The return of long-dated investment trust debt

The return of long-dated investment trust debt

Jackie Beard, director of closed-end fund research at Morningstar, explains how trusts are negotiating new gearing facilities, including the reintroduction of long-dated debt, as the cost of borrowing falls.

Since the financial crisis, it has been common to hear how new borrowing facilities are impossible to negotiate. This had been the case until around 12 months or so ago, when banks started to lend once again. Indeed, we have recently seen a fair few investment trusts increase their gearing facilities through new or renegotiated facilities. A few have changed the nature of their gearing too. For some time, it has been common to see revolving unsecured loans in use as an investment trust’s mode of gearing, because this continues to be relatively cheap money with only a short-dated commi...