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Volta is a closed-ended, limited liability company registered in Guernsey. Its investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its shareholders through dividends that it expects to distribute on a quarterly basis. The rolling 12-month dividend is €0.62 per share (with €0.15/€0.16 per share paid quarterly). The assets in which Volta may invest, either directly or indirectly, include, but are not limited to, corporate credits, sovereign and quasi-sovereign debt, residential mortgage loans, commercial mortgage loans, automobile loans, student loans, credit card receivables, leases, and debt and equity interests in infrastructure projects. The current underlying portfolio risk is virtually all to corporate credits. The investment manager for Volta’s assets is AXA Investment Managers Paris, which has a team of experts concentrating on the structured finance markets.

  • Volta monthly report: In March, Volta’s NAV rose 0.5% (YTD 4%), taking it to €7.87 per share. The performance by asset class was bank balance sheet transactions (+0.7% for the month) and CLO debt tranches (+0.6%). The performances of Volta’s other asset classes in local currencies were -0.2% for CLO Equity tranches, +0.7% for Cash Corporate Credit deals and +0.4% for ABS.
  • Peers’ January reports: Blackstone GSO Loan Financing’s (MTM valuation) € NAV was up 1.2% (YTD 4.4%). Fair Oaks Income’s $ NAV was up 0.91% (YTD 1.9%). Marble Point saw a 1.26% $ NAV monthly fall (YTD 7.73%). TwentyFour Income Fund’s £ NAV rose 1.09% (YTD 1.52%). Carador is in wind-up . We reviewed Volta and its peers in our 25 February 2019 report, Diving deep finds you the treasure.
  • Valuation: Volta trades at a 12% discount to NAV. Peer-CLO finance funds trade at a ca.5% discount. In recent months and over the medium term, Volta has delivered a better NAV performance than its immediate peers and in-line volatility, making this discount anomalous.
  • Risks: Credit risk is a key sensitivity (Volta has a widely diversified portfolio). We examined the valuation of assets, highlighting the multiple controls to ensure its validity, in our 5 Sept 2018 initiation note. NAV is affected by sentiment towards its own and underlying markets. Volta’s long $ position is only partially hedged.
  • Investment summary: Volta is an investment for sophisticated investors, as there could be sentiment-driven, share price volatility. However, long-term returns have been good: ca.11% p.a. (dividend re-invested basis) over five years. The current portfolio-expected NAV return is over 10%. The historical yield is 8.9%, and we believe is covered by predictable income streams in 2019E.
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