DJ M&G Credit Income Investment Trust plc: 2021 Interim Results
M&G Credit Income Investment Trust plc (MGCI) M&G Credit Income Investment Trust plc: 2021 Interim Results 16-Sep-2021 / 15:43 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.
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LEI: 549300E9W63X1E5A3N24
M&G Credit Income Investment Trust plc
Half Year Report and unaudited Condensed Financial
Statements for the six months ended 30 June 2021
Copies of the Half Year Report can be obtained from the following website:
www.mandg.co.uk/creditincomeinvestmenttrust
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 2021 2021 First interim dividend: Payment date May 2021 2021 Second interim dividend: Payment date August 2021
Future dividend timetable
Payment date 2021 Third interim November 2021 2021 Fourth interim February 2022 2022 First interim May 2022 2022 Second interim August 2022
Financial highlights
As at As at
Key data 30 June 2021 31 December 2020
(unaudited) (audited)
Net assets (GBP'000) 146,297 146,628
Net asset value (NAV) per Ordinary Share 102.04p 101.40p
Ordinary Share price (Mid-market) 97.20p 92.00p
Discount to NAV[a] 4.74% 9.27%
Ongoing charges figure[a] 1.08%[b] 0.87%
Six months ended Year ended
Return and dividends per Ordinary Share 30 June 2021 31 December 2020
(unaudited) (audited)
Capital return 2.0p 1.3p
Revenue return 1.3p 2.9p
NAV total return[a] 3.3% 3.7%
Share price total return[a] 8.7% (9.7)%
First interim dividend 0.74p 0.85p
Second interim dividend 0.76p[c] 0.77p
Third interim dividend - 0.71p
Fourth interim dividend - 1.95p[c]
Total dividends declared 1.50p 4.28p
[a] Alternative Performance Measure.
[b] The increase in the ongoing charges figure mainly shows the annualised effect of the increase in the investment management fee from 0.5% to 0.7% per annum. This increase in fee took effect on 1 April 2021, reflecting the fact that the portfolio is now appropriately positioned with regard to the Company's dividend target set at launch.
[c] Paid after the period/year end. Please see note 6 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 invests primarily in Sterling denominated Debt Instruments. Where the Company invests in assets not denominated in Sterling, it is generally the case that these assets are 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.
The Company's portfolio comprises 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 Instruments Unsecured Debt Instruments Rating (% of Gross Assets) [a] (% of Gross Assets) AAA 5% 5%[b] AA/A 4% 3% BBB 3% 2% Below investment grade 2% 1%
[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.
The Company typically invests directly, but it also invests indirectly through collective investment vehicles which are managed 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 managed primarily on an ungeared basis although the Company may, from time to time, be geared tactically through the use of borrowings. Borrowings will 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 Financial Conduct Authority (FCA).
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. The Company is mainly invested in private debt instruments. This part of the portfolio generally includes 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.
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