Volta Finance Limited - Net Asset Value(s) as at 31 December 2020
Volta Finance Limited (VTA / VTAS) –
December 2020 monthly report
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE
OR PART, IN OR INTO THE UNITED STATES
***** Guernsey, 13 January 2021
AXA IM has published the Volta Finance Limited
(the “Company” or “Volta Finance” or “Volta”) monthly report for
December. The full report is attached to this release and will be
available on Volta’s website shortly (www.voltafinance.com).
PERFORMANCE and PORTFOLIO
ACTIVITY
In December, the monthly performance of Volta
was +4.3% dividend payable included, another strong performance
following the announcements regarding the availability of vaccines
against the COVID-19 pandemic. The performance was mainly driven
once again by the CLO debt and equity buckets. This brings
the performance for the full year to -5.7%. Whilst it is, of
course, disappointing to have generated a negative return for the
year as a whole, the recovery from the lows at the end of March has
been very strong, with a gain of 41.8% in the last 9-month
period. As noted below, we anticipate a solid performance in
2021.
The monthly asset class performances** were in
euro: -0.2% for Bank Balance Sheet transactions, +9.7% for CLO
equity tranches; +5.9% for CLO Debt; +0.5% for Cash Corporate
Credit deals (this bucket comprises funds that have a one-month
delay in publishing their NAV); and -0.9% for ABS.
The continuing strong performance of CLO equity
positions reinforces our conviction that we may be able to
refinance or even reset some of our CLO equity positions in
2021. This would reduce the average cost of debt that
constitutes the embedded leverage for our CLO equity positions. As
the WAS (Weighted Average Spread) of the underlying loan pools is
still increasing and might continue to increase in the coming
quarters thanks to repayments of existing loans, we can reasonably
expect that cash flows from our CLO equity positions will increase
through 2021.
In 2020, despite the COVID-19 pandemic, almost
19% of the US loans prepaid, reducing occurrences of default and
allowing CLO managers to reinvest in loans at discount or in new
loans with higher spreads. We expect loan prepayments to be higher
still in 2021, near 25% for the US and 20% in Europe. This will
further improve the performance of our CLO equity positions.
Turning to default rates, December marked the
second successive month in which the trailing 12-month default rate
declined in the US. Our view continues to be that the COVID
pandemic will continue to generate defaults in both the US and the
European loan markets, probably for a few years, but at a
manageable pace.
As in prior years, January should be a solid
month for CLO equity cash flows to Volta.
In December 2020 interest and coupons received
totaled the equivalent of €0.7m for Volta. On a 6-month rolling
basis, Volta received the equivalent of €18.1m as at the end of
December, representing a 14.8% annualised cash flow yield, based on
the end December NAV (even taking into account the strong increase
in NAV). We expect this amount to increase in the coming
months.
This combination of advantageous factors for our
CLO Equity positions, which account for a total of 61% of the NAV,
alongside the likelihood of further spread compression in CLO Debt
and other positions means that the outlook for 2021 and beyond is
favorable for Volta. There will, no doubt, be ongoing bouts
of volatility in markets but we are optimistic that the NAV should
reach €7.00 per share at some point in 2021 and then to €7.50 per
share in the medium term which, combined with a dividend close to
8% of NAV represents an attractive return stream especially when
considering the discount to the NAV at which the shares are
currently trading.
As at the end of December 2020, Volta’s NAV was
€244.0m or €6.67 per share after the payment of €0.12 dividend in
December.
The month-end available cash position was
€7.0m.
*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 note. The most
recently available fund NAV or quoted price was for 3.0% as at 30
November 2020, 3.9% as at 31 October 2020, and 1.1% as at 30
September 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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