Axiom European Financial Debt Fund - Resilience and regulatory changes driving returns
Axiom European Financial Debt Fund (AXI) has made a 21% total return over the last 12 months, well above the average of its debt investing closed-end funds peers. AXI’s investment space, European financials regulatory capital debt, has remained buoyant. Bank capital equity ratios remain high, NPLs are falling, balance sheet liquidity is comfortable and profitability is growing (eurozone banks’ average ROE was 7.2% in Q121). Rising interest rates (if not excessive) should be good news for banks’ margins and profitability at this stage of the cycle. AXI’s portfolio has a 7.8% running yield; 8.3% to perpetuity. AXI is trading on an 11% discount to NAV with a covered 6.4% dividend yield.Axiom European Financial Debt Fund is an authorised closed-ended investment company. Co. provides shareholders regulatory capital instruments, which constitute regulatory capital for the purposes of Basel I, Basel II or Basel III or Solvency I or Solvency II, derivative instruments, being CDOs, securitisations or derivatives, whether funded or unfunded, linked or referenced to regulatory capital instruments and other financial institution investment instruments, being financial instruments issued by a European financial institution, including without limitation senior debt, which do not constitute regulatory capital instruments. As of Dec. 31 2016, the Fund's investment portfolio totaled £49,145,000 and its assets totaled £60,877,000.
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