PKO - PIMCO August Coverage And Shareholder Report Update

• We take a look at the August coverage figures alongside the annual shareholder reports.
• If you were confused by the July coverage figures, you're going to hate the August report sequel.
• The circumstances around the strange income levels over the past 2 months suggest that they are not driven by normal market factors but by discretionary portfolio decisions.
• Our view remains that forward-looking indicators such as borrowing levels, leverage costs and sensitivity to floating-rate instruments are a better gauge of fund earnings than disclosures.
• We once again like PKO here due to its high leverage, low fee among the high-leverage cohort, attractive premium and more sustainable distribution rate.

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