Interim Management Statement
20 Outubro 2011 - 1:41PM
UK Regulatory
TIDMCHY
City Merchants High Yield Trust plc
Interim Management Statement
for the Three Months ended 30 September 2011
Objective of the Company
The investment objective of City Merchants High Yield Trust plc is to seek to
obtain both high income and capital growth from investment, predominantly in
high-yielding fixed-interest securities.
The Company seeks to provide a high level of dividend income relative to
prevailing interest rates through investment in fixed-interest securities,
various equity-like securities within fixed-income markets and equity-linked
securities such as convertible bonds and in direct equities that have a high
income yield. It seeks also to enhance total returns through capital
appreciation generated by investments which have equity-related
characteristics.
Material Events
On 3 October 2011 the Company announced that it is contemplating a move
off-shore that will allow the Company to continue to deliver tax-efficient
investment returns from high-yielding fixed-interest securities.
Dividends
As previously declared, in the period a second interim dividend of 2.5p per
share was paid on 26 August 2011 to shareholders on the register on 29 July
2011.
Market background
The Company's NAV fell 12.8% (source: Bloomberg) in the third quarter, a period
that saw a strong trend of risk aversion and negative returns across the high
yield corporate bond market. Returns were also negative for investment grade
corporates. With core government bonds enjoying strong performance, corporate
spreads widened considerably.
According to data from Merrill Lynch, over the quarter the total sterling
return for European high yield was -14.3%. Yields rose 316 basis points (bps)
to 11.57% and the spread over government bonds widened 414bps to 990bps. The
aggregate sterling investment grade yield rose 51bps to 5.94% (total return of
-0.6%), but the BBB yield rose 96bps to 5.98% (total return of -2.2%).
Financials was the weakest sector of the corporate market, with the more junior
sterling Tier 1 Subordinated Debt index recording a negative total return of
16.7%. Meanwhile, the 10 year Gilt yield fell 95bps to just 2.43%. Corporate
fundamentals remain strong and default rates remain low. According to Moody's,
the global high yield default rate was 1.8% in August 2011 compared to 1.9% in
July and 5.1% in August last year. Volatile market conditions drove down
corporate issuance to low levels.
Investors have become more risk-averse over the past few months. This trend has
been driven by continuing indications of slowing economic growth and
developments in the eurozone sovereign debt crisis. Economic data is painting a
picture of falling business confidence and activity, weak labour markets and
low consumer confidence. This is depressing growth and inflation expectations
and so is boosting interest rate-sensitive bonds and reducing appetite for more
growth-sensitive corporate debt. The risks of contagion from the severe debt
problems of Greece and other peripheral eurozone member states are a further
weight on investor sentiment. Reacting to these developments, monetary
authorities have become more `dovish'.
Portfolio strategy & outlook
The third quarter has been a period of high volatility and poor returns in high
yield. However, our overall strategy has not changed. We
continue to favour better quality (BB and B rated) high-yield issuers as well
as higher yielding (BBB rated) investment-grade names. Following recent
weakness, yields are higher than they have been for some time and we believe we
can find opportunities, most notably in banks and other financials. We think
that the combination of structural reform, conservative interpretations of
Basel III guidelines and rising capital levels will be a powerful support for
subordinated bank debt for years to come. In our opinion, aggregate yields on
this type of debt offer real value despite their increased volatility.
Elsewhere, recent months have seen sharp downward price moves in relatively
thin trading conditions across the high yield market and we believe this can
provide opportunities to lock in attractive yields.
We have used the volatile conditions of the last months to top up favoured
positions and to open new ones where we saw opportunities to lock in attractive
yields for the portfolio. We bought EDP 8.625% (utility), Bormioli 10%
(packaging) and Levi Strauss 7.75% (retail). We also added to Chrysler 8%
(auto), Stena 6.125% (transport), Fiat 6.375% (auto) and Abengoa 8.5%
(construction). In financials we added Intesa Sanpaolo 8.375% (bank). Sales
included Rhodia 7% (chemical) and Ford Motor 7.45% (auto).
