30 July 2024

CQS New City High Yield Fund Limited
("NCYF" or the "Company")

Monthly Fact Sheet as at 28 June 2024

The Company's  Fact Sheet as at 28 June 2024 has been submitted and is available for inspection on the Company's website, https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/.

The investment manager updates on the wider macro-economic environment and on key changes to the portfolio positions as at 28 June 2024.

Ian Franco Francis, Investment Manager at New City Yield Fund comments: 

"The last set of PMI figures under a Conservative administration were the lowest in seven months, though still indicated that the UK is in growth mode with the S&P Global Flash UK PMI Composite Index at 51.7, down from 53.0. This amounted to uncertainty in the business environment in the run-up to the 4 July General Election.

"CPI inflation hitting the 2% target, down from 2.3% a month earlier, leaves the Bank of England open to cutting rates in August. This would be subject to how the markets react to the Policies of the new Labour government with a large working majority, as announced in early July.

"Sterling has reacted well to the result of the election, strengthening against both the US Dollar and the Euro. Both the latter currencies could have political challenges ahead. In the US, with the Presidential elections in November, there were ongoing questions in the Democratic camp over the health of President Biden. However, this speculation ended in July with President Biden choosing to stand down and endorse his Vice President, Kamala Harris. The question remains whether the final Democratic nominee can fend off a very motivated former President Trump.

In Europe, France is a focal point - with the French vote initially swinging to the right after the first round before lunging to the left after the second. With no party having an overall majority, there is a hung parliament and it will be interesting to see how this eventually pans out.

"Away from politics in the Eurozone, as expected the European Central Bank ("ECB") cut the three key interest rates by 0.25%, hoping that this would aid recovery in the manufacturing sector. Given the weakness in the June figure for the HCOB Flash Eurozone Manufacturing Output Index, down to 46.0 in June from 49.3 in May, this may be a longer-term hope rather than a short-term fix.

"The US is still showing economic strength. Output growth hit a 26-month high with the added positive of cooling inflation, down by 0.1% in June to 3%. We believe this bodes well for the possibility of a rate cut in September. The difference between growth in the US and the rest of the Western economies is that the US growth is broad-based across both the service and manufacturing sectors, with job creation seen across the board.

"For the Company, we added to Holdings in Kantar 9.25% 2026, Gaming Innovation group FRN 2026 and Azerion group FRN 2026 while opening new holdings in two new issues: Coventry Building Society 8.25% Perpetual and Cruise Yacht Upper Holding Co 11.875% 2028. (Ritz Carlton Yachts.) Against these, we sold Deutsche Bank 7.125% Perpetual and further sold down Boparan 7.625% 2025.

"With the UK elections in our wake, we await the Autumn Statement from the new Labour Chancellor Rachel Reeves in September. There will likely be media speculation as to which sectors of the economy will or won't be beneficiaries."

-ENDS-

About CQS New City High Yield Fund Limited

CQS New City High Yield Fund Limited aims to provide investors with a high dividend yield and the potential for capital growth by investing in high-yielding, fixed interest securities. These include, but are not limited to, preference shares, loan stocks, corporate bonds (convertible and/or redeemable) and government stocks. The Company also invests in equities and other income-yielding securities.

Since the Fund's launch in 2007, the Board has increased the level of dividends paid every year. As at 31 December 2023, the Fund's dividend yield is 9.13%. In addition to quarterly dividend payments, the Fund seeks to deliver investors access to a high-income asset class across a well-diversified portfolio with low duration to help mitigate interest rate risk.

Further information can be found on the Company's website at https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/