Have amassed a holding at avg. $1.51 and continue buying when I can.
NTA is $1.74, but this is a mark-to-market valuation which is driven largely by interest rates and credit spreads relative to where the fixed rate loans are priced.
Current annual yield is c. 7% based on my entry price.
If these were private credit's that didn't trade in the global bond market, unless they face imminent default they'd all be held at face value - which for NBI's portfolio is closer to $2.0 a share. e.g. if NBI just let each loan mature, when the loans are repaid or refinanced in full (e.g. no defaults), they would have $2.00 of NTA (plus whatever benefits the buyback can generate).
As each loan matures, and NBI reinvests this into a new High Yield Loan based on the latest interest rate environment, the NTA should therefore gravitate back to $2.00
The only caveat to all this is NBI has a hugely disproportionate position in very weak credits - the CCC space. 25% of NBI is CCC, whereas the index only holds 5% of this rating, hence the index has a much lower probability of defaults at the individual borrower level.
My understanding is that NBI is largely held by retail investors (probably mostly SMSF) so are vey flighty when markets get the wobbles. I'm happy to look through this fear, and keep buying at low points like we're seeing now.
Historically there's never been an event where 25% of the high yield bond market has defaulted (and not recovered principal), hence $1.44 vs. $2.00 par value for the loan book has very limited downside risk, at 7% running yield, this is a greta place to park cash.
Onwards and upwards.
DYOR
NBI Price at posting:
$1.44 Sentiment: Hold Disclosure: Held
