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London, UK, 7 September 2023
Edison issues update on Riverstone Credit Opportunities Income (RCOI)
Riverstone Credit Opportunities Income (RCOI) reported an H123 NAV total return (TR) of 4.1%, with all loan investments in its portfolio performing to plan (also with respect to key sustainability performance indicators embedded in the loan terms). In June 2023, RCOI participated in the refinancing of the Streamline Innovations loan, which allowed it to realise a gross internal rate of return (IRR) of 23.6% and multiple on invested capital (MOIC) of 1.29x on the original US$13.8m loan (after a holding period of 13 months). RCOI reinvested US$9.9m into a new loan to Streamline Innovations, with an estimated all-in yield to maturity of 13%. It declared a quarterly dividend of 2.0 US cents per share (in line with the previous quarter). At the current c 17% discount to NAV (including income), the last 12-month (LTM) payment now implies a c 10% dividend yield.
RCOI's targeted dividend yield of 8-10% on its IPO price of US$1.00 looks well covered (assuming no portfolio defaults). This is underpinned by the normalisation in the interest rate environment (current Secured Overnight Financing Rate, SOFR, of c 5.30%), confidence that RCOI will stay close to fully invested, as well as key portfolio metrics. These metrics include (on a weighted average basis as at end-June 2023): 1) a floating rate spread of 710bp, 2) a call premium at entry of 102.6%, 3) a structuring fee and/or original issue discount of 97.5% par and 4) a moderate loan to value ratio of 40%.
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