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Trust forced to pay bank debt

The European Technology and Income Trust managed by Aberdeen Asset Managers has been forced to pay off £40m of bank debt after the trust breached its banking covenants.

This is the second time the trust has been forced to repay its bank debt.

The first time was earlier this year when it was forced to pay off an £25m in bank borrowings.

The fund which invests in a mixture of technology shares and high yield corporate bonds has been hit by downturns in investor sentiment in both sectors forcing up the trusts bank borrowings relative to assets.

Under the trusts banking convenants, assets must total at least 165 per cent of banks borrowings.

UBS Warburg analyst John Szymanowski says the trust’s assets could fall a further 13 per cent before banking covenants were breached again.

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