babson_ncsrs.htm

 
As filed with the Securities and Exchange Commission on September 6, 2013
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
 
 
 
Investment Company Act file number  811-22562
 
 
 
Babson Capital Global Short Duration High Yield Fund
(Exact name of registrant as specified in charter)
 
 
 
550 South Tryon Street, Charlotte, NC 28202
(Address of principal executive offices) (Zip code)
 
 
 
Janice M. Bishop
Secretary and Chief Legal Officer
c/o Babson Capital Management, LLC
Independence Wharf
470 Atlantic Avenue
Boston, MA 02210
(Name and address of agent for service)
 
704-805-7200
Registrant’s telephone number, including area code
 
 
 
Date of fiscal year end: December 31
 
 
 
Date of reporting period:  June 30, 2013
 
 
 
 
 
 

 
 
Item 1. Reports to Stockholders.
 
(GRAPHIC)

 
 

 

     
     
     
 
Babson Capital Global Short Duration High Yield Fund
 
 
c / o Babson Capital Management LLC
 
 
550 South Tryon St.
 
 
Charlotte, NC 28202
 
 
704.805.7200
 
 
http://www.BabsonCapital.com/bgh
 
     
 
ADVISER
 
 
Babson Capital Management LLC
 
 
550 South Tryon St.
 
 
Suite 3300
 
 
Charlotte, NC 28202
 
     
 
SUB-ADVISOR
 
 
Babson Capital Global Advisors Limited
 
 
61 Aldwych
 
 
London, UK
 
 
WC2B 4AE
 
     
 
COUNSEL TO THE FUND
 
 
Ropes & Gray LLP
 
 
Prudential Tower
 
 
800 Boylston Street
 
 
Boston, Massachusetts 02110
 
     
 
CUSTODIAN
 
 
US Bank
 
 
MK-WI-S302
 
 
1555 N. River Center Drive
 
 
Milwaukee, WI 53212
 
     
 
TRANSFER AGENT & REGISTRAR
 
 
U.S. Bancorp Fund Services, LLC
 
 
615 E. Michigan St.
 
 
Milwaukee, WI 53202
 
     
 
FUND ADMINISTRATION/ACCOUNTING
 
 
U.S. Bancorp Fund Services, LLC
 
 
615 E. Michigan St.
 
 
Milwaukee, WI 53202
 
     
     
     
     
     
 
(bgh listed nyse logo)
 
     
 
PROXY VOTING POLICIES & PROCEDURES
 
 
The Trustees of Babson Capital Global Short Duration High Yield Fund (the “Fund”) have delegated proxy voting responsibilities relating to the voting of securities held by the Fund to Babson Capital Management LLC (“Babson Capital”). A description of Babson Capital’s proxy voting policies and procedures is available (1) without charge, upon request, by calling, toll-free 1-866-399-1516; (2) on the Fund’s website at http://www.BabsonCapital.com/bgh; and (3) on the U.S. Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
 
     
 
FORM N-Q
 
 
The Fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This information is available (i) on the SEC’s website at http://www.sec.gov; and (ii) at the SEC’s Public Reference Room in Washington, DC (which information on their operation may be obtained by calling 1-800-SEC-0330). A complete schedule of portfolio holdings as of each quarter-end is available on the Trust’s website at http://www.BabsonCapital.com/bgh or upon request by calling, toll-free, 1-866-399-1516.
 
     
     

 
 

 

OFFICERS OF THE FUND
 
Russell Morrison
President and Principal
Executive Officer
 
Patrick Hoefling
Chief Financial Officer and
Principal Financial and
Accounting Officer
 
Andrew Lennon
Treasurer
 
Michael Freno
Vice President
 
Sean Feeley
Vice President
 
Scott Roth
Vice President
 
Melissa LaGrant
Chief Compliance Officer
 
Janice Bishop
Secretary/Chief Legal Officer
 
Michele Manha
Assistant Secretary
 
BABSON CAPITAL GLOBAL SHORT DURATION HIGH YIELD FUND
 
Babson Capital Global Short Duration High Yield Fund is a closed-end investment company, first offered to the public in 2012, whose shares are traded on the New York Stock Exchange.
 
INVESTMENT OBJECTIVE & POLICY
 
Babson Capital Global Short Duration High Yield Fund (the “Fund”) was organized as a business trust under the laws of the Commonwealth of Massachusetts on May 20, 2011, and commenced operations on October 26, 2012. The Fund is registered under the Investment Company Act of 1940, as amended, as a non-diversified, closed-end management investment company with its own investment objective. The Fund’s common shares are listed on the New York Stock Exchange under the symbol “BGH”.
 
The Fund’s primary investment objective is to seek as high a level of current income as the Adviser (as defined herein) determines is consistent with capital preservation. The Fund seeks capital appreciation as a secondary investment objective when consistent with its primary investment objective. There can be no assurance that the Fund will achieve its investment objectives.
 
The Fund will seek to take advantage of inefficiencies between geographies, primarily the North American and Western European high yield bond and loan markets and within capital structures between bonds and loans. For example, the Fund will seek to take advantage of differences in pricing between bonds and loans of an issuer denominated in U.S. dollars and substantially similar bonds and loans of the same issuer denominated in Euros, potentially allowing the Fund to achieve a higher relative return for the same credit risk exposure.
 
