Hastings High Yield Fund
Profile
Overview
Hastings High Yield Fund (HHY) is an ASX listed fund investing in high yield securities with the objective of providing unitholders with a regular source of income. Quarterly distributions are funded from interest received, participation fees and realised gains. Investments are made in high yield securities sourced from transactions associated with:
- infrastructure and privatisation;
- private equity;
- acquisition and financial restructures; and
- other leveraged finance transactions.
Strategy
The key elements of HHY's investment strategy are as follows:
- target investment in unrated and non-investment grade high yield securities which are not listed on ASX;
- invest in high yield securities issued by Australian and international entities that:
- hold a significant market position
- generate relatively predictable cash flows
- share an alignment of interests with management and shareholders
- rank ahead of an appropriate level of shareholder equity
- invest in high yield securities that provide for potential gains flowing from re-rating, early repayment and equity participation;
- target early involvement to generate participation fee income and positively influence the terms of investment; and
- hold investments for the medium to long term.
Returns and distributions
Returns to unitholders comprise regular cash distributions, distribution of annual tax credits and movements in the traded price of Units on ASX. Cash distributions are derived from:
- periodic income, in the form of interest and dividends, generated by HHY's investment portfolio;
- participation fee income associated with investments; and
- realised gains, in the form of gains on sale, early repayment penalties and equity participation.
Information on distribution history and guidance is available in the HHY Investor Centre.
Assets
Current investment portfolio
| Investment | Instrument | Unrated | Unlisted | Potential for gain | Participation fee income | Transaction source |
| AB Ports | Junior Floating Rate Loan | Yes | Yes | Early repayment | Yes | Infrastructure |
| Arqiva/NGW | Junior Floating Rate Loan | Yes | Yes | Early repayment | - | Infrastructure |
| BAA | Toggle Facility | Yes | Yes | Early repayment | - | Infrastructure |
| B&B Infrastructure | Subordinated Prime Adjusting Reset Convertible Securities | Yes | NZX (1) | Equity upside | - | Infrastructure |
| Cory Environmental | Junior Floating Rate Loan | Yes | Yes | - | - | Infrastructure |
| DCA Group | Junior Floating Rate Loan | Yes | Yes | Early repayment | Yes | Private equity |
| Eircom | Senior Term Loans | - | Yes | Early repayment | - | Private equity |
| EnviroWaste | Junior Floating Rate Loan | Yes | Yes | Early repayment | - | Private equity |
| European Directories | Second Lien Loan | Yes | Yes | Early repayment | - | Private equity |
| Hyne Timber | High Yield Non-cumulative Exchangeable Securities | Yes | Yes | Equity upside | Yes | Financial restructure |
| Maher Terminals | Junior Floating Rate Loan | Yes | Yes | - | - | Infrastructure |
| Manildra Group | Reset Secured Note | Yes | Yes | Early repayment | Yes | Financial Restructure |
| South East Water | Junior Floating Rate Loan | Yes | Yes | Early repayment | Yes | Infrastructure |
| Thames Water | Junior Floating Rate Loan | Yes | Yes | Early repayment | - | Infrastructure |
(1) Listed on the New Zealand Stock Exchange
The latest Product Disclosure Statement, Annual Report and Quarterly Report can be downloaded in the HHY Investor Centre.
