ISD - ISD: Not An Attractive Entry Point At This Level (Rating Downgrade)
2024-03-22 01:30:32 ET
Summary
- Credit spreads have tightened significantly, reaching historic lows, indicating a risk-on market and potentially inadequate compensation for credit risk.
- The discount to NAV for the PGIM High Yield Bond Fund has narrowed, approaching decade-long highs, suggesting a less attractive entry point.
- Despite the less appealing entry point, the fund has performed well and represents a solid choice to hold due to its high dividend distribution and successful management team.
- ISD has a classic build, with an overweight positioning in single-B and double-BB names, and an overall low leverage ratio of 22%.
Thesis
We last covered this name six months ago in a piece where we assigned this high-yield fixed income CEF a 'Buy' rating. The CEF is up significantly since we highlighted the opportunity:
Original Rating (Seeking Alpha)