 
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Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
DEAR FELLOW SHAREHOLDERS,
 
It is our pleasure to provide you with the 2013 Semi-Annual Report for the Babson Capital Global Short Duration High Yield Fund (the “Fund”). We continue to believe our Global High Yield Investments Group at Babson Capital has a unique capability to offer investors a portfolio consisting of attractive yield opportunities in the global high yield market. We believe the recent performance of the Fund is a testament to the strength and collaboration of our global investment team and our expertise in the global markets. The global high yield asset class provided investors an adequate risk-reward premium during the first half of 2013 and we expect this trend to continue into the back half of the year.
 
We believe the global nature of the portfolio, primarily focusing on North American and Western European credits, provides investors with additional benefits compared to a U.S. only portfolio such as higher quality, increased yield, and lower duration credits. By leveraging our experienced team of investment professionals in the U.S. and U.K., we are able to primarily focus on North American and Western European credits with a fundamental bottom-up research approach and provide investors with what we believe to be our best relative value opportunities across jurisdictions, industries, credit quality and within the corporate capital structure. We continue to believe this approach and our seasoned team of investment professionals should provide investors with the opportunity for an attractive dividend yield in the future.
 
Market Review
 
The first of half of 2013 had a similar story to 2012, with investors searching for yield in the current low interest rate environment. This caused yields in both the U.S. and European markets to approach near all-time lows during the first quarter as investors entered the high yield market looking for attractive yields. Global high yield bond issuance also reached record highs mainly due to refinancing activity as companies took advantage of issuing lower coupon debt to refinance higher coupon payments. For the most part, the first quarter of 2013, could be characterized by healthy corporate earnings, accommodative central bank policies and modest economic improvement that helped support the global high yield asset class.
 
In the second quarter though, in light of concerns regarding the Federal Reserve’s tapering plans and the eventual increase of interest rates, volatility increased in the global high yield markets. In the U.S. high yield market, record outflows from retail investors put significant pressure on the market. With treasury rates stabilizing and more tempered enthusiasm from the Fed about growth, the high yield market rallied towards the tail end of the quarter. The Western European market experienced similar macro-economic headwinds in the second quarter as well. Market volatility increased and investor sentiment swayed mainly due to mixed economic reports and speculation regarding future U.S. Federal Reserve actions, Japan’s economic stimulus program and concerns over liquidity matters in China.
 
While yields fluctuated during the second quarter of 2013, we continue to see what we believe are attractive spreads for the current risk in the market despite the recent yield movements. The global fundamental picture remains healthy, with strong balance sheets, historically high EBTIDA margins, and prudent deployment of capital. Issuance volumes from M&A related activity remain at low levels compared to pre-financial crisis levels. We also expect that currently low default rates will continue for the foreseeable future.
 
We continue to expect modest volatility in the near-term as the markets sort out ever-changing views of global economic growth and central bank policies. However, the Fund continues to emphasize a fundamental approach to credit selection in order to identify good quality credits in the global high yield bond and loan markets. As a result, we believe the Fund will continue to offer attractive opportunities to our shareholders, particularly in light of the recent spike in yields.
 
Babson Capital Global Short Duration High Yield Fund Overview and Performance
 
The Fund ended June with a portfolio of 139 issuers, which is slightly more than the 121 issuers at the end of last year. A majority of the issuers are still domiciled in the U.S. (64.8%) followed by the U.K. (13.6%) and Canada (3.0%) - see Country Composition chart on page [4]. Over the course of the first half of the year, the U.K. market experienced the largest increase in exposure primarily due to attractive opportunities in the secondary market. The secondary market in Europe has proved to be an attractive market to pick up compelling opportunities that supplement the yield profile of the portfolio. In addition, these opportunities may help improve the credit profile of the Fund and reduce duration at the same time, as the European market is generally one notch higher in ratings and has shorter durations, on average, when compared to the U.S. market.
 
 
2

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
As of June month-end, the Fund was well positioned from a quality standpoint: 72.1% B-rated, 12.1% BB-rated, and 11.3% CCC-rated, with almost 60% of the portfolio consisting of secured obligations. Within the CCC-rated and below category, the majority of these assets are senior secured 2nd lien loans. Based on our experience within the current market environment, we believe these senior secured 2nd lien loan assets offer a tremendous amount of value and being senior secured offers additional protection to investors.
 
The portfolio composition gravitated more towards global high yield bonds at the end of the second quarter. The Fund sold lower yielding bank loans and redeployed the proceeds into higher yielding bonds that had traded down as a result of the recent technical pressure on the global high yield bond market from mutual fund outflows.
 
The Fund paid a dividend payment of $0.1677 per share during each of the past six months comprised of net investment income. Based on the Fund’s initial public offering price of $25.00 per share, the distribution represents an annualized yield of 8.05% per share. Assets acquired through leverage, which represented 21% as of June 30, 2013, were accretive to net investment income and benefitted shareholders. We expect to stay in this range for the foreseeable future and do not anticipate any need to increase the level of leverage in the portfolio based on the current market environment. From an NAV performance standpoint, the Fund increased +4.26% year-to-date.
 
