Figure is twice August's, while share buybacks fell month on month
Debt repayment by investment trusts accelerated in September as trust managers continued to de-gear their portfolios.
However, the acceleration in share buybacks also seen in September fell off in October, dropping from £53.4m to just £32m, although this was still higher than the low of £23.4m recorded in August.
Figures from Cazenove's monthly investment trust report show a total of £361.2m of bank debt was repaid in September, more than double the £158.8m repaid in August.
The number of trusts repaying debt in September was also up from August, from 13 to 19.
Iimia head of investment trusts Nick Greenwood said the increase in repayments is probably a delayed reaction to the equity market weakness in July and August.
'If you get a fall in the size of your assets, you need to reduce the size of the debt, otherwise you're allowing the gearing to go up,' he said.
Breakage costs associated with the repayments were lower in September, however, at £5.69m, compared to £7.96m the previous month.
Greenwood said this is probably a symptom of the rise in short-term interest rates since August, which would have reduced the spread to the rate at which the funds were lent and therefore the size of penalties applied to repayments.
'Money market rates have risen, so the level at which trusts have to compensate their lenders for foregone interest income has come down slightly,' he said.
The slide in share buyback activity among investment trusts saw the total number of funds making repurchases also decrease marginally in October, to 36 from the two-year high of 41 in September.
HSBC analyst Paul Locke said the reduction is partly due to the relatively narrow level of discounts in specific sectors such as UK Growth & Income, as well as more recent narrowing on some funds in the international generalist sector.
'While discounts remain high in other areas such as UK Smaller Companies,' Locke said, 'justification for deploying any sustained use of buybacks is at least in part reduced by the underlying cause ' continued risk aversion on the part of investors.'
This is accentuated by the low level of capitalisation among many trusts in the sector, he added, with the benefits to be derived from any share cancellation scheme needing to be set against any negative impact on the funds' liquidity.
Three funds dominated repurchasing by value in October: Scottish Investment Trust, Gartmore Irish Growth and Candover Investments.
The only new entrant to the buyback market in October was Merrill Lynch New Energy, which repurchased just 50,000 shares, or 0.03% of shares outstanding.
Call for 'preventative measures'
700 potential claimants
Know suitability requirements
As head of distribution
‘Misconduct is misconduct’