Honeycomb trust bullish despite economic uncertainty

ALTERNATIVE finance investment trust Honeycomb has reported strong growth for 2018, despite an uncertain economic outlook.

In a December update, the trust’s manager said returns for the month were impacted by higher IFRS 9 provisions following an annual economic outlook review.

“The revised models reflect greater economic uncertainty and a more pessimistic view of the near-term potential of the UK economy,” the manager said.

The trust generated a 0.6 per cent net asset value (NAV) return per share annualised in December. This brought its year-to-date return to 8.4 per cent, or 25 per cent since inception.

Read more: Honeycomb sees 13pc growth in assets in third quarter

The specialist lending trust also reported growth over the quarter, with assets climbing from £562m to £603m, driven by originations of £78m. This growth was funded by an increase in debt drawings through its revolving debt facilities, Honeycomb said.

The majority of the trust is invested in consumer loans at 48 per cent of assets, totalling £292m. Property loans make up 39 per cent of the portfolio, while SME loans account for 11 per cent.

Read more: Honeycomb buzzes about originations as NAV gets sweeter

The manager says there are still “significant lending opportunities with attractive returns in the company’s chosen markets with the pipeline of new opportunities remaining strong”.

However, with the trust approaching its target debt to equity ratio, its capacity for new investments in the first quarter of this year will be limited, it said.

The Honeycomb trust is trading on a premium of 11 per cent to NAV.

Read more: Honeycomb NAV keeps improving