DJ Quarterly Review
M&G Credit Income Investment Trust plc (MGCI) Quarterly Review 04-Nov-2026 / 07:00 GMT/BST =---------------------------------------------------------------------------------------------------------------------- M&G CREDIT INCOME INVESTMENT TRUST PLC (the "Company") LEI: 549300E9W63X1E5A3N24 Quarterly Review The Company announces that its quarterly review as at 30 September 2026 is now available, a summary of which is provided below. The full quarterly review is available on the Company's website at: mandg_credit-income-investment-trust_quarterly-review_gb_eng.pdf Market Review The third quarter saw a sharp repricing across global government bond markets as renewed inflationary pressure, rising energy prices and heavy sovereign issuance pushed borrowing costs higher. The US-Iran conflict remained a key source of volatility, with disruption through the Strait of Hormuz contributing to a 42% rise in Brent crude over the quarter and taking oil above USUSD100 per barrel. Despite these pressures, global economic activity remained resilient. Inflation moved higher across the major developed economies as energy costs fed through to headline measures. Against this backdrop, central banks adopted a more hawkish stance. The Federal Reserve raised rates by 25 basis points in September, its first increase since 2023, while the European Central Bank and Bank of Japan also tightened monetary policy. The Bank of England, meanwhile, kept rates on hold at 3.75%, but retained a tightening bias in its messaging. Government bonds sold off materially. The US 10-year Treasury yield rose by 82 basis points over the quarter to 5.3%, its highest level since 2007, while the 10-year gilt yield increased from 4.8% to 5.4%. Fiscal concerns added to the pressure, particularly in France. Credit markets were resilient through much of the quarter, supported by investor demand and healthy corporate balance sheets, but weakened in September as sovereign volatility spilled into risk assets. Sterling credit was also affected by supply indigestion following a record breaking issuance from Alphabet (Google). Manager Commentary The Company delivered a NAV total return of +0.81% in the third quarter, compared with +1.89% for the benchmark. The portfolio's low-duration positioning helped offset the sharp rise in government bond yields, although relative performance was constrained by our continued defensive positioning, which involves forgoing some incremental yield in the near term in pursuit of stronger risk-adjusted returns over the longer term. Broader credit-market weakness in September also weighed on relative performance. Over the quarter, we continued to recycle capital from public holdings that had tightened materially into private opportunities offering more compelling prospective returns. Activity remained focused on maintaining credit discipline and identifying attractive relative value opportunities. We sold a GBP1.2 million holding in Aroundtown, acquired during the 2022-23 real estate sell-off, crystallising a notable capital gain, while also disposing of public bonds issued by Center Parcs (GBP1.6 million) and Quilter (GBP0.5 million), which had similarly performed well. We also exited a private TMT holding (GBP0.75 million) close to its original purchase price following a deterioration in the refinancing outlook. Ongoing execution risk and the potential need for further lender support led us to conclude that the balance of risk and reward favoured an exit. Our deployment into private markets was spread across both investment-grade and high-yield opportunities. We invested GBP0.75 million in a direct-lending transaction supporting the acquisition of a global provider of high-pressure water-mist fire-suppression systems, and GBP1.2 million in a term loan supporting the acquisition of a North American telecom infrastructure-services provider. We also allocated GBP1.6 million to the mezzanine tranche of a new regulatory-capital transaction referencing a USUSD2 billion portfolio of senior global lending facilities, as well as GBP2 million to a bilateral CPI-linked loan to a UK regulated utility. Demand for share issuance returned during the quarter, with the Company issuing an additional 4.1 million ordinary shares and subsequently allocating GBP3 million to increase exposure to the M&G Investment Grade ABS Fund. Outlook Investors continue to contend with significant uncertainty and volatility across financial markets. Disruption to energy markets and supply chains arising from the US-Iran conflict continues to weigh on the outlook for global growth and inflation. Earlier market optimism that the conflict would prove short-lived has faded, while the prospect of a prolonged period of elevated energy prices is adding to inflationary pressure and prompting a more hawkish response from central banks. This is likely to place renewed pressure on corporate profitability and consumer spending, particularly in Europe and the UK, where economies have greater exposure to imported energy costs. Economic activity has so far proved resilient, but higher energy