In Conclusion
 
It is still our opinion that the Central Banks’ recent comments about maintaining low interest rates over the near term will help sustain solid performance in the global high yield market. At the same time, we are aware that the credit markets remain subject to volatility due to the unsettled political and economic situation in Europe, domestic policy concerns, and low global growth rates. In general, we believe global high yield credit fundamentals are likely to remain relatively stable, following significant balance sheet improvements over the last three years. We also expect global default rates to continue to remain below their historical averages.
 
We believe that our bottom-up fundamental approach to investing has allowed us to build a solid portfolio of our best ideas covering the entire global high yield market over the past 6 months. Thus far, the Fund has performed as expected, even during the most recent period of market volatility, and we believe the Fund will continue to offer an attractive dividend to our shareholders through the end of 2013.
 
From all of us at Babson Capital Management LLC, we appreciate your continued support for the Fund and our Global High Yield Investments Group.
 
Sincerely,
 
Russell Morrison
 
Russell Morrison
 
President and Principal Executive Officer
 
Babson Capital Global Short Duration High Yield Fund
 
Cautionary Notice: Certain statements contained in this report may be “forward looking” statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date in which they are made and which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the Trust’s trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the Fund’s current or future investments. We undertake no obligation to publicly update forward looking statements, whether as a result of new information, future events, or otherwise.
 
 
3

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
(CHART)
 
(CHART) 
 
*
Percentage of assets are expressed by market value and may vary over time. The percentages shown above represent a percentage of the Fund’s invested assets as of June 30, 2013.
 
 
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5

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
       
    June 30, 2013  
       
Assets
     
Investments, at fair value (cost $603,851,929)
  $ 604,344,571  
Cash
    11,165,780  
Foreign currency, at fair value (cost $5,599,334)
    5,580,483  
Receivable for investments sold
    17,404,046  
Interest receivable
    11,246,316  
Unrealized appreciation on forward foreign exchange contracts
    46,814  
Prepaid expenses and other assets
    28,315  
Total assets
    649,816,325  
         
Liabilities
       
Payable for investments purchased
    19,877,562  
Payable to adviser
    533,911  
Dividend payable
    3,363,701  
Accrued expenses and other liabilities
    486,600  
Note payable
    138,000,000  
Total liabilities
    162,261,774  
Total net assets
  $ 487,554,551  
         
Net Assets
       
Common stock, $0.00001 par value; 20,057,849 shares issued and outstanding (unlimited shares authorized)
  $ 201  
Additional paid-in capital
    477,890,815  
Undistributed net investment income
    401,164  
Accumulated net realized gain
    8,720,155  
Net unrealized appreciation
    542,216  
Total net assets
  $ 487,554,551  
Net asset value per share
  $ 24.31  
 
See accompanying Notes to Financial Statements

 
6

 

Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
STATEMENT OF OPERATIONS (UNAUDITED)
 
   
Period from
 
   
January 1, 2013
 
   
through
 
   
June 30, 2013
 
       
Investment Income
     
Interest income
  $ 25,230,493  
Total investment income
    25,230,493  
         
Operating Expenses
       
Advisory fees
    3,129,533  
Administrator fees
    930,177  
Interest expense
    776,334  
Directors’ fees
    146,173  
Professional fees
    73,917  
Printing and mailing expense
    43,122  
Registration fees
    14,876  
Other operating expenses
    756  
Total operating expenses
    5,114,888  
Net investment income
    20,115,605  
         
Realized and Unrealized Gains (Losses) on Investments
       
Net realized gain on investments
    5,315,817  
Net realized gain on forward foreign exchange contracts
    2,681,571  
Net realized gain on foreign currency and translation
    419,947  
Net realized gain on investments
    8,417,335  
Net unrealized depreciation of investments
    (10,868,157 )
Net unrealized appreciation of forward foreign exchange contracts
    2,758,044  
Net unrealized depreciation of foreign currency and translation
    (20,590 )
Net unrealized depreciation on investments
    (8,130,703 )
Net realized and unrealized gains on investments
    286,632  
Net increase in net assets resulting from operations
  $ 20,402,237  
 
See accompanying Notes to Financial Statements
 
 
7

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
STATEMENT OF CASH FLOWS (UNAUDITED)
 
   
Period from
 
   
January 1, 2013
 
   
through
 
   
June 30, 2012
 
       
Reconciliation of net increase in net assets applicable to common stockholders resulting from operations to net cash used in operating activities
     
Net increase in net assets applicable to common stockholders resulting from operations
  $ 20,402,237  
Adjustments to reconcile net increase in net assets applicable to common stockholders resulting from operations to net cash used in operating activities:
       
Purchases of long-term investments
    (228,602,127 )
Proceeds from sales of long-term investments
    203,373,381  
Purchases of foreign currency, net
    448,365  
Forward currency exchange contracts, net
    (2,758,043 )
Net unrealized depreciation
    10,878,470  
Net realized gain
    (5,978,383 )
Amortization and acretion
    615,304  
Changes in operating assets and liabilities:
       
Increase in interest receivable
    (2,567,213 )
Decrease in prepaid expenses and other assets
    (8,655 )
Increase in receivable for investments sold
    (15,371,110 )
Decrease in payable for investments purchased
    (21,335,447 )
Decrease in payable to Adviser
    (308,183 )
Decrease in accrued expenses and other liabilities
    27,830  
Net cash used in operating activities
    (41,183,574 )
         
Cash Flows From Financing Activities
       
Advances from note payable
    38,000,000  
Distributions paid to common stockholders
    (19,850,097 )
Net cash provided by financing activities
    18,149,903  
         
Net change in cash
    (23,033,671 )
Cash--beginning of period
    34,199,451  
Cash--end of period
  $ 11,165,780  
         
Non-Cash Financing Activities
       
Reinvestment of distributions by common stockholders in additional common shares
  $ 324,847  
 
(1) Commencement of operations.
  
