Volta Finance Limited (VTA / VTAS) – July 2024 Monthly Report
This report is not for release, distribution, or publication in whole or in part.
AXA IM has released the monthly report for Volta Finance Limited for July 2024. The complete report will soon be accessible on Volta's website.
Performance and Portfolio Activity
In July, Volta Finance achieved a net performance increase of +0.9%, which includes a dividend payment of 14.5 cents per share. This brings the year-to-date return to +10.8% and the financial year performance from July 2023 to July 2024 to 19.7%. It’s important to consider this performance against the backdrop of broader credit markets, where both US and Euro High Yield have returned approximately +4.50% since January 1, 2024.
After a challenging June, financial markets regained momentum, buoyed by positive results from the French snap elections and various political developments in the US related to the upcoming presidential race. The PMI (Purchasing Managers' Index) readings in Europe indicated that the European Central Bank might contemplate lowering interest rates, a move that could also be mirrored in the US in September. Preliminary company earnings data hinted at a potential slowdown in sales and revenues in the US markets, raising concerns about a possible equity market correction. Interest rates fluctuated, ultimately settling just below 4.1% for US 10-year treasuries at the month’s close. High Yield indices experienced tightening, with Europe’s (Xover) improving from +319bps at the end of June to +294bps, while the US moved from +345bps to +331bps. The loan markets also showed resilience, as the Morningstar European Leveraged Loan Index climbed from 97.60px to 98.95px, while its US counterpart remained stable at around 96.60px.
In this favorable environment, CLO (Collateralized Loan Obligation) markets flourished, with significant issuance in the US (approximately USD 40 billion) and Europe (around EUR 10 billion), despite the typical slowdown in July. Spreads across the capital structure remained consistent, with AAA tranches in the +125bps range and BB tranches around +550bps among top-tier US issuers, providing clarity on equity arbitrage and exit strategies. Loan collateral portfolios showed minimal deviation from expected performance, with US default rates at 0.79% and European rates at 0.92%. Recovery rates, which had been trending upward in June, continued this positive trajectory in July, reaching approximately 61%. The share of CCC-rated loans within CLO collateral portfolios remained relatively stable, accounting for about 5.8% in US CLOs and 3.9% in European CLOs.
Volta Finance’s investment portfolio performed in line with expectations, benefiting from steady cash flow generation from its debt and equity investments. CLO debt instruments saw a performance increase of +1.4%, while European CLO equity tranches delivered returns exceeding 3%, thanks to strong early distributions from a position held since the warehouse phase. In contrast, CLO equity performance in the US market was mixed, with some valuations declining amid a slight reduction in overall payouts across the sector.
Consequently, cash flow generation over the past six months totaled €29.4 million in interest and coupon payments, representing about 22.5% of the month’s NAV on an annualized basis.
In terms of 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.
By the end of July 2024, Volta's NAV was recorded 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. Under the EU Transparency Directive, Volta’s home member state is the Netherlands, and it is regulated by the AFM, the authority overseeing Dutch financial markets.
Volta aims to preserve capital throughout the credit cycle while providing a stable income stream through dividends expected on a quarterly basis. The company primarily targets investments in CLOs and similar asset classes, pursuing a diversified strategy across structured finance assets on an opportunistic basis. AXA Investment Managers Paris, a firm specializing in structured credit, has been appointed to manage 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 asset managers based in Europe, AXA IM employs 2,700 professionals and manages €844 billion in assets as of December 2023.
Frequently Asked Questions
1. What was Volta Finance's net performance in July 2024?
Volta Finance reported 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 from July 2023 to July 2024 was 19.7%.
3. What were the main factors contributing to the market recovery in July?
The recovery was driven by positive outcomes from the French elections, developments in the US presidential race, and favorable PMI readings that suggested 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 stood at €260.9 million, which is 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 firm that specializes in structured credit.
