25 September 2025

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

Monthly Factsheet as at 31 August 2025

The Company's Factsheet as at 31 August 2025 has been submitted and is available for inspection on the Company's website, https://ncim.co.uk/cqs-new-city-high-yield-fund-ltd/.

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

"The headline numbers for UK economic growth showed the fastest growth for 12 months with the S&P Global Flash UK PMI Composite output index at 53, up from 51.3 in July. Yet again this has been led by a strong service sector and supported by a more stable manufacturing sector. However, we believe that prospects do not support this growth going forward, with fragility and concern at the fore, as companies worry about what may impact them and their clients in the November Budget. Additionally, geopolitics is still casting a shadow over exporters.

Employment numbers continued to weaken due to increasing staff costs from the last Budget and the weakness in future orders. At 3.8%, inflation for July, which continued into August, failed to help sentiment significantly. This decreases the chance of any further rate cuts by the Bank of England this year. There was considerable speculation during the month on where Chancellor Rachel Reeves would raise taxes to cover the growing economic deficit; wherever the taxes are raised, they are likely to further dampen the private sector economy. Markets too have their worries over the next Budget with UK 30-year Gilts reaching a yield of 5.61%, perilously close to the 1998 high of 5.66%. Logic dictates that this increases the cost of future borrowing for the government and corporates and, without sensible growth alongside it, could prove a further drag on the economy.

In Europe, August was positive, with both the services and manufacturing sectors picking up. This was partially due to trade agreements with the US and the advantage of a large internal European market, especially in tourism and cross-border exports. Manufacturing has now been positive for the sixth month in a row, helped by stability for Germany and France, the latter of which had been a distinct laggard. Add this improvement in the services sector in both countries, due to growth in Germany and a slowdown in the recession in France. On the political front, the French government continued to battle the prospect of a no-confidence vote being carried in early September. This is weakening the French government bond market with its 30-year bond now yielding 4.513%, the highest since 2009 but yet still substantially lower than the UK.

It was a very positive month for the US Economy, which seems to be firing on all cylinders. Service and manufacturing sectors are combining to give an S&P Global US Flash PMI Output Index of 55.4 versus 55.1 in July, an eight-month high. Companies are reporting stronger demand across the board, but are unable to satisfy it, resulting in the highest backlogs since the early stages of Covid-19 in 2022. This upturn has created a shortage of labour, increasing the cost to companies, which, along with the added costs of tariffs, is pushing inflation higher. This logically would mean zero rate cuts and even possibly a rate rise. However, with President Trump's attack on the Federal Reserve's independence, including the removal of Lisa Cook from the Fed's board, markets should be cautious of authoritarian interference in independent institutions, particularly the largest of central banks globally.

For the Company, the fourth interim dividend of 1.51p/share was paid at the end of the month.

Across the portfolio, the Kantar 9.25% Euro-denominated bond was called, being replaced by adding to Sigma (Flora) 8.625% 2031, Pizza Express 9 7/8% 2029, and Aston Martin 10.375% 2029. We also switched out of Deutsche Bank 7.125% perpetual into Sherwood Financing 9.625% 2029.

With August being one of the quieter months for the market in terms of trading volumes, we anticipate both primary (new issue) markets and secondary markets volumes and opportunities to pick up in September."

-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 30 June 2025, the Company's dividend yield was 8.77%. 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/