See accompanying Notes to Financial Statements
 
 
8

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
 
   
Period from
January 1, 2013
through
June 30, 2013
   
Period from
October 26, 2012 (1)
through
December 31, 2012
 
Operations
           
Net investment income
  $ 20,115,605     $ 3,668,210  
Net realized gain on investments
    8,417,335       458,814  
Net unrealized depreciation on investments
    (8,130,703 )     8,672,919  
Net increase in net assets resulting from operations
    20,402,237       12,799,943  
                 
Dividends to Common Shareholders
               
Net investment income
    (20,177,140 )     (3,361,505 )
Total dividends to common shareholders
    (20,177,140 )     (3,361,505 )
                 
Capital Share Transactions
               
Net proceeds from sale of shares
    -       477,466,104 (2)
Issuance of 13,099 common shares from reinvestment of
               
distributions to stockholders
    324,847       -  
Net increase in net assets capital stock transactions
    324,847       477,466,104  
Total increase in net assets
    549,944       486,904,542  
                 
Net Assets
               
Beginning of period
    487,004,607       100,065  
End of period (includes undistributed net investment income of 401,164)
  $ 487,554,551     $ 487,004,607  
 
(1)  Commencement of operations.
(2)  Proceeds from sale of shares of $501,013,750 net of sales load paid and offering costs of $23,547,646.
 
See accompanying Notes to Financial Statements

 
9

 

Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
FINANCIAL HIGHLIGHTS (UNAUDITED)
 
    Period From
January 1, 2013
through
June 30, 2013
    Period From
October 26, 2012 (1)
through
December 31, 2012
 
Per Common Share Data (2)
           
Net asset value, beginning of period
  $ 24.30       23.82  (3)
Income from investment operations:
               
Net investment income
    1.01       0.18  
Net realized and unrealized gains on investments
    0.01       0.47  
Total decrease from investment operations
    1.02       0.65  
Less distributions to common stockholders:
               
Net investment income
    (1.01 )     (0.17 )
Total distributions to common stockholders
    (1.01 )     (0.17 )
Net asset value, end of period
  $ 24.31     $ 24.30  
Per common share market value, end of period
  $ 22.95     $ 23.77  
Total investment return based on net asset value (2)(4)
    4.26 %     2.69 %
Total investment return based on market value (2)(4)
    0.58 %     (4.27 )%
                 
Supplemental Data and Ratios
               
Net assets, end of period (000’s)
  $ 487,555     $ 487,005  
                 
Ratio of expenses to average net assets(5)
    2.07 %     1.85
%
Ratio of net investment income to average net assets(5)
    8.15 %     4.70
%
Portfolio turnover rate(2)
    33.21 %     4.74 %
 
(1)  Commencement of operations.
(2)  Not annualized.
(3) Net asset value at the beginning of the period reflects the deduction of the sales load and offering costs of $1.18 per share paid by the shareholder from the $25.00 offering price.
(4) 
Total investment return calculation assumes reinvestment of dividends at actual prices pursuant to the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions.
(5)
Annualized for periods less than one full year.
 
See accompanying Notes to Financial Statements

 
10

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
SCHEDULE OF INVESTMENTS (UNAUDITED)
June 30, 2013
 
   
Effective
                       
   
Interest Rate ‡
 
Due Date
 
Principal
   
Cost
   
Fair Value
 
                               
Fixed Income — 123.95%*:
                             
                               
Bank Loans — 20.77%*:
                             
Beverage, Food and Tobacco — 0.34%*:
                             
Performance Food Group Company
  6.25 %  
11/30/2019
      1,678,736     $ 1,670,349     $ 1,661,949  
Total Beverage, Food and Tobacco
                1,678,736       1,670,349       1,661,949  
                                     
Broadcasting and Entertainment — 1.46%*:
                                   
Deluxe Entertainment Services Group, Inc.
  8.75    
7/3/2017
      5,452,390       5,254,043       5,270,662  
TWCC Holding Corp.
  7.00    
12/11/2020
      1,822,860       1,804,632       1,831,975  
Total Broadcasting and Entertainment
                7,275,250       7,058,675       7,102,637  
                                     
Buildings and Real Estate — 0.79%*:
                                   
Tomkins Air Distribution
  9.25    
5/11/2020
      3,773,513       3,716,929       3,877,285  
Total Buildings and Real Estate
                3,773,513       3,716,929       3,877,285  
                                     
Chemicals, Plastics and Rubber — 2.25%*:
                                   
Cytec Monarch
  8.25    
3/20/2020
      6,000,000       6,176,127       6,000,000  
Pinnacle Operating Corp.
  11.50    
5/13/2019
      4,856,269       4,659,755       4,953,394  
Total Chemicals, Plastics and Rubber
                10,856,269       10,835,882       10,953,394  
                                     
