Recommending the NB Global Corporate Income Trust (ASX: NBI)

Global high yield bonds is a $2.8 trillion asset class and a major pillar of the global fixed income universe – one that is highly diversified by geography, sector and credit quality. It has been typically inaccessible in Australia - or by retail investors - as specialist expertise is required to operate in this market, however, this is set to change as global investment manager Neuberger Berman introduces its NB Global Corporate Income Trust (NB GCIT). The NB GCIT is a listed investment trust (LIT) designed to provide investors with access or exposure to the global high-yield bond market (ASX Code: NBI).

The investment objective of the trust is to provide stable income with a target distribution of 5.25% p.a. after fees, payable monthly. The trust aims to provide incremental capital appreciation throughout the cycle and more importantly, avoid capital downside. The NB GCIT is not leveraged and foreign currency risk is hedged into AUD.

This product is best recommended for investors looking for diversified exposure to the global high yield market and broader fixed income asset class. Our basis for recommending the NB GCIT is a blend of both subjective and objective analysis of the underlying portfolio and the manager’s background, experience, analytical capability and proven track record.

Neuberger Berman commenced managing US high yield bonds in 1997 and expanded into the management of Emerging Market high yield bonds in 2003 and European high yield bonds in 2006. The firm launched its dedicated European High Yield strategy in 2014 coinciding with the growth in size and depth of European high yield markets. 

The NB GCIT team consists of 56 investment professionals and is supported by NB’s global network of nearly 2000 employees, operating in 20 countries and managing $378 billion globally. This strength, scale and expertise underpins the firm’s high yield platform which has been in existence for over 20 years and evolved in line with the broader market.

Based on our research, we believe this product offers investors a stable and consistent source of income with the yield being offered considered fair and commensurate with its risk.

Given the above reasons, BondAdviser recommends investors subscribe to the NB Global Corporate Income Trust (ASX: NBI).

The trust is expected to list and commence trading on the 26th of September 2018 at an indicative Net Asset Value (NAV) of $2.00 (equal to the issue price of $2.00 per unit). Equity Trustees Limited will serve as the Responsible Entity. Given the robust liquidity of the market, proceeds are expected to be invested within 3 days. Management costs associated with the LIT are indicated to be 0.85% p.a. of invested capital. Neuberger Berman will cover all set-up and offer costs associated with the launch of the NB GCIT and there is no charge-back mechanism to investors.

You can access our full research here.