486BPOS: BlueBay Destra International Event-Driven Credit Fund Files Registration Statement Amendment

BlueBay Destra International Event-Driven Credit Fund has filed a post-effective amendment to its registration statement for the continuous offering of its shares.

Summary

• BlueBay Destra International Event-Driven Credit Fund is a diversified, closed-end management investment company operating as an interval fund.
• The fund's investment objective is to provide attractive total returns, consisting of income and capital appreciation.
• The fund will invest at least 80% of its total assets in credit-related instruments and at least 40% in securities of non-U.S. issuers.
• The fund employs an event-driven credit strategy, focusing on securities of companies facing corporate, market, or regulatory events.
• The fund offers Class I, Class A, Class L, and Class T shares, each with different sales loads and expense structures.
• The fund will conduct quarterly repurchase offers for no less than 5% and no more than 25% of its outstanding shares at net asset value.
• Destra Capital Advisors LLC serves as the investment adviser, and RBC Global Asset Management (UK) Limited serves as the sub-adviser.
• The fund intends to use leverage, including borrowing funds and investing in derivative instruments, up to 33 1/3% of its total assets.
• Destra has agreed to reimburse and/or pay or absorb, on a monthly basis, the ordinary operating expenses of the Fund to the extent that such expenses exceed 0.50% per annum of the Funds average daily net assets.
• The fund's management fee is 1.75% of the average daily managed assets, with a portion paid to the sub-adviser.

Sentiment

Score: 6

Explanation: The document is neutral in tone, providing factual information about the fund's structure, investment strategy, and risks. While the fund has some positive features, such as the expense limitation and diversified investment approach, the risks associated with leverage, illiquidity, and market volatility temper the overall sentiment.

Positives

• The fund has an expense limitation agreement in place to control operating costs.
• The fund has a diversified investment strategy across credit instruments and geographies.
• The fund has a clearly defined event-driven investment strategy.
• The fund offers multiple share classes to cater to different investor needs.
• The fund has a sub-adviser with significant assets under management.

Negatives

• The fund's shares are not listed on an exchange, limiting liquidity.
• The fund's use of leverage can magnify both gains and losses.
• The fund's investment strategy involves a high degree of risk.
• The fund's distributions may include a return of capital.
• The fund's management and sub-advisory fees are based on managed assets, which can increase with leverage.

Risks

• The fund's shares are not listed on an exchange, and a secondary market is not expected to develop.
• The fund's investments are subject to market risk, credit risk, and interest rate risk.
• The fund's event-driven strategy carries the risk that anticipated events may not occur or may not have the expected outcome.
• The fund's use of leverage can magnify losses.
• The fund's investments in non-U.S. securities are subject to currency risk and political risk.
• The fund's investments in below investment grade securities are subject to higher credit risk.
• The fund's investments in derivatives are subject to counterparty risk and liquidity risk.
• The fund's investments in illiquid securities may be difficult to dispose of at a fair price.
• The fund's repurchase policy may result in the sale of securities at unfavorable prices.
• The fund's valuation of illiquid securities involves subjective judgments and may differ from actual realizable value.

Future Outlook

The fund intends to continue its continuous offering of shares and to pursue its investment objective of providing attractive total returns, consisting of income and capital appreciation. The fund intends to use leverage opportunistically and may choose to increase or decrease its leverage, or use different types or combinations of leveraging instruments, at any time based on the Funds assessment of market conditions and the investment environment.

Management Comments

• Destra oversees the management of the Funds activities and is responsible for developing investment guidelines with RBC BlueBay and overseeing investment decisions for the Funds portfolio.
• RBC BlueBay acts as the Funds investment sub-adviser and makes investment decisions for the Funds portfolio, subject to the oversight of Destra.

Industry Context

The fund operates in the alternative investment space, focusing on event-driven credit strategies, which is a niche area within the broader fixed-income market. The fund's structure as a closed-end interval fund is common among alternative investment vehicles seeking to manage liquidity while investing in less liquid assets.

Comparison to Industry Standards

• The fund's management fee of 1.75% is within the typical range for actively managed alternative investment funds.
• The fund's expense limitation of 0.50% is a positive feature for investors, as it helps to control operating costs.
• The fund's use of leverage is common among credit-focused funds, but the specific level of 33 1/3% of total assets is a key factor to consider.
• The fund's quarterly repurchase offers provide some liquidity, but are less frequent than open-end mutual funds.
• The fund's investment strategy is similar to other event-driven credit funds, but the specific focus on international markets and non-U.S. issuers differentiates it from some competitors.
• The fund's use of derivatives is common among alternative investment funds, but the specific types of derivatives used and the level of exposure are important factors to consider.

Related Party Transactions

• In May 2018, the Fund issued approximately $25,000,000 of Class I Shares to Destra, RBC BlueBay and/or their respective affiliates at a price of $25.00 per Share, and have subsequently issued an additional amount of Class I Shares of approximately $22,000,000, Class A Shares of approximately $1,000,000, Class T Shares of approximately $1,000,000 and Class L Shares of approximately $1,000,000.

Stakeholder Impact

• Shareholders are subject to the risks associated with the fund's investment strategy and leverage.
• Shareholders have limited liquidity due to the fund's structure as a closed-end interval fund.
• Shareholders will bear the fund's expenses, including management fees and operating costs.
• Shareholders may receive distributions that include a return of capital.
• Shareholders may be subject to tax liabilities on distributions and capital gains.

Next Steps

• The fund will continue to offer shares on a continuous basis.
• The fund will conduct quarterly repurchase offers.
• The fund will monitor its portfolio and make investment decisions in accordance with its investment objective and policies.

Key Dates

Keywords

event-driven credit, interval fund, credit instruments, non-U.S. securities, leveraged finance, fixed income, derivatives, closed-end fund, high yield, emerging markets