Diversified/Conglomerate Manufacturing — 1.67%*:
                                   
Allflex Holdings, Inc.
  8.00    
6/11/2020
      2,232,322       2,209,999       2,230,938  
Alliance Laundry Systems LLC
  9.50    
11/30/2019
      1,728,930       1,711,655       1,752,702  
Northern Tool & Equipment Company, Inc.
  7.00    
12/6/2018
      4,135,714       4,053,511       4,156,393  
Total Diversified/Conglomerate Manufacturing
                8,096,966       7,975,165       8,140,033  
                                     
Diversified/Conglomerate Service — 2.41%*:
                                   
Endurance International Group Inc.
  6.25    
10/18/2017
      5,970,000       5,910,319       5,992,388  
Redprarie Corporation
  6.75    
12/14/2018
      2,985,000       2,928,031       2,993,716  
Redprarie Corporation
  11.25    
12/14/2019
      2,702,244       2,650,308       2,783,311  
Total Diversified/Conglomerate Service
                11,657,244       11,488,658       11,769,415  
                                     
Diversified Natural Resources, Precious Metals and Minerals — 0.73%*:
                             
Osmose Holdings, Inc.
  4.75    
5/2/2018
      3,598,426       3,562,455       3,587,920  
Total Diversified Natural Resources, Precious Metals and Minerals
          3,598,426       3,562,455       3,587,920  
                                     
Electronics — 1.58%*:
                                   
Kronos, Inc.
  9.75    
4/26/2020
      7,500,000       7,425,012       7,687,500  
Total Electronics
                7,500,000       7,425,012       7,687,500  
                                     
Finance — 1.49%*:
                                   
Confie Seguros Holding
  10.25    
5/8/2019
      1,880,257       1,859,599       1,899,059  
Cunningham Lindsey Group, Inc.
  9.25    
4/18/2020
      2,338,636       2,373,235       2,362,023  
Transfirst Holdings Inc.
  11.00    
6/30/2018
      1,004,072       975,474       1,021,644  
Wall Street Systems Inc.
  9.25    
4/24/2020
      1,980,000       1,980,000       1,987,425  
Total Finance
                7,202,965       7,188,308       7,270,151  
 
 
11

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
June 30, 2013
 
   
Effective
                       
   
Interest Rate ‡
 
Due Date
 
Principal
   
Cost
   
Fair Value
 
Bank Loans (Continued)
                             
                           
Healthcare, Education and Childcare — 3.02%*:
                         
Air Medical Group Holdings
  6.50    
6/20/2018
      2,244,874       2,222,438       2,267,322  
Gentiva Health Services Inc.
  6.50    
8/17/2016
      3,934,426       3,888,139       3,929,508  
PRA International
  10.50    
11/30/2019
      1,844,428       1,811,515       1,867,484  
Sage Products Holdings Iii, LLC
  9.25    
5/31/2020
      3,325,292       3,275,431       3,383,484  
TriZetto Group
  8.50    
3/27/2019
      3,325,000       3,309,161       3,291,750  
Total Healthcare, Education and Childcare
                14,674,020       14,506,684       14,739,548  
                                     
Mining, Steel, Iron and Non-Precious Metals — 0.66%*:
                                   
Boomerang Tube, LLC
  11.00    
10/8/2017
      3,256,298       3,227,675       3,207,454  
Total Mining, Steel, Iron and Non-Precious Metals
            3,256,298       3,227,675       3,207,454  
                                     
Oil and Gas — 2.36%*:
                                   
Chesapeake Energy Corporation
  5.75    
12/2/2017
      2,000,000       1,968,532       2,024,580  
NFR Energy LLC
  8.75    
12/31/2018
      7,008,901       7,099,685       6,973,856  
Rice Energy
  8.50    
9/26/2018
      2,503,689       2,501,345       2,497,430  
Total Oil and Gas
                11,512,590       11,569,562       11,495,866  
                                     
                                     
Retail Store — 2.01%*:
                                   
BJ’s Wholesale Club, Inc.
  9.75    
3/13/2020
      4,000,000       4,118,769       4,070,000  
FleetPride
  9.25    
5/8/2020
      3,000,000       2,942,212       2,842,500  
Smart & Final Holdings Corp.
  10.50    
11/8/2020
      2,871,795       2,786,096       2,886,154  
Total Retail Store
                9,871,795       9,847,077       9,798,654  
                                     
Total Bank Loans
                100,954,072       100,072,431       101,291,806  
                                     
Corporate Bonds — 103.18%*:
                                   
                                     
Aerospace and Defense — 0.50%*:
                                   
Ducommun Inc.
  9.75 %  
7/15/2018
      2,230,000     $ 2,395,448     $ 2,436,275  
Total Aerospace and Defense
                2,230,000       2,395,448       2,436,275  
                                     
Automobile — 5.64%*:
                                   
Accuride Corp
  9.50    
8/1/2018
      6,800,000       6,694,948       6,919,000  
J.B. Poindexter & Co. Inc.^
  9.00    
4/1/2022
      4,500,000       4,620,643       4,725,000  
International Automotive Components Group, S.A.^
  9.13    
6/1/2018
      4,866,000       4,886,246       4,866,000  
Meritor Inc.
  10.63    
3/15/2018
      3,000,000       3,061,709       3,247,500  
Meritor Inc.^
  7.88    
3/1/2026
      2,010,000       1,993,045       2,443,406  
UCI International, Inc.
  8.63    
2/15/2019
      5,215,000       5,175,888       5,319,300  
Total Automobile
                26,391,000       26,432,479       27,520,206  
                                     
