30 August 2024

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

Monthly Fact Sheet as at 31 July 2024

The Company's Fact Sheet as at 31 July 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 31 July 2024.

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

"The emphatic win for the Labour Party in the UK election had a negligible impact on the market, with a result of this magnitude being widely forecast. This has maintained a stable political situation in the UK and is what markets feel comfortable with.

"An area of concern may be the rapid speed at which an above inflation offer to junior doctors was offered by the new government. The wider health service has the equivalent of 1.3 million employees and we could see the rest of the National Health Service (NHS), as well as other public sector workers, asking for the same treatment. Down the line, we believe there is a potentially large risk to the UK economy in the form of the defined benefits (DB) pension schemes across the public sector. These are unfunded and come out of the UK Treasury, unlike private schemes where a fund has been built up over time by defined contributions. Currently, £12 billion per year is paid to NHS pensioners, just over 10% of the figure paid to all UK pensioners by the government. The UK economy may not be able to fund such generous schemes in future without growth in the whole economy and resultant tax revenues.

"July's S&P Global Flash UK PMI figures were comfortably in growth territory with the composite output index at 52.7 and business activity at 52.4, with both reaching their two-month highs. Most notably, Manufacturing had the largest gain, with an output index of 54.4 and a PMI of 51.8, a 29-month and 24-month high respectively.  These growth figures added to the lowest price rises seen for three and a half years. Also encouraging was the strengthening in employment growth across most sectors and pleasingly flat in manufacturing which had previously experienced a 21-month sequence of losses.

"In Europe, the economic recovery faltered further in July. The decreasing level of employment in manufacturing has not slowed for 10 months. Worryingly, output has fallen faster, implying poor productivity as manufacturers hold onto staff in the hope of a recovery. It may take longer to see the corresponding improvement in employment data.

"The figures coming out of Germany are worrying with manufacturing new orders falling the fastest for 3-months and still no sign of improvement in sight. Additionally, the automotive sector is losing global market share to China. On a positive note, the service sector, and tourism in particular, had a strong month on the back of the UEFA European Football Championship.

"In the US, the main news was Joe Biden stepping aside for Kamala Harris as the Democratic Presidential candidate. For the economy, PMI data signaled moderating inflation with robust growth which is great for now, but there remain questions over whether this scenario lasts, or if one of these factors reverse. We witnessed manufacturing moving from expansion to contraction during the month, which could result in a reversal and as we get to the Presidential election in November the prospects for uncertainty will only increase.

"NCYF's shares went ex-dividend at the end of the month with 1.5p/share to be paid on the 30th August.

"The Company called on the last day of the month the Mangrove Luxco 7.75% Sept 2025, Transocean 11.5% Jan 2027 and Kent Global 10% June 2026. Stonegate announced a refinance of their bonds and funds will be received mid-August, with part of this rolled into the Stonegate FRN July 2029. In the equity element of the portfolio, we sold out of Harbour Energy and downsized our holdings in Diversified Energy and Croma Security."

-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/