Paul Read, Paul Causer
Portfolio Managers
20 October 2011
Performance - Total Return
3 Months 1 Year 3 Years 5 Years
Share Price -11.6% -6.3% 44.7% 21.0%
Net Asset Value -11.8% -6.5% 47.7% 26.0%
FTSE All-Share Index -13.5% -4.4% 19.2% 4.0%
FTSE Government Securities - 8.3% 7.8% 28.6% 38.1%
All Stocks Index
Source: Thomson Reuters/Morningstar
Share Price and Discount
As at For the Three Months Ended
30 Sept 30 September 2011
2011
High Low Average
Ordinary Shares mid-market 152.00 177.00 146.00 163.57
price (pence)
Premium 3.5%
Source: Fundamental Data
Assets and Gearing
30 September 2011
Total Gross Assets (GBPm) 107.0
of which cash (GBPm) 6.3
Borrowings (GBPm) -
Cum Income Net Asset 146.93
Value
(pence)
Actual Gearing 100
Asset Gearing 90
Gearing
The term applied to the effect of borrowings on assets that will increase the
return on investment when the value of the Company's investments is rising but
reduce the return when values are declining. A gearing level of 100 or 0%
indicates there is no gearing.
Actual Gearing reflects the amount of loans already arranged and in use by the
Company. This is the gearing figure published by the Association of Investment
Companies. It is calculated by
dividing the aggregate of shareholders' funds and all drawn down-loans by
shareholders' funds.
Asset Gearing reflects the amount of loans actively invested in assets and not
held in cash. It is
calculated by dividing fixed assets investments by shareholders' funds.
Bond Rating
30 September 2011
AA- 0.0%
A+ 0.5%
A 1.7%
A- 2.6%
BBB+ 11.1%
BBB 8.6%
BBB- 0.6%
BB+ 7.4%
BB 13.2%
BB- 8.5%
B+ 6.0%
B 6.8%
B- 3.4%
CCC+ 0.5%
CCC 0.3%
CCC- 0.0%
CC 0.0%
C 0.1%
D 0.1%
NR(including equity) 28.6%
100.0%
Top Ten Holdings
Ranking Top Ten Holdings % of
Now Portfolio
1 LBG Capital 6.385% May 2020 & 16.125% Dec 5.0%
2024 & 6.439% May 2020 &
7.975% Sept 2024 & 9% Dec
2019
2 General Motors Wts Jul 2016 & Jul 2019, 3.0%
Common Stock & US Pref
3 Premier Farnell Pfd 89.2p Cum CNV Red 3.7%
4 Intergen 9.5% Jun 2017 & 8.5% Jun 2017 2.3%
5 Socitete Generale 8.875% NTS Jun 2049 2.6%
6 Balfour Beatty 10.75P Gross Cnv Pref Share 2.4%
7 Ecclesiastical 8.625% Prefs 2.2%
8 Citigroup 6.829% FRN, US Pref and 2.2%
Common Stock
9 Aviva 6.125% Perpetual 2.2%
10 First Hydro Finance 9% GTD 31 July 2021 1.9%
Changes to Share Capital
Ordinary Shares of 2p each
Issued Treasury
As at 31 Dec 2010 72,799,105 0
Ordinary shares bought back 0 0
Ordinary shares issued 0 0
As at 30 September 2011 72,799,105 0
The Company has authority to buy back shares and to issue new shares
(disapplying pre-emption rights), in each case within specified limits. The
Company expects to renew these authorities each year.
Price and Performance
The Company's Ordinary shares are listed on the London Stock Exchange and the
price is published in the Financial Times under `Investment Companies' and in
the Daily Telegraph under `Investment Trusts'.
The Company's net asset value is calculated daily and can be viewed on the
London Stock Exchange website at www.londonstockexchange.com.
Further information can be obtained from Invesco Perpetual as follows:
Free Investor Helpline: 0800 085 8677 (available Monday to Friday from 8.30am
to 6.00pm)
Internet address: www.invescoperpetual.co.uk/investmenttrusts
The information provided in this statement should not be considered as a
financial promotion or recommendation.
Interim management statements are expected to be published normally in April/
May and October each year.
For and on behalf of
Invesco Asset Management Limited
20 October 2011
Registered Office
30 Finsbury Square, London, EC2A 1AG
Telephone: 020 7065 4000
Facsimile: 020 7065 3166
Registered in England No 2649592
An Investment Company under Section 833
of the Companies Act 2006
END
City Merch. (LSE:CHY)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
City Merch. (LSE:CHY)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024
Notícias em tempo-real sobre City Merch. da Bolsa de Valores de Londres bolsa de valores: 0 artigos recentes
Mais Notícias de City Merch.