Broadcasting and Entertainment — 1.88%*:
                               
Arqiva Finance+^
  9.50    
3/31/2020
      5,000,000       7,952,243       7,832,938  
CET 21 Spol Sro+^
  9.00    
11/1/2017
      950,000       1,319,200       1,349,088  
Total Broadcasting and Entertainment
                5,950,000       9,271,443       9,182,026  
 
 
12

 

Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
June 30, 2013
 
   
Effective
                       
   
Interest Rate ‡
 
Due Date
 
Principal
   
Cost
   
Fair Value
 
Corporate Bonds (Continued)
                             
                               
Buildings and Real Estate — 5.12%*:
                             
Ainsworth Lumber Ltd^
  7.50    
12/15/2017
      4,250,000       4,269,223       4,505,000  
Brookfield Residential Properties+^
  6.13    
7/1/2022
      1,620,000       1,620,000       1,589,625  
Builders FirstSource Inc.^
  7.63    
6/1/2021
      1,020,000       1,020,000       986,850  
Cemex International Capital LLC+^
  9.88    
4/30/2019
      2,890,000       3,812,822       4,213,157  
Lyon Williams Homes, Inc.^
  8.50    
11/15/2020
      8,000,000       8,055,979       8,700,000  
Roofing Supply LLC^
  10.00    
6/1/2020
      4,605,000       5,070,160       4,984,913  
Total Buildings and Real Estate
                22,385,000       23,848,184       24,979,545  
                                     
Cargo Transport — 2.80%*:
                                   
Kenan Advantage Group, Inc.^
  8.38    
12/15/2018
      8,000,000       8,000,000       8,320,000  
Moto Hospitality Limited+^
  10.25    
3/15/2017
      2,000,000       3,100,342       3,125,570  
Quality Distribution Inc.
  9.88    
11/1/2018
      2,040,000       2,186,636       2,218,500  
Total Cargo Transport
                12,040,000       13,286,978       13,664,070  
                                     
Chemicals, Plastics and Rubber — 7.51%*:
                                   
Associated Asphalt Partners LLC^
  8.50    
2/15/2018
      2,300,000       2,300,000       2,311,500  
Ciech Group Finance+^
  9.50    
11/30/2019
      1,200,000       1,538,876       1,663,499  
Cornerstone Chemical Co.^
  9.38    
3/15/2018
      7,975,000       8,229,588       8,373,750  
Ineos+^
  6.13    
8/15/2018
      970,000       970,000       926,350  
Ineos+
  6.50    
8/15/2018
      1,450,000       1,894,558       1,805,356  
Omnova Solutions, Inc.
  7.88    
11/1/2018
      1,630,000       1,668,700       1,695,200  
Perstorp Holding AB+^
  9.00    
5/15/2017
      3,130,000       4,071,933       4,114,883  
TPC Group, Inc.^
  8.75    
12/15/2020
      7,065,000       7,151,399       7,223,963  
Tronox Worldwide LLC^
  6.38    
8/15/2020
      9,000,000       8,935,548       8,482,500  
Total Chemicals, Plastics and Rubber
                34,720,000       36,760,602       36,597,001  
                                     
Containers, Packaging and Glass — 1.78%*:
                                   
Bormioli Rocco & Figlio S.P.A.+^
  10.00    
8/1/2018
      1,500,000       1,993,361       1,981,751  
Pretium Packaging, LLC
  11.50    
4/1/2016
      6,265,000       6,428,208       6,703,550  
Total Containers, Packaging and Glass
                7,765,000       8,421,569       8,685,301  
                                     
Diversified/Conglomerate Manufacturing — 0.60%*:
                                   
StoneMor Partners L.P.^
  7.88    
6/1/2021
      3,000,000       2,935,512       2,940,000  
Total Diversified/Conglomerate Manufacturing
                3,000,000       2,935,512       2,940,000  
                                     
Diversified/Conglomerate Service — 4.39%*:
                                   
Bravida+
  5.21    
6/15/2019
      650,000       850,396       846,068  
Bravida+
  6.60    
6/15/2019
      5,500,000       837,999       820,149  
Brickman Group Holdings, Inc.^
  9.13    
11/1/2018
      6,670,000       6,819,368       7,136,900  
Equiniti Group Ltd.+
  7.13    
12/15/2018
      1,460,000       2,222,582       2,215,492  
Ista 2007+
  6.88    
4/30/2021
      900,000       1,183,946       1,159,764  
Teamsystem S.P.A.+
  7.38    
5/15/2020
      2,180,000       2,769,368       2,681,514  
Verisure Holdings+^
  6.71    
9/1/2018
      3,500,000       4,476,657       4,544,360  
Verisure Holdings+^
  8.75    
9/1/2018
      1,440,000       1,971,574       2,014,943  
Total Diversified/Conglomerate Service
                22,300,000       21,131,890       21,419,190  
 
 
13

 

Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
June 30, 2013
                                     
   
Effective
Interest Rate ‡
 
Due Date
 
Principal
   
Cost
   
Fair Value
 
Corporate Bonds (Continued)
                                   
