Volta Finance Limited - Net Asset Value as at 31 October 2022
Volta Finance Limited
(VTA / VTAS)
– October
2022
monthly report
NOT FOR RELEASE, DISTRIBUTION,
OR PUBLICATION, IN WHOLE OR PART, IN OR INTO THE UNITED
STATES
***** Guernsey, 14 November 2022
AXA IM has published the Volta Finance Limited
(the “Company” or “Volta Finance” or “Volta”) monthly report for
October. The full report is attached to this release and will be
available on Volta’s website shortly (www.voltafinance.com).
PERFORMANCE and
PORTFOLIO ACTIVITY
October was a mixed month for Structured Debt
Markets as European CLO debt tranches experienced a price rebound -
especially the ones that were significantly hit in September -
while US CLO performances were slightly negative. As a result
Volta’s net asset value (“NAV”) declined by -2.6% in October.
Diving into Volta’s underlying sub asset
classes, monthly performances** were as follow: +0.7% for Bank
Balance Sheet transactions, -3.9% for CLO Equity tranches; +1.7%
for CLO Debt tranches (driven by +6.2% on European CLO debt); and
-0.4% for Cash Corporate Credit and ABS (which represent circa 2.3%
of the fund’s NAV).
As for every quarter, October was an heavy month
in terms of CLO Equity distributions. We were expecting relatively
healthy ones across the board and our positions did deliver on that
front. Volta received in October the equivalent of €9.1m in terms
of interest and coupons. Over the usual 6-month-basis time frame
Volta received €23.4m interest and coupons. A 22.3% annualized cash
flow to NAV.
Looking at fundamentals, we continued to see
slightly more downgrades than upgrades in both the US and the
European loan markets, although at a very moderate pace. We have
been highlighting for months through this channel of communication
the fact that inflation per se can positively impact companies’
balance sheets. The release of Q3 earnings demonstrated once more
that when revenues increase (in nominal amount) at a high pace,
earnings can be maintained or even increased despite companies
suffering from margin pressure. At the time of writing this
publication, 90% of the S&P companies have reported their Q3
earnings; revenues are up 12.2% (from the previous quarter)
allowing earnings to grow by “only” 3.9%.
In the meantime, this increase in revenues is
eroding the real value of debt. We believe that the real value of
debt for the average US company was basically eroded by 20% in the
last two years when considering that from Q3 2020 to Q4 2022 the US
GDP grew by 20% in nominal terms. This relationship between nominal
growth and debt and the maitainance of healthy earnings can explain
why rating agencies have so far been relatively slow (and they may
be correct in doing so) in downgrading debt even though many
companies do suffer or will suffer from higher interest rates.
Our view remains that the overall dynamics are
still more favorable for the US relative to Europe. At the end of
October, 12 months running default rates in Loans were still low at
0.4% in Europe and 0.8% in the US. We expect to see more
deterioration in Europe than in the US in the coming quarters and
consider it reasonable to see default rates move in the 2% area in
the US and in the 3% area in Europe for 2023.
This kind of default pattern will not materially
impact the distribution of interests by Volta’s assets in the near
term. We believe that we can maintain a high level of coupons in
the coming quarters and are actively looking to seize investment
opportunities with the extra cash that is being generated.
We recently opened a European CLO Warehouse as
part of this strategy. No loans have yet been purchased but we
expect to start ramping assets in the near term to take advantage
of significant price discounts and patiently build a very
profitable CLO Equity position.
As at the end of October 2022, Volta’s NAV was
€206.8m or €5.65 per share.
*It should be noted that approximately 1.5% 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 1.1% as at 30
September 2022, 0.4% was at 31 July 2022 and 0.4% as at 30 June
2022..
** “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 S.A, Guernsey
Branchguernsey.bp2s.volta.cosec@bnpparibas.com +44 (0) 1481
750 853
Corporate BrokerCenkos Securities plcAndrew
WorneDaniel Balabanoff+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 2,460 professionals and
€887 billion in assets under management as of the end of December
2021.
*****
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.
*****
- Volta - Monthly Report - October 2022
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