Greenwich Loan Income Fund (GLIF.AIM) has announced a Q1 NAV of 54p (end-2012, 49.1p) with the increase being half asset appreciation and half currency related. Encouragingly, cash generation remains excellent and having passed all its CLO tests, a record $3.8m has been up-streamed to the parent. The quarterly dividend of 1.25p has been declared (yield close to 10%).
Continued positive loan markets has seen an appreciation in the underlying dollar value of GLIF’s assets. In Q1 there was a further c 5% increase in their value. Greater relative comfort about the US economy also saw the dollar appreciate against sterling, adding a further c 5% to the sterling reported NAV. Management has historically taken the view that the cost of hedging is disproportionate to the benefits received and there may be further gains/losses from this line.
Good loan market conditions are encouraging the early repayment of loans and reinvestment is at lower yields like-for-like. Management has addressed this issue with continued focus on niche lending markets which offer good and more sustainable margins. In Q1 there was also some benefit from deploying cash from earlier repayments (the CLO test on the proportion of the portfolio invested in senior notes was met this quarter). Overall record cash ($3.8m) was up-streamed to the parent from the CLO.
Management emphasis the benefits of sustainable dividends and has maintained the quarterly dividend at 1.25p despite excellent short-term trading and cash generation. We maintain our estimates at this early stage of the year.
To Read the Entire Report Please Click on the pdf File Below.