                                     
Diversified Natural Resources, Precious Metals and Minerals — 0.92%*:
 
Lecta S.A.+^
 
8.88
   
5/15/2019
     
1,090,000
     
1,431,858
     
1,340,757
 
Lecta S.A.+^
 
5.70
   
5/15/2018
     
2,600,000
     
3,240,273
     
3,130,451
 
Total Diversified Natural Resources, Precious Metals and Minerals
     
3,690,000
     
4,672,131
     
4,471,208
 
                                     
Ecological — 0.18%*:
                                   
ENCE+
 
7.25
   
2/15/2020
     
650,000
     
874,938
     
862,989
 
Total Ecological
               
650,000
     
874,938
     
862,989
 
                                     
Electronics — 1.68%*:
                                   
International Wire Group, Inc.^
 
8.50
   
10/15/2017
     
8,086,000
     
8,254,781
     
8,207,290
 
Total Electronics
               
8,086,000
     
8,254,781
     
8,207,290
 
                                     
Farming and Agriculture — 0.94%*:
                                   
Chiquita Brands International Inc.^
 
7.88
   
2/1/2021
     
4,350,000
     
4,318,419
     
4,556,625
 
Total Farming and Agriculture
               
4,350,000
     
4,318,419
     
4,556,625
 
                                     
Finance — 5.30%*:
                                   
Arrow Global Finance+^
 
7.88
   
3/1/2020
     
500,000
     
791,653
     
739,718
 
Brighthouse Group PLC+
 
7.88
   
5/15/2018
     
2,000,000
     
3,116,052
     
3,027,316
 
Cabot Financial+^
 
10.38
   
10/1/2019
     
5,000,000
     
8,421,220
     
8,336,755
 
First Data Corp.^
 
11.25
   
1/15/2021
     
6,000,000
     
5,992,500
     
5,985,000
 
Lowell Group Financing PLC+^
 
10.75
   
4/1/2019
     
2,000,000
     
3,407,234
     
3,327,097
 
TMF Group Holding+^
 
5.59
   
12/1/2018
     
1,400,000
     
1,802,552
     
1,827,912
 
TMF Group Holding+^
 
9.88
   
12/1/2019
     
2,000,000
     
2,687,237
     
2,603,285
 
Total Finance
               
18,900,000
     
26,218,448
     
25,847,083
 
                                     
Healthcare, Education and Childcare — 4.87%*:
                                   
Care UK Health+
 
9.75
   
8/1/2017
     
4,000,000
     
6,590,157
     
6,175,093
 
Cerba European Lab+^
 
7.00
   
2/1/2020
     
450,000
     
599,464
     
578,417
 
Crown Newco PLC+^
 
8.88
   
2/15/2019
     
5,100,000
     
8,320,362
     
7,601,752
 
Prospect Medical Holdings Inc^
 
8.38
   
5/1/2019
     
5,000,000
     
5,092,647
     
5,225,000
 
Valeant+^
 
7.50
   
7/15/2021
     
3,260,000
     
3,260,000
     
3,374,100
 
Voyage Care+^
 
6.50
   
8/1/2018
     
500,000
     
800,077
     
764,282
 
Total Healthcare, Education and Childcare
               
18,310,000
     
24,662,707
     
23,718,644
 
                                     
Hotels, Motels, Inns and Gaming — 1.97%*:
                                   
Elior+
 
6.50
   
5/1/2020
     
600,000
     
783,085
     
792,700
 
Gala Group Finance+
 
8.88
   
9/1/2018
     
5,500,000
     
8,829,067
     
8,833,729
 
Total Hotels, Motels, Inns and Gaming
               
6,100,000
     
9,612,152
     
9,626,429
 
                                     
Insurance — 0.19%*:
                                   
Towergate Finance PLC+
 
8.50
   
2/15/2018
     
600,000
     
942,052
     
938,200
 
Total Insurance
               
600,000
     
942,052
     
938,200
 
 
 
14

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
June 30, 2013
                                     
   
Effective
Interest Rate ‡
 
Due Date
 
Principal
   
Cost
   
Fair Value
 
Corporate Bonds (Continued)
                                   
                                     
Leisure, Amusement, Motion Pictures and Entertainment — 1.38%*:
Odeon & Uci Finco+
 
9.00
   
8/1/2018
     
4,200,000
     
6,958,456
     
6,723,398
 
Total Leisure, Amusement, Motion Pictures and Entertainment
   
4,200,000
     
6,958,456
     
6,723,398
 
                                     
Machinery (Non-Agriculture, Non-Construct, Non-Electronic) — 3.25%*:
Cleaver-Brooks, Inc.^
 
8.75
   
12/15/2019
     
4,740,000
     
4,875,829
     
4,977,000
 
KM Germany Holding+^
 
8.75
   
12/15/2020
     
1,450,000
     
1,876,585
     
1,936,454
 
Milacron LLC^
 
8.38
   
5/15/2019
     
5,800,000
     
5,951,682
     
5,916,000
 
Xerium Technologies
 
8.88
   
6/15/2018
     
3,000,000
     
2,878,840
     
3,015,000
 
Total Machinery (Non-Agriculture, Non-Construct, Non-Electronic)
     
