28 October 2024

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

Monthly Factsheet as at 30 September 2024

The Company's Fact Sheet as at 30 September 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 30 September 2024.

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

"September in the UK saw some positive news on the economy, with inflationary stresses calming further and the private sector showing growth, although not as strong as in August. Employment in the private sector was not quite as rosy, as manufacturing was still cutting jobs, while the more buoyant service sector showed only a slight increase in hiring.

Manufacturing was sending signals of a more significant underlying problem: declining pre-production inventories and finished goods stocks, weaker demand for goods, and increased supply chain delivery times. Subject to the effects of the Budget at the end of this month, it appears highly likely that the Bank of England will decrease rates again before the end of the year.

Regarding the Budget, the markets have not yet reacted to various rumours and counter rumours about what will be taxed and to what extent. As we have mentioned before, this could be the most impactful budget since the Thatcher era and will set out how markets view the Labour-run UK economy and how hard individual investors are hit. Most importantly, the question will be which areas will genuinely benefit?

The Eurozone is in a much worse position than either the US or the UK. The temporary boost seen in France over the Olympics is in the rear-view mirror with the French HCOB Flash Composite Output index falling to 47.7 against August's robust 53.1. Manufacturing continued to be weak and, unsurprisingly, Services fell to a six-month low. The only real upside in data across the Eurozone was that the fall in input and output inflation could encourage the European Central Bank (ECB) to cut rates further. Manufacturing needs a boost as the sector has been in recession for 27 months and is shedding jobs at the fastest rate since August 2020. It is looking likely that the Eurozone is heading for stagnation.

The US economy remains in expansion mode and relies on the services sector for growth. The September PMI figures imply a GDP growth of 2.2% in the third quarter. However, looking forward to the fourth quarter, the uncertainty caused by the forthcoming presidential election is causing concern for much of the private sector, in both manufacturing and services. Inflation is still not under control, and wage inflation is still a particular worry in services, where wage increases are at their fastest rate for 12 months.

The Company's main purchases during the month were Investec 10.5% perpetual; Aston Martin 10.375% 2029; Travelodge 10.25% 2028; 3 t Global 11.25% 2028; Bluewater Holdings 12% 2026; and Tullow Oil 10.25% 2026. Due to continuing market demand, the liquidity for these purchases came from issuing shares."

-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/