The changes in NAV arose primarily through:
· Interest income net of expenses of 0.71p;
· An increase of 0.67p in asset valuations; and
· An increase of 0.10p from FX movements.
During the month, the Company made two additional drawings on its Revolving Credit Facility of $50.0m and £20.0m respectively, resulting in total outstanding debt of £112.8m. After deducting cash, the Company had net leverage of £62.8m as at 28 February. The Company also had undrawn commitments, and one additional investment in settlement, collectively valued at £88.4m.
The Company's invested portfolio comprised of 48 private debt investments and 20 infrastructure bonds across 8 sectors and 26 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.5% and a weighted average life of approximately 5.4 years. Private debt investments represented 86% of the total portfolio and 70% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 94% of par. Investments which are pre-operational represented 18.8% of total assets.
The Company's invested portfolio remains geographically diverse with 47% located across North America, 19% in the UK, 26% in Europe, and 9% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has invested in selective opportunities in Spain. The Company's pipeline of future economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.
As at 28 February 2019, approximately 99% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover the cash costs associated with its hedging activities.
The Company's settled investment activities during February include:
· A $50.0m primary loan to Kaveh Ventures for the construction of a 96MW data centre in Ashburn, Virginia;
· A final £25.0m disbursement to Bulb Energy, an electricity supplier in the UK;
· An initial £7.2m primary loan to Forsa Energy, a company with a portfolio of gas-fired flexible generation assets in the UK;
· An additional PLN 2.3m disbursement to Project Warsaw's VAT facility;
· An additional $6.7m disbursement to Whittle Schools in the US; and
· An additional €0.5m disbursement to Hatch student housing in Cork, Ireland.
The following investment was prepaid during February, and was in-line with expectations:
· The $34.7m primary loan to Abteen Ventures.
Note (1) – excluding accrued interest
Market Summary
A total of 28 project finance transactions closed in February throughout the Company's eligible jurisdictions, worth $6.3bn in aggregate. Notable transactions during the month include:
· A €260m financing of the construction of the 240 MW Yerevan power plant in Armenia;
· A $742m financing of the 485MW Hannibal Port Power Plant in the United States;
· A $435m refinancing of the Brooklyn Navy Yard Cogeneration plant in New York City; and
· A CAD $412m PPP financing of the Tlicho All Season road in the Northwest Territories, Canada.
US GDP growth was confirmed to slow to an annualized rate of 2.6% in Q4 2018, a slowdown, but not as much as some investors had feared. This finalized growth for the year at 2.9%. US GDP is estimated to grow 0.5% in Q1 2019, a decrease from Q1 2018. China's economy continues to slow, with negative implications for US GDP growth.
Eurozone growth is estimated for 0.2% in Q1 2019, the same as Q4 2018. US tariffs and concerns about Brexit continue to undermine economic confidence, with the export-driven German economy particularly concerned. After ending its financial stimulus program, the ECB has decided to once again re-instate financial stimulus and has pushed back the earliest date at which it would increase interest rates.
Sterling has remained volatile throughout the month, weighed down by fears of a no-deal Brexit. UK economic growth remains slow, with a forecast of 1.4% GDP growth for 2019, although unemployment remains at 4.0%, its lowest rate since the 1970's. There remains considerable uncertainty driven by the lack of a clear plan for how the UK will manage its 29 March deadline for leaving the EU.