14,990,000
     
15,582,936
     
15,844,454
 
                                     
Mining, Steel, Iron and Non-Precious Metals — 4.79%*:
Ausdrill Finance Pty Ltd.+^
 
6.88
   
11/1/2019
     
6,000,000
     
6,000,000
     
5,730,000
 
Barminco Finance Pty Ltd.+
 
9.00
   
6/1/2018
     
6,000,000
     
5,930,804
     
5,280,000
 
Fortescue Metals Group Ltd.+^
 
8.25
   
11/1/2019
     
2,000,000
     
2,065,703
     
2,060,000
 
Hecla Mining Company^
 
6.88
   
5/1/2021
     
4,925,000
     
4,929,966
     
4,567,938
 
Kaiser Aluminum Corporation
 
8.25
   
6/1/2020
     
800,000
     
868,256
     
886,000
 
New World Resources N.V.+^
 
7.88
   
5/1/2018
     
3,350,000
     
4,314,207
     
2,583,598
 
Rain CII Carbon LLC^
 
8.25
   
1/15/2021
     
1,390,000
     
1,390,000
     
1,390,000
 
Rain CII Carbon LLC
 
8.50
   
1/15/2021
     
650,000
     
855,139
     
846,068
 
Total Mining, Steel, Iron and Non-Precious Metals
   
25,115,000
     
26,354,075
     
23,343,604
 
                                     
Oil and Gas — 28.02%*:
                                   
Alta Mesa Holdings, LP
 
9.63
   
10/15/2018
     
4,275,000
     
4,374,097
     
4,435,312
 
Calumet Specialty Products
 
9.38
   
5/1/2019
     
7,365,000
     
7,901,988
     
7,880,550
 
CHC Helicopter+
 
9.25
   
10/15/2020
     
4,620,000
     
4,737,224
     
4,735,500
 
CHC Helicopter+^
 
9.38
   
6/1/2021
     
3,000,000
     
3,000,000
     
2,970,000
 
Chesapeake Oilfield Operating LLC^
 
6.63
   
11/15/2019
     
6,000,000
     
5,768,559
     
5,940,000
 
Era Group Inc.^
 
7.75
   
12/15/2022
     
3,000,000
     
2,949,330
     
3,000,000
 
Ferrellgas Partners LP
 
8.63
   
6/15/2020
     
7,135,000
     
6,996,321
     
7,259,863
 
Gibson Energy Holdings+^
 
6.75
   
7/15/2021
     
1,915,000
     
1,885,815
     
1,910,213
 
Halcon Resources Corporation^
 
9.75
   
7/15/2020
     
8,000,000
     
8,451,259
     
7,980,000
 
Headwaters, Inc.
 
7.63
   
4/1/2019
     
3,000,000
     
3,124,792
     
3,135,000
 
Hercules Offshore, Inc.^
 
10.25
   
4/1/2019
     
6,865,000
     
7,210,302
     
7,482,850
 
Magnum Hunter Resources, Corp^
 
9.75
   
5/15/2020
     
3,000,000
     
3,057,349
     
3,045,000
 
Midstates Petroleum Company Inc.^
 
10.75
   
10/1/2020
     
5,800,000
     
6,121,746
     
5,829,000
 
Midstates Petroleum Company Inc.^
 
9.25
   
6/1/2021
     
6,065,000
     
6,023,778
     
5,701,100
 
Millennium Offshore+^
 
9.50
   
2/15/2018
     
6,000,000
     
6,000,000
     
6,150,000
 
Niska Gas Storage
 
8.88
   
3/15/2018
     
6,500,000
     
6,726,005
     
6,743,750
 
Northern Tier Energy LLC^
 
7.13
   
11/15/2020
     
6,000,000
     
6,000,000
     
6,060,000
 
Pbf Holding Company LLC
 
8.25
   
2/15/2020
     
6,000,000
     
6,281,246
     
6,285,000
 
Penn Virginia Corp^
 
8.50
   
5/1/2020
     
4,000,000
     
4,000,000
     
3,880,000
 
Resolute Energy Corp.^
 
8.50
   
5/1/2020
     
7,285,000
     
7,441,683
     
7,412,488
 
Samson Investment Company^
 
10.00
   
2/15/2020
     
7,000,000
     
7,383,135
     
7,376,250
 
 
 
15

 
 
Babson Capital Global Short Duration High Yield Fund June 2013 Semi-Annual Report
 
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
June 30, 2013
                                     
   
Effective
Interest Rate ‡
 
Due Date
 
Principal
   
Cost
   
Fair Value
 
Corporate Bonds (Continued)
                                   
                                     
Oil and Gas (Continued)
                                   
Seven Generations Energy Ltd.+^
 
8.25
   
5/15/2020
     
3,645,000
     
3,645,000
     
3,626,775
 
Shelf Drilling Holdings Ltd+^
 
8.63
   
11/1/2018
     
6,000,000
     
6,078,139
     
6,240,000
 
Venoco, Inc.
 
11.50
   
10/1/2017
     
5,500,000
     
5,562,686
     
5,816,250
 
Welltec+^
 
8.00
   
2/1/2019
     
5,500,000
     
5,730,855
     
5,720,000
 
Total Oil and Gas
               
133,470,000
     
136,451,309
     
136,614,901
 
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