DJ Quarterly Review
M&G Credit Income Investment Trust plc (MGCI)
Quarterly Review
21-Apr-2026 / 16:31 GMT/BST
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M&G CREDIT INCOME INVESTMENT TRUST PLC
(the "Company")
LEI: 549300E9W63X1E5A3N24
Quarterly Review
The Company announces that its quarterly review as at 31 March 2026 is now available, a summary of which is provided
below. The full quarterly review is available on the Company's website at:
https://www.mandg.com/dam/investments/common/gb/en/documents/funds-literature/credit-income-investment-trust/
mandg_credit-income-investment-trust_factsheet_gb_eng.pdf
Market Review
The conflict in the Middle East, and the accompanying spike in energy prices, was the defining event of the first
quarter of 2026 and significantly altered the macroeconomic landscape. Prior to the onset of the conflict on 28
February, global economic activity had been resilient and the disinflationary trend remained on track. However, as the
conflict continued through March, disruption to global oil and gas supplies, caused by the closure of the Strait of
Hormuz, raised the prospect of higher inflation alongside a potential slowdown in economic growth, a so called
stagflationary regime or 'worst of both worlds' scenario.
Government bond markets adjusted sharply over the quarter as rising oil prices fed through into higher inflation
expectations and reduced the likelihood of near term policy easing. These concerns were reinforced by inflation data
from the eurozone, where annual inflation rose to 2.5% in March from 1.9% in February, driven primarily by higher
energy costs. Against this uncertain backdrop, major developed market central banks kept interest rates on hold.
However, this pause was accompanied by firm messaging that further policy tightening remained on the table should
inflationary pressures persist. As a result, investors began to anticipate interest rate hikes later this year rather
than rate cuts, and government bond markets sold off in March, erasing strong year-to-date gains up to that point. UK
gilts were among the weakest performers, with the 10 year yield reaching a post 2008 high of 5% at one point during the
quarter. Similarly, UK credit underperformed both European and US debt markets.
Manager Commentary
During the opening quarter of 2026, the Company delivered a NAV total return of +0.41%, compared to the +1.88% returned
by the benchmark. Performance lagged primarily due to our intentionally defensive positioning, which resulted in
portfolio yield running below the target return, alongside credit spread widening following the escalation of the Iran
conflict.
Concerns about private credit, predominantly focused on the US sub investment grade loan market, also contributed
meaningfully to increased market volatility during the period. Sectors with a high proportion of intangible assets sold
off over the quarter, driven by fears surrounding Artificial Intelligence ("AI") as a disruptive technology,
particularly within software. Fixed-income markets are increasingly pricing in an AI-driven risk premium. Lenders are
demanding higher yields from issuers most vulnerable to technological obsolescence, particularly where AI is shifting
established competitive moats. Against this backdrop, it is important to highlight that the majority of the portfolio
is invested in investment grade quality assets and remains predominantly focused on Europe and the UK, with only a
small exposure to the US. The private portion of the portfolio has no direct software exposure, while software related
holdings across the remainder of the portfolio represent less than 2% of total portfolio value, including indirect
exposure via the M&G European Loan Fund.
Demand for share issuance began the year strongly, and the Company issued an additional 5.8 million ordinary shares up
to the end of February. We invested these proceeds, alongside surplus cash, across both public (GBP6.8 million) and
private (GBP5.7 million) markets. The range of new and existing private opportunities invested in during the quarter
included: a fully operational data centre with long dated leases to blue chip clients (GBP1.1 million); an existing, well
performing RegCap transaction (GBP1.75 million); a senior term loan secured against prime urban logistics hubs in the
Benelux region (GBP1.75 million); and a senior term loan to a UK headquartered paper packaging and labels business (GBP0.75
million).
Public market purchases focused on leveraging our in house research capabilities to identify relative value
opportunities where we believe risk is mispriced, either at new issue or in the secondary market. This doesn't
represent a change to our long held view that public credit spreads are, in aggregate, expensive (i.e., tight) and
offer a low premium for taking on risk, leaving markets vulnerable to sharp corrections from economic or geopolitical
shocks. In the near term, investment grade public market opportunities offering returns close to SONIA +4% (the
Company's target return) without assuming significant default risk remain scarce. As we have previously emphasised,
this is not the stage of the cycle to be chasing returns, as tight credit spreads actually mask deep macroeconomic and
geopolitical risks. Amid these conditions, we continue to prioritise attractive relative-value opportunities where we
identify potential for further spread compression alongside adequate risk-adjusted carry, within businesses
demonstrating robust - albeit potentially unspectacular - operating performance. We remain patient as we await more
compelling entry points to add risk more meaningfully.
