DJ M&G Credit Income Investment Trust plc: Half Year Report
M&G Credit Income Investment Trust plc (MGCI)
M&G Credit Income Investment Trust plc: Half Year Report
29-Sep-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No
596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
LEI: 549300E9W63X1E5A3N24
M&G Credit Income Investment Trust plc
Half Year Report and unaudited Condensed Financial
Statements for the six months ended 30 June 2020
Copies of the Half Year Report can be obtained from the following website:
www.mandg.co.uk/creditincomeinvestmenttrust [1]
Company highlights
Company summary
M&G Credit Income Investment Trust plc (the "Company") was incorporated on 17 July 2018 as a public company
limited by shares. Admission to the London Stock Exchange's (LSE) main market for listed securities and
dealings in its Ordinary Shares commenced on 14 November 2018. The Company is an investment trust within the
meaning of section 1158 of the Corporation Tax Act (CTA) 2010.
Key dates
Period end 30 June 2020
First interim dividend: Payment date 28 May 2020
Second interim dividend: Payment date 28 August 2020
Future dividend timetable
Payment date
Third interim November 2020
Fourth interim February 2021
First interim May 2021
Second interim August 2021
Financial highlights
Key data as at as at
30 June 2020 31 December 2019
(unaudited) (audited)
Net assets (GBP'000) 140,733 132,232
Net asset value (NAV)
per Ordinary Share 97.23p 101.72p
Mid-market price
per Ordinary Share 101.00p 106.00p
Premium to NAV[a] 3.88% 4.21%
Ongoing charges figure[a] 0.92%[b] 0.93%[c]
Return per Ordinary six months ended period[c] ended
Share
30 June 2020 31 December 2019
(unaudited) (audited)
Capital return (3.2)p 2.7p
Revenue return 1.4p 2.6p
NAV total return[a] (2.0)% 5.6%
Mid-market price (2.3)% 8.2%
total return[a]
First interim 0.85p 2.09p
dividend
Second interim 0.77p 1.65p
dividend[d]
Total dividends 1.62p 3.74p
declared
[a] Alternative Performance Measures.
[b] From 1 January 2020.
[c] From the date of Initial Public Offering (IPO) 14 November 2018.
[d] Paid after the period end. Please see note 7 for further information.
Investment objective and policy
Investment objective
The Company aims to generate a regular and attractive level of income with low asset value volatility.
Investment policy
The Company seeks to achieve its investment objective by investing in a diversified portfolio of public and
private debt and debt-like instruments ("Debt Instruments"). Over the longer term, it is expected that the
Company will be mainly invested in private Debt Instruments, which are those instruments not quoted on a
stock exchange.
The Company operates an unconstrained investment approach and investments may include, but are not limited
to:
* Asset-backed securities, backed by a pool of loans secured on,
amongst other things, residential and commercial mortgages,
credit card receivables, auto loans, student loans, commercial
loans and corporate loans;
* Commercial mortgages;
* Direct lending to small and mid-sized companies, including
lease finance and receivables financing;
* Distressed debt opportunities to companies going through a
balance sheet restructuring;
* Infrastructure-related debt assets;
* Leveraged loans to private equity owned companies;
* Public Debt Instruments issued by a corporate or sovereign
entity which may be liquid or illiquid;
* Private placement debt securities issued by both public and
private organisations; and
* Structured credit, including bank regulatory capital trades.
The Company will invest primarily in Sterling denominated Debt Instruments. Where the Company invests in
assets not denominated in Sterling, it is generally expected that these assets will be hedged back to
Sterling.
Investment restrictions
There are no restrictions, either maximum or minimum, on the Company's exposure to sectors, asset classes or
geography. The Company, however, achieves diversification and a spread of risk by adhering to the limits and
restrictions set out below.
Once fully invested, the Company's portfolio will comprise a minimum of 50 investments.
The Company may invest up to 30% of Gross Assets in below investment grade Debt Instruments, which are those
instruments rated below BBB- by S&P or Fitch or Baa3 by Moody's or, in the case of unrated Debt Instruments,
which have an internal M&G rating below BBB-.
The following restrictions will also apply at the individual Debt Instrument level which, for the avoidance
of doubt, does not apply to investments to which the Company is exposed through collective investment
vehicles:
Secured Debt Unsecured Debt
Instruments Instruments
Rating
(% of Gross Assets) (% of Gross Assets)
[a]
AAA 5% 5[b]
AA/A 4% 3%
BBB 3% 2%
Below investment 2% 1%
grade
[a] Secured Debt Instruments are secured by a first or secondary fixed and/or floating charge.
[b] This limit excludes investments in G7 Sovereign Instruments.
For the purposes of the above investment restrictions, the credit rating of a Debt Instrument is taken to be
the rating assigned by S&P, Fitch or Moody's or, in the case of unrated Debt Instruments, an internal rating
by M&G. In the case of split ratings by recognised rating agencies, the second highest rating will be used.
It is expected that the Company will typically invest directly, but it may also invest indirectly through
collective investment vehicles which are expected to be managed or advised by an M&G Entity. The Company may
not invest more than 20% of Gross Assets in any one collective investment vehicle and not more than 40% of
Gross Assets in collective investment vehicles in aggregate. No more than 10% of Gross Assets may be
invested in other investment companies which are listed on the Official List.
Unless otherwise stated, the above investment restrictions are to be applied at the time of investment.
Borrowings
The Company is expected to be managed primarily on an ungeared basis although the Company may, from time to
time, be geared tactically through the use of borrowings. Borrowings would principally be used for
investment purposes, but may also be used to manage the Company's working capital requirements or to fund
market purchases of Shares. Gearing represented by borrowing will not exceed 30% of the Company's Net Asset
Value, calculated at the time of draw down, but is typically not expected to exceed 20% of the Company's Net
Asset Value.
Hedging and derivatives
The Company will not employ derivatives for investment purposes. Derivatives may however be used for
efficient portfolio management, including for currency hedging.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent investments, which may include
short-term investments in money market type funds ("Cash and Cash Equivalents").
There is no restriction on the amount of Cash and Cash Equivalents that the Company may hold and there may
be times when it is appropriate for the Company to have a significant Cash and Cash Equivalents position.
For the avoidance of doubt, the restrictions set out above in relation to investing in collective investment
vehicles do not apply to money market type funds.
Changes to investment policy
Any material change to the Company's investment policy set out above will require the approval of
Shareholders by way of an ordinary resolution at a general meeting and the approval of the UK Listing
Authority.
Investment strategy
The Company seeks to achieve its investment objective by investing in a diversified portfolio of public and
private debt and debt-like instruments of which at least 70% is investment grade. Over the longer term, it
is expected that the Company will be mainly invested in private debt instruments. This part of the portfolio
may include debt instruments which are nominally quoted but are generally illiquid. Most of these will be
floating rate instruments, purchased at inception and with the intention to be held to maturity or until
prepaid by issuers; shareholders can expect their returns from these instruments to come primarily from the
interest paid by the issuers.
The remainder of the Company's portfolio is invested in cash, cash equivalents and quoted debt instruments,
which are more readily available and which can generally be sold at market prices when suitable
opportunities arise. These instruments may also be traded to take advantage of market conditions.
Shareholders can expect their returns from this part of the portfolio to come from a combination of interest
income and capital movements.
Chairman's statement
Performance
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