OCCI - OCCI: 17% Yield Is Not Enough To Justify The NAV Decline Risk
2024-01-23 21:33:19 ET
Summary
- OFS Credit Company is a small CEF that invests in CLO structures primarily associated with equity lever.
- Since the IPO back in 2018, OCCI has delivered relatively flat returns, where the dividend component has compensated for ~50% decline in NAV.
- In this article, I outline several reasons why OCCI is an inherently speculative bet and why the current dividend of 17% is not attractive enough to justify the underlying risk profile.
OFS Credit Company, Inc. ( OCCI ) is a CEF, which invests in CLO structures that are primarily associated with equity lever. The underlying pool of these CLOs is usually comprised of U.S. senior secured loans, which are then further segmented into several tranches starting from the most senior one (e.g., investment grade space) and ending at the equity bucket (i.e., the riskiest one), where OCCI happens to exercise its investment strategy....
OCCI: 17% Yield Is Not Enough To Justify The NAV Decline Risk