Edison Investment Research Limited
London, UK, 14 April 2021
Axiom European Financial Debt Fund (AXI): Initiation - Capital opportunities
Axiom European Financial Debt Fund (AXI) is a closed-end fund that invests in European financials regulatory capital. If a bank's operations and equity position are robust enough to withstand shock asset losses, these instruments can be to a way to earn a premium return. Axiom also seeks opportunities from regulatory changes that lead banks to redeem some of their legacy instruments that no longer have the same capital rating under stricter rules. This is a niche space where it is important to be familiar with not only the banks, but also regulation, local legislation and even politics. The portfolio has a 6.1% running yield; 7.3% to perpetuity. The stock is trading on a 6.5% dividend, 8% below NAV.
The shares are trading at an 8% discount to NAV, with a trailing dividend yield of 6.5%. The dividend has been stable since 2016.
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