The NB Global Corporate Income Trust (ASX: NBI) is a managed investment scheme which provides investors with an opportunity to obtain monthly income by investing in the bonds of large, liquid companies globally.
Today (i.e., 14 May 2019) the NB Global Corporate Income Trust has announced a pro rata 1 for 1 non-renounceable entitlement offer and shortfall offer of new fully paid ordinary units in the Trust to raise up to $476.3 Mn.
Under the Entitlement Offer, eligible unitholders are invited to apply for 1 New Unit at the Offer Price for every 1 existing Unit held on the Record Date, 31 May 2019 whereas under the Shortfall Offer, any new Units not taken up by eligible unitholders under the Entitlement Offer together with New Units available for issue utilising the Trust’s available placement capacity will be offered to new investors at the Offer Price.
Entitlement Offer will close on 26 June 2019 and the shortfall offer will close on 28 June 2019.
The Trust raised in excess of $413 million in its initial public offer (IPO), which was closed in early September 2018. After getting listed on the ASX on 26 September 2018, the Trust invested all the IPO proceeds within 3 days and has been paying a stable and consistent income stream monthly from mid-November 2018 to date in line with its Target Distribution.
Source: The Company’s Announcement
The trust was established by Neuberger Berman Australia Pty Ltd which is acting as the Manager of the Trust. The Trust is providing investors with exposure to the high yield bonds of large and liquid companies globally which the Manager believes may be an attractive investment solution for investors seeking stable and consistent income and diversification.
The investment objective of the Trust is to provide its Unitholders with a consistent and stable income stream paid through monthly distributions, while achieving an attractive level of total return (income plus capital appreciation) over a full market cycle.
By providing exposure to global high yield corporate bond markets, the Trust can provide diversification benefits to a domestically-biased portfolio containing assets such as Australian equities, property and traditional fixed income, and improve the risk/return profile of an investor’s investment portfolio.
The Manager of the trust aims to deliver a stable and consistent income stream, which, for the financial year ending 30 June 2019, is currently targeted at 5.25% per annum on the subscription price paid by investors under the IPO of the Trust, paid monthly, and is targeted to remain at the same rate for the financial year commencing 1 July 2019.
Basics of Bonds
A bond is a debt security which follows the same principle as a loan where the investor “lends” a principal amount to the borrower in exchange for interest payments and, generally, at maturity the repayment of the principal amount. The fixed interest payment on the bond is known as the coupon. The yield is, basically, the income return, which is usually expressed as an annual percentage rate based on the bond’s purchase price, current market price or face value.
NBI’s Shares are trading at $2.050, down by 0.966% as on 14 May 2019 (AEST: 3:10 PM).