by the AFM,
being the regulator for financial markets in the Netherlands.
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 AXA
Investment Managers Paris an investment management company with a
division specialised in structured credit, for the investment
management of all its assets.
*****
ABOUT AXA INVESTMENT
MANAGERSAXA Investment Managers (AXA IM) is a multi-expert
asset management company within the AXA Group, a global leader in
financial protection and wealth management. AXA IM is one of the
largest European-based asset managers with 753 investment
professionals and €801 billion in assets under management as of the
end of April 2020.
*****
This press release is published by AXA
Investment Managers Paris (“AXA IM”), in its capacity as
alternative investment fund manager (within the meaning of
Directive 2011/61/EU, the “AIFM Directive”) of Volta Finance
Limited (the "Volta Finance") whose portfolio is managed by AXA
IM.
This press release is for information
only and does not constitute an invitation or inducement to acquire
shares in Volta Finance. Its circulation may be prohibited in
certain jurisdictions and no recipient may circulate copies of this
document in breach of such limitations or restrictions. This
document is not an offer for sale of the securities referred to
herein in the United States or to persons who are “U.S. persons”
for purposes of Regulation S under the U.S. Securities Act of 1933,
as amended (the “Securities Act”), or otherwise in circumstances
where such offer would be restricted by applicable law. Such
securities may not be sold in the United States absent registration
or an exemption from registration from the Securities Act. Volta
Finance does not intend to register any portion of the offer of
such securities in the United States or to conduct a public
offering of such securities in the United States.
*****
This communication is only being
distributed to and is only directed at (i) persons who are outside
the United Kingdom or (ii) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (iii) high net
worth companies, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the Order
(all such persons together being referred to as “relevant
persons”). The securities referred to herein are only available to,
and any invitation, offer or agreement to subscribe, purchase or
otherwise acquire such securities will be engaged in only with,
relevant persons. Any person who is not a relevant person should
not act or rely on this document or any of its contents. Past
performance cannot be relied on as a guide to future
performance.
*****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. Volta Finance's actual results, portfolio composition
and performance may differ materially from the impression created
by the forward-looking statements. AXA IM does not undertake any
obligation to publicly update or revise forward-looking
statements.
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 Volta Finance, as
implemented by AXA IM. The historical success or AXA IM’s belief in
the future success, of any of these trades or strategies is not
indicative of, and has no bearing on, future results.
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 Volta Finance
due to market conditions and general economic environment. Such
valuations do not constitute a fairness or similar opinion and
should not be regarded as such.
Editor: AXA INVESTMENT MANAGERS
PARIS, a company incorporated under the laws of France, having its
registered office located at Tour Majunga, 6, Place de la Pyramide
- 92800 Puteaux. AXA IMP is authorized by the Autorité des Marchés
Financiers under registration number GP92008 as an alternative
investment fund manager within the meaning of the AIFM
Directive.
*****
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