Fidante Partners investigates the opportunities BGLF offers for investors seeking exposure to floating rate fixed income investments
- Blackstone/GSO Loan Financing (‘BGLF’) is the only listed investment company on the London Stock Exchange that invests in European and US CLOs, via the originator, Blackstone/GSO Corporate Funding (‘BGCF’). The exposures to European CLOs comply with EU risk retention rules. The company is run by an experienced manager, GSO Capital Partners, part of The Blackstone Group (‘Blackstone’), in a low cost management structure with ongoing charges of just 0.3%. On top of that, the interests of the company’s managers are aligned with investors, as Blackstone holds a substantial proportion of the company’s shares.
- The recent turnaround in NAV performance can be illustrated by the total return over the six months to November 2018, which was 7.3% (15.2% annualised), compared with down 0.4% (down 1.1% annualised) over the first five months of the year (all in EUR terms). This recovery has not fed through to the share price, which has continued the steady decline starting in H1 2017, with a sharp drop in late December 2018, with the result that the EUR-denominated shares are now at a 15.6% discount to NAV, similar to the level reached in the first half of 2016.
- We believe that BGLF is currently an attractive opportunity for investors seeking exposure to floating rate fixed income investments, at a time when rates are generally rising in developed markets. The potential for further NAV growth and the possible closing of the discount from the current historically wide levels suggest that decent performance for shareholders may be within reach. On top of that, the current dividend yield is an attractive 13.2%.
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