prices, persistent inflation and rising sovereign borrowing costs present a more demanding backdrop for policymakers and corporate issuers. A higher-for-longer interest-rate environment also has important implications for investors. The Company's predominantly floating-rate portfolio and low duration reduce its sensitivity to movements in interest rates relative to more traditional fixed-income strategies, providing a degree of resilience should rates remain elevated for longer than expected. At the same time, the Company's SONIA-linked dividend target means shareholders could continue to benefit from a higher level of income while interest rates remain elevated. While many higher-quality companies remain well positioned to withstand a higher-rate environment, refinancing costs across the corporate sector have risen materially from the ultra-low-rate era. Although this is unlikely to result in widespread distress among investment-grade borrowers, it is likely to place greater pressure on weaker business models and highly leveraged issuers. Investment-grade credit spreads remain close to historically tight levels and, in our view, offer limited protection against a deterioration in economic conditions, an escalation in geopolitical tensions or a broader repricing of risk assets. The reaction to the more hawkish repricing of interest-rate expectations has been markedly bifurcated: investment-grade indices have widened by approximately 20 basis points, compared with almost 100 basis points for the high-yield index. Although investment-grade valuations remain tight in absolute terms, we continue to favour higher-quality credit on a relative basis, particularly given the greater sensitivity of more leveraged issuers to a higher-for-longer rate environment. In this environment, borrower resilience, financial discipline and cash-flow generation are increasingly important differentiators. Our focus remains on bottom-up credit analysis: identifying issuers where we believe the market is mispricing risk and avoiding situations where prospective returns provide insufficient compensation for the underlying credit exposure. This valuation-led approach has long been central to the Company's investment philosophy and is particularly relevant when markets leave little room for error. Beyond the immediate macroeconomic and geopolitical backdrop, the growing influence of artificial intelligence is also becoming increasingly relevant to global credit markets. While the associated growth potential is considerable, the theme has expanded beyond US equity markets and is increasingly relevant across other asset classes. The scale of AI-related debt issuance is increasingly influencing pricing dynamics in fixed income, while the financing required to support AI infrastructure is shifting some technology-sector risk from equity to credit markets. The Company has not participated in recent hyperscaler debt issuance on relative-value grounds and currently has limited exposure to AI-themed issuance. We continue to favour defensive corporate issuers supported by tangible assets and predictable free cash flow. The Company's flexible mandate across public and private credit markets remains a key advantage in the current environment. Supported by M&G's extensive credit research platform and longstanding presence in private markets, we can access a broad opportunity set and allocate dynamically to areas where we believe value is most compelling. This 'best of both worlds' approach enables the portfolio to benefit from the structural protections, stronger covenant packages and enhanced return potential available in private credit, while public markets provide liquidity and the ability to reposition the portfolio efficiently as opportunities arise. Periods of volatility can create attractive opportunities for long-term investors. Should market dislocations emerge and credit spreads move to more attractive levels, we believe the Company remains well positioned to deploy capital selectively where valuations become disconnected from underlying fundamentals. Consistent with our longstanding investment approach, we will continue to prioritise capital preservation, stable income generation and disciplined risk-taking, while remaining patient and deploying capital only where we believe the balance of risk and return is attractive. MUFG Corporate Governance Limited Company Secretary 3 November 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 =---------------------------------------------------------------------------------------------------------------------- Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. View original content: EQS News =---------------------------------------------------------------------------------------------------------------------- ISIN: GB00BFYYLXXX, GB00BFYYTXXX Category Code: MSCL TIDM: MGCI LEI Code: 549300E9W63X1E5A3N24 Sequence No.: 448465 EQS News ID: 2427816 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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November 04, 2026 02:00 ET (07:00 GMT)
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