RM Secured Direct Lending PLC (LON:RMDL) has said the focus of its portfolio on real assets and businesses not linked to the economic cycle will enable it to weather the current coronavirus storm as it reported 2019 results.
For the year ending December 31, 2019, the value of assets the group's rose to £119.5mln from £95.7mln as its portfolio performed well in more normal conditions but the corporate lending market has since been hit by the virus disruption.
“Looking ahead to the rest of 2020, opportunities will arise. However, first and foremost will be the management of the existing portfolio", it said.
“Given the unique nature of this event, and the almost wholesale shut down to industry, we expect monthly trading performance of a number of our borrowers to be impacted, the degree and severity will be subject to both sector-specific factors, macro 'health' factors and any structural credit support mechanisms built into the transaction/investment (for example funded interest reserve accounts)," it added.
RM noted that in partnership with financial sponsors and borrowers it will provide guidance and advice to holdings experiencing financial stress and aid in any workout situation.
“Overall, the Investment Management team believe that despite the recent market volatility the portfolio is well-positioned to continue to deliver the stable returns which investors are seeking and in addition there will be greater NAV growth as we target a return to the opening NAV,” it added.
The investment trust carries out an update on its portfolio each month and as at March 31 the net value was £105.9mln, with the gross value of investments £119.7mln compared to £131.2mln at the end of December.
These valuations are temporal, said RM, and exacerbated by the fact that the underlying instruments are generally relatively illiquid and therefore price movements can be exacerbated by extreme changes in sentiment.