M&G Credit Income Investment Trust plc (MGCI)
28 January 2021
MGCI Dividend Announcement
M&G Credit Income Investment Trust plc
Dividend Declaration and update on dividends and management fees
M&G Credit Income Investment Trust plc (the "Company") is pleased to announce an interim dividend of 1.95 pence per Ordinary Share in respect of the period from 1 October to 31 December 2020. The dividend will be paid on 26 February 2021 to ordinary shareholders on the register on 5 February 2021. The ex-dividend date will be 4 February 2021.
As referred to in Part 7 'Taxation' of the Company's prospectus dated 26 September 2018, the Directors have chosen to apply the 'streaming' regime to part of the dividend payment. Accordingly, the Company has designated 0.77 pence per Ordinary Share as an interest distribution and 1.18 pence per Ordinary Share as a dividend to shareholders.
This dividend, in combination with the Company's three previous quarterly dividends, represents an annualised rate of LIBOR plus 4% for the financial year ended 31 December 2020, the level originally targeted by the Company at launch.
The Board believes that it should pay dividends from income and prior capital gains (including accumulated capital gains from previous years). It therefore proposes to continue hereafter with three, level quarterly interim dividends in respect of each financial year plus a variable, fourth interim dividend to be determined after each year end, which will take into account the net income over the whole financial year and, if appropriate, any capital gains.
M&G Alternatives Investment Management Limited (the "Investment Manager") has made strong progress in increasing the portfolio's exposure to private assets and, thus, the income available for paying dividends. Accordingly, the Company proposes to increase the first three interim quarterly dividends to be paid in respect of the 2021 financial year from an annual rate of LIBOR plus 2.75% to an annual rate of LIBOR plus 3%, calculated by reference to the opening NAV as at 1 January 2021, and adjusted by the payment of the dividend referred to in this announcement.
The Investment Manager believes that an annual total return, and thus ultimately a dividend yield, of LIBOR plus 4% will continue to be achievable in the future although there can be no guarantee that this will occur in any individual year. Accordingly, the Board is of the view that the portfolio is now appropriately positioned and, in accordance with the agreement previously notified to Shareholders, the management fee paid by the Company to the Investment Manager will increase with effect from 1 April 2021 from 0.5% to 0.7% per annum of the Company's net asset value.
Adam English, the lead portfolio manager says:
"The global pandemic sparked unparalleled moves in the markets and provided us with the opportunity to selectively add risk to the portfolio. As global stimulus measures began to take effect, the strong recovery in asset prices contributed to the performance of the portfolio. We continued to increase our allocation to private and illiquid public assets and are now close to reaching the long term state of deployment, with nearly 60% of the portfolio held in long term private or illiquid assets, generating an attractive yield."
"Over 79% of the portfolio is invested in Investment Grade debt assets and the portfolio has a weighted average credit rating of 'BBB'. As uncertainty remains on the horizon, we are well positioned to respond to renewed bouts of volatility with the ability to deploy the £25m gearing facility established in 2020."
"We're delighted that the Company is declaring a 1.95 pence p/s dividend for Q4 2020, bringing the annualised dividend for full year 2020 to Libor plus 4%, which is in line with the long-term return objective originally communicated when the Company first launched in November 2018."
"The first three quarterly dividends will be increased to an annual rate of LIBOR plus 3% for 2021, with the fourth dividend being variable. We still maintain our long-term commitment to generate an annualised dividend yield (based on NAV) of LIBOR plus 4% into the future"
3.1. Additional regulated information required to be disclosed under the laws of a Member State
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End of Announcement
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