Volta Finance Limited's Performance and NAV Update for July 2024
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Volta Finance Limited (VTA / VTAS) – July 2024 Monthly Report
Not for release, distribution, or publication in whole or part.
AXA IM has published the Volta Finance Limited monthly report for July 2024. The full report will be available on Volta's website shortly.
Performance and Portfolio Activity
Volta Finance demonstrated a net performance increase of +0.9% in July, including a dividend payment of 14.5 cents per share. This brings the year-to-date return to +10.8% and the financial year performance to 19.7% for the period from July 2023 to July 2024. This performance should be viewed in the context of broader credit markets, particularly as both US and Euro High Yield returned approximately +4.50% since January 1, 2024.
Following a turbulent June, the financial markets regained strength thanks to positive results from French snap elections and various US political developments related to the upcoming presidential race. The PMI (Purchasing Managers' Index) readings in Europe suggested that the European Central Bank might consider cutting interest rates, a path that could also be mirrored in the US in September. Early company earnings data indicated a potential slowdown in sales and revenues in the US markets, raising the possibility of an equity market correction. Interest rates fluctuated, settling just below 4.1% for US 10-year treasuries at the end of the month. High Yield indices saw tightening, with Europe’s (Xover) moving from +319bps at the end of June to +294bps, and the US from +345bps to +331bps. Loan markets also exhibited strength, as the Morningstar European Leveraged Loan Index rose from 97.60px to 98.95px, whereas its US counterpart remained steady at approximately 96.60px.
In this environment, CLO (Collateralized Loan Obligation) markets thrived, with significant issuance observed in the US (approximately USD 40 billion) and Europe (around EUR 10 billion) despite the usual July slowdown. Spreads across the capital structure remained stable, with AAA tranches in the +125bps range and BB tranches around +550bps among top tier US issuers, facilitating clarity regarding equity arbitrage and exit strategies. Loan collateral portfolios showed little deviation from expected paths regarding fundamentals, with US default rates recorded at 0.79% and European rates at 0.92%. Recovery rates, which trended upwards in June, continued to maintain this trajectory in July, approximating 61%. The proportion of CCC-rated Loans within CLO collateral portfolios remained relatively unchanged, representing about 5.8% in US CLOs and 3.9% in European CLOs.
Volta Finance’s investment portfolio aligned well with expectations, driven by steady cash flow generation from both its debt and equity investments. CLO debt instruments saw a performance increase of +1.4%, while European CLO equity tranches achieved returns exceeding 3%, notably benefiting from strong early distributions on a position held since the warehouse phase. Conversely, in the US market, CLO equity performance was mixed, with valuations experiencing some downturn amid a slight decline in overall payouts across the sector.
As a result, cash flow generation over the last six months amounted to €29.4 million in interest and coupon payments, equating to about 22.5% of the month’s NAV on an annualized basis.
Regarding activity, Volta Finance acquired a €1.6 million single-B rated tranche from the primary market and €7.6 million of a European CLO equity tranche.
As of the end of July 2024, Volta's NAV stood at €260.9 million, translating to €7.13 per share.
Contacts
For the Investment Manager
AXA Investment Managers Paris
François Touati
francois.touati@axa-im.com
+33 (0) 1 44 45 80 22
Olivier Pons
Olivier.pons@axa-im.com
+33 (0) 1 44 45 87 30
Company Secretary and Administrator
BNP Paribas S.A, Guernsey Branch
guernsey.bp2s.volta.cosec@bnpparibas.com
+44 (0) 1481 750 853
Corporate Broker
Cavendish Securities plc
Andrew Worne
Daniel Balabanoff
+44 (0) 20 7397 8900
About Volta Finance Limited
Volta Finance Limited is incorporated in Guernsey under The Companies (Guernsey) Law, 2008 (as amended) and is listed on Euronext Amsterdam and the London Stock Exchange's Main Market for listed securities. Volta’s home member state under the EU Transparency Directive is the Netherlands, thus it is regulated by the AFM, the regulator for Dutch financial markets.
Volta’s investment objectives focus on preserving capital across the credit cycle while providing a stable income stream through dividends anticipated on a quarterly basis. The company targets investment primarily in CLOs and similar asset classes, with a diversified strategy across structured finance assets being pursued opportunistically. AXA Investment Managers Paris, a firm specializing in structured credit, has been appointed for managing all its assets.
About AXA Investment Managers
AXA Investment Managers (AXA IM) is a multi-expert asset management firm within the AXA Group, a global leader in financial protection and wealth management. As one of the largest European-based asset managers, AXA IM employs 2,700 professionals and manages €844 billion in assets as of year-end December 2023.
Frequently Asked Questions
1. What was Volta Finance's net performance in July 2024?
Volta Finance recorded a net performance of +0.9% in July 2024.
2. How did the company's year-to-date return compare to its annual performance?
The year-to-date return was +10.8%, while the financial year performance was 19.7% from July 2023 to July 2024.
3. What were the main factors contributing to the market recovery in July?
The market recovered due to positive outcomes from the French elections and developments regarding the US presidential race, along with favorable PMI readings suggesting potential interest rate cuts.
4. What was Volta's NAV at the end of July 2024?
As of the end of July 2024, Volta’s NAV was €260.9 million, equivalent to €7.13 per share.
5. Who manages Volta Finance's investment portfolio?
The investment portfolio of Volta Finance is managed by AXA Investment Managers Paris, a company specializing in structured credit.
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