2024-07-25 00:12:33 ET
Summary
- BlackRock Debt Strategies is continuing to benefit from the "higher for longer" rate environment, moving from a wide discount to a premium.
- Despite rate cut expectations, DSU may continue to offer attractive yields with expectations that we don't go back to a zero-rate environment.
- DSU's distribution yield is 10.90%, but we should monitor coverage as they will require some capital gains to achieve this payout.
Written by Nick Ackerman, co-produced by Stanford Chemist
The "higher for longer" rate environment continues to benefit floating-rate closed-end funds such as BlackRock Debt Strategies ( DSU ). That has seen the fund that regularly traded at a wide discount move to a narrow discount and even a premium to its net asset value per share. With the outlook for rate cuts on the horizon, it could seem that floating-rate funds aren't a great choice, especially when they come at a premium....
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For further details see:
DSU: Rate Cuts Projected, But This CEF Can Still Deliver An Attractive Yield