The board of derated debt fund BioPharma Credit (BPCR ) has been quick to resume buybacks after Swiss pharmaceutical giant Roche agreed to buy part of portfolio company LumiraDx’s, which had failed to pay back a hefty loan.

As part of an earlier amendment to the loan, BPCR was granted two observer seats on the board, giving it inside knowledge of the deal and therefore restricting the board of the £1.3bn investment company from buying back shares to narrow the discount that had emerged.

On the day of the news last week that BPCR will recover 80% of its loan, the board chaired by Harry Hyman started buying back stock and has spent £4.5m so far, according to stock exchange notices. It last bought back stock in July.

The 8%-yielder has a discount control mechanism in place, which comes into effect when the shares fall more than 5% below asset value. 

The combination of poor sentiment over the problem loan and a lack of buybacks saw its shares fall from a premium to a discount in the second half of last year.

Since 2 January, the shares have jumped 11.3% to 94 cents, but remain on a 7% discount to the November NAV of 101.38 cents.

A continuation vote was triggered after the share price discount average over a 12-month rolling period ending on 31 October crossed the 10% threshold. On 28 December 94% of voting shareholders backed the company.

JPMorgan Cazenove’s Chris Brown noted that if BPCR reduces the discount rate applied to LumiraDx to reflect the reduced risk the NAV would increase and in turn widen the share price deficit. However, he maintained an ‘overweight’ recommendation.