In March, amid heightened macroeconomic volatility, the ordinary share price moved to trade at a discount to NAV. As a
result, the Company recommenced its buyback programme in accordance with its Zero Discount Policy, which seeks to
ensure that ordinary shares trade close to NAV in normal market conditions. This resulted in the repurchase of 250,000
shares into Treasury. During the quarter, we also sold GBP4 million of the portfolio's exposure to the M&G Secured Asset
Backed Credit Fund ahead of funding several private opportunities in early Q2.
Outlook
The conflict involving Iran represents the most significant risk to global supply chains since the Covid 19 pandemic,
introducing a new and potentially long lasting shock to the global economy and driving elevated volatility across
financial markets. History suggests that geopolitical shocks very rarely leave a lasting dent on asset prices and are
generally followed by rapid market recoveries, which perhaps explains the market's rather sanguine outlook. Indeed, at
time of writing, the announcement of a two week ceasefire has seen a very strong rally in rates and equity markets.
However, despite the ceasefire, shipping traffic through the Strait of Hormuz remains constrained. Should the nascent
ceasefire hold, the reality is that it is likely to take months rather than weeks to negotiate a durable and stable
peace framework. The global economy's heavy dependence on the Strait of Hormuz arguably represents Iran's most
significant bargaining chip, increasing the probability that shipping disruption will persist for some time. This
suggests continued volatility in energy markets, inflation expectations, and government bond yields, complicating
policymaking for central banks - particularly in Europe, where economic growth remains anaemic and there is less
latitude for policy missteps.
It is also worth noting that governments have rarely operated with such elevated deficit and debt levels. Alongside
central banks, policymakers have limited fiscal and monetary ammunition available to contain a prolonged economic
downturn should one materialise. This creates a high stakes environment that hinges on a swift and credible resolution
to the conflict. To date, equity and credit markets appear to have priced in only a brief disruption, leaving them
particularly exposed to a more protracted scenario that could result in a pronounced stagflationary shock. The
potential for a global energy emergency-and its associated second and third order effects, including policy pivots,
demand destruction, forced efficiency, and capital reallocation, cannot be ignored. Indeed, European Central Bank
President Christine Lagarde has already warned that markets may be underestimating the economic fallout from the
ongoing Middle East conflict.
Paradoxically, despite the heightened macroeconomic uncertainty and increased geopolitical risk, credit spreads remain
anchored and continue to appear expensive when viewed through a historical lens. As a result, investors are not being
adequately compensated for the breadth of short and medium term risks, nor for the plausible scenario of a sustained
energy supply disruption.
Given the current market backdrop, we believe it is appropriate to reiterate our investment philosophy. We allocate
capital based on our assessment of relative value, which is underpinned by rigorous fundamental credit research and in
depth analysis from a team of over 100 analysts. When credit appears expensive, as is currently the case, we position
the portfolio to be a net beneficiary of potential credit spread widening or market volatility by adopting a cautious
stance and enhancing overall credit quality. We then remain patient and disciplined, awaiting more attractive entry
points to take on additional credit risk, which typically arise during periods of macro driven volatility when
dislocations emerge between fundamentals and valuations. This approach has historically supported portfolio
performance.
At present, we maintain a significant allocation to AAA/AA-rated ABS funds that are ready to be reallocated as
opportunities arise, alongside access to a GBP40 million credit facility. In our opinion, this leaves the Company well
positioned to respond should heightened volatility create opportunities to add risk and enhance portfolio yield.
MUFG Corporate Governance Limited
Company Secretary
21 April 2026
- ENDS -
The content of the Company's web-pages and the content of any website or pages which may be accessed through hyperlinks
on the Company's web-pages, other than the content of the Update referred to above, is neither incorporated into nor
forms part of the above announcement.
For further information in relation to the Company please visit: https://www.mandg.com/investments/private-investor/
en-gb/investing-with-mandg/investment-options/mandg-credit-income-investment-trust
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The issuer is solely responsible for the content of this announcement.
View original content: EQS News
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ISIN: GB00BFYYL325, GB00BFYYT831
Category Code: MSCL
TIDM: MGCI
LEI Code: 549300E9W63X1E5A3N24
Sequence No.: 424621
EQS News ID: 2312294
End of Announcement EQS News Service
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