Brunner Investment Trust PLC Edison issues review on The Brunner Inv. Trust
June 13 2018 - 6:55AM
RNS Non-Regulatory
TIDMBUT
Brunner Investment Trust PLC
13 June 2018
London, UK, 13 June 2018
Edison issues review on The Brunner Investment Trust (BUT)
The Brunner Investment Trust (BUT) has recently announced a
refinancing of its second (and last) tranche of high-cost debt
(GBP28m). It placed a GBP25m note at a record low rate of 2.84% for
30-year debt, made possible due to declining UK government bond
yields as a result of recent political concerns in Italy. The
remaining GBP14.4m costs (including accrued interest) to repay the
debt will be financed by existing assets and bank debt, and will
meaningfully lower BUT's overall weighted average interest costs
from 7.7% to 2.9% pa. Manager Lucy Macdonald describes this as an
exciting development, as it will allow the trust to have a more
efficient balance sheet and provides greater flexibility to
increase the dividend in real terms. Coupled with the lower cost of
debt, a potentially higher yield could lead to a narrowing in the
trust's discount. BUT has a distinguished distribution track
record, growing dividends for the last 46 consecutive years.
BUT is trading at a 9.6% discount to cum-income NAV, with debt
at fair value. This is narrower than the averages of the last one,
three, five and 10 years (range of 10.6% to 13.0%). There is room
for the discount to narrow further following the meaningful
reduction in the trust's cost of debt and the potential for higher
dividend growth. BUT's current dividend yield is 2.1%.
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