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Senior Floating Rate Loan Management

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Institutional Strategy > Fixed Income > Senior Floating Rate Loan Management

Senior Floating Rate Loan Management

A credit research-driven strategy that seeks attractive risk-adjusted returns through the disciplined management of credit quality/industry analysis and rotation

  • Disciplined credit process seeks to mitigate risk with potential for upside participation
  • Investment discipline seeks to understand the investment thesis for portfolio credits and underlying assumptions via our "Credit Best Practices" checklist which incorporates a risk management overlay and ESG framework
  • Experienced team led by Joseph Lynch and Stephen Casey, who have worked together for the entirety of their 20+ year careers and have managed floating rate loans through many credit cycles

Key Risks

Market Risk: The risk of a change in the value of a position as a result of underlying market factors, including among other things, the overall performance of companies and the market perception of the global economy.
Liquidity Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Credit Risk: The risk that bond issuers may fail to meet their interest repayments, or repay debt, resulting in temporary or permanent losses to the portfolio.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
Counterparty Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Operational Risk: The risk of direct or indirect loss resulting from inadequate or failed processes, people and systems including those relating to the safekeeping of assets or from external events.
Derivatives Risk: The strategy may use certain types of financial derivative instruments (including certain complex instruments). This may increase the portfolio’s leverage significantly which may cause large variations in the value of investments. Investors should note that the strategy may achieve its investment objective by investing principally in Financial Derivative Instruments (FDI). There are certain investment risks that apply in relation to the use of FDI.
Currency Risk: Investments in a currency other than the base currency of the portfolio are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment. If the currency of the portfolio is different from your local currency, then you should be aware that due to exchange rate fluctuations the performance may increase or decrease if converted into your local currency.


Investment Approach

Neuberger Berman's Non-Investment Grade Fixed Income team’s lead portfolio managers average 26 years of investment experience and are supported by one of the largest dedicated research teams in the industry. The research group is organized into specialty sector teams that analyze both floating rate loans and high-yield bonds, providing unique perspective to the team's co-portfolio managers whose approach to portfolio construction includes the following:

  • Bias toward large liquid issuers, and issues and companies with hard assets
  • Well-diversified by issuer, industry and quality
  • Endeavors to add value through active management: manage credit deterioration, industry and quality rotation and relative value analysis
  • Allocation to secured bonds based on relative value between loans and bonds

Investment Process

Focus on experience-based, in-depth credit and industry analyses, disciplined portfolio construction and ongoing portfolio surveillance.

Investment Universe

Approximately 800–1000 issuers
  • Strive to construct highly-diversified portfolios across:
    • Industry
    • Credit ratings
    • Companies
    • Yield analysis
    • Investment size
  • Avoid concentration of cyclical industries

Quality Screens

Approximately 400–500 issuers
  • Comprehensive analysis:
    • Macroeconomic
    • Industry
    • Credit

Credit and Industry Analysis

Approximately 200–250 issuers
  • Target companies with historically stable cash flows, liquidity and access to capital
  • Seek to eliminate:
    • Less liquid issuers
    • Most defaulted and distressed securities
    • Outliers and high-default potential issuers

Portfolio Construction

Approximately 100–150 issuers
  • Loans and securities rated BB+ and below
  • Includes U.S. and non-U.S. issuers


Joseph P. Lynch
Senior Portfolio Manager and Global Head of Non-Investment Grade Credit
28 Years of Industry Experience
22 Years with Neuberger Berman
Stephen J. Casey, CFA
Senior Portfolio Manager
29 Years of Industry Experience
22 Years with Neuberger Berman