Fund Research

M&G Credit Income

Last update 05 March 2019

M&G Credit Income is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.

Please see the important information by following this link or at the bottom of the page.

Investment objective

The Company aims to generate a regular and attractive level of income with low asset value volatility by investing in a diversified portfolio of public and private debt and debt-like instruments (‘Debt Instruments’), of which at least 70% will be investment grade.

As at:

28/02/2019

Group/Investment

M&G Credit Income Investment Ord

Ticker

MGCI

Management Company

M&G

Manager Name

Jeremy Richards;Adam English;William Nicoll;

Association of Investment Companies (AIC) Sector

Sector Specialist: Debt

Dividend Distribution Frequency

Semi-Annually

Latest Market Capitalisation

£103,500,001

Latest Net Gearing (Cum Fair)

0%

Shares Outstanding

 125,000,001

(Discount)/ Premium (Cum Fair)

4.9%

Daily Closing Price

103.5p

M&G Credit Income Investment Trust launched in November 2018 and targets a dividend yield of LIBOR plus 4% per annum once fully invested. The trust offers investors access to illiquid and private debt markets, usually only the preserve of institutional investors, which offer attractive yields for taking extra liquidity and complexity risk.

At all times, the managers have committed to ensure that at least 70% of the investments will be investment grade. Their aim is that the trust will offer the yield of a high yield fund, but with the credit risk of an investment grade fund. With the economy in a late cycle phase, the lower level of credit risk could prove attractive as time goes on. At the same time, most of the investments are expected to be floating rate, offering protection from rising interest rates, and the duration will be low (currently around two years).

Since launch the trust has made good progress on getting invested. In line with the stated strategy, it has so far invested largely in liquid public securities which will serve as liquidity to invest in private, less liquid opportunities as they come up. The dividend level in the first accounting period is planned to be LIBOR plus 2.5%, payable in two instalments, with the trust moving to quarterly dividends and a LIBOR plus 4% payout from 2020 onwards.

The trust is managed by Jeremy Richards, for 25 years manager of the fixed income allocation of the Prudential’s Life Fund, who is able to draw on the expertise and analysis of a vast team of analysts at M&G working in highly specialised sectors of the fixed income universe. He works with his deputy Adam English and also Will Nicoll, co-head of alternative credit at M&G.

M&G’s resources and scale are such that they are often the originators of innovative structures, a trend in which it is anticipated that the trust will be able to participate, benefitting from the extra yield that typically comes with an immature asset class.

Since launch, the trust has traded strongly and currently stands on a 4.9% premium. The board has the authority to buy back shares to protect the discount, while there will also be a liquidity window held every five years allowing investors to redeem their investment at NAV. Having raised £100m in the IPO (the lower end of its target), the trust recently came back to the market with a fully subscribed placing raising an additional £25m in January, largely from original investors who wanted to increase their holdings.

Thomas McMahon

Important information

M&G Credit Income is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.

Please see the important information by following this link or at the bottom of the page.

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Fund History: M&G Credit Income

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