Blackrock Global Floating Rate Income Trust
Investment Notes

May 19, 2005

Blackrock Global Rate (BGT)(17.21)

The following are notes I took as I spoke to Blackrock in regards to BGT. BGT is a loan participation fund. Net Asset Value is 18.96, and price as I type this is 17.21 (last trade). This equates to a discount of over 9%. The notes below are haphazard, unedited, and raw. I keep these as a history on most of my investments. Hence, I can refer to them.

rep from Blackrock said the following:

broad market closed end fund sell off about a month ago. Floating rate universe has been changing their dividends. Blackrock thinks
movement in dividend has funneled money elsewhere. “unfortunately, we did not change dividend. We don’t want to risk destroying NAV.”
Looking to increase dividend. Underlying portfolio is intact. “portfolio is solid, just trading down” Average credit quality is BB-

Gazprom is 2.3% portfolio position

default rate is near nil

rep (closed end specialist) () said the following:
bank loan market is slowing down, hence we are seeing bidding drying up. hedge funds need to sell.

designed as short interest rise, intention is to make money. funds are based on libor. as libor goes up, bank loan pays more income.
short term rates were so low, as rates rose, they called the loans. this demand has slowed down. primary market gives more income.

watch the bank loan market. bank loans were being bid up, recently sold off, they were selling at high premiums, this is selling off. bank
loan market was being bid up. bank loans themselves should have a stable nav. global floating rate stuff is fluctuating.

How does one follow bank loan market?

csfb leveraged loan index, find on web or wsj. here is a link which discusses the index.,2058,20_1028186,00.html?cmp=AFC-DV6185190922
corporate market in general. look at spread on corp to treasury.

disconnect has existed on rising LIBOR London Interbank Offered Rates vs. dividends increase.

libor was going up, but because spread vs. LIBOR was going down, this is based on supply and demand.

if spread increases, there is less demand for bank loans. traditionally banks have had a stable nav, there are secured underlying assets.
generally you will get 80 to 85% on the dollar. “In time you will see the conservatism of the Blackrock products” Track record has been
good according to . current spread is for BB LIBOR + 200, single b is LIBOR +250.
credit swaps…. commented on Steinberg’s comments about no one adjusting for risk. He said that over last few years, there has been a
credit default market. People are using and they are not tested because of their youth. they have not been through a difficult period.
these are not used in BGT.

could securities being priced unusually. Yes, for sure. I can buy a st treasury at 3.25, and a 10N at 4.10, or do i buy this at higher
yield. Hi yield has come under pressure.

what happens if long term rates go up and short terms stay stagnant, that should not effect BGT. Based just on short term floating rate.

if you have short fed hikes and corresponding long hikes, bank loans were up 10.32%, this happened in 1994.
explain leverage:

Kyne says: ” couple ways to leverage. issue common, then issue preferred’s off of the trust. ARPS reset every 7 days , these are 2.75 to
3.0%. Blackrock plays the spread. When the credit curb is steep, you can pick up spread b/w short and long term rates. When you use
leverage you are increasing exposure to fixed income market, you are increasing duration. Leverage of BGT is 35% to 38% leveraged.
Leverage should always be helpful, because you are always paying libor and always picking up spread on other securities.

what is expected expense ratio ? right now at 95 bp, should be around there. in 5N mgt fees go up.

what is expected turnover ratio? 11% turnover, possibly going to 50 to 100%.