- A recovery in credit spreads and a drop in Treasury yields have buoyed the prices of preferred stocks and sector CEF NAVs.
- This has allowed preferred CEFs to increase borrowings this year which drives higher income levels and strengthens distribution coverage.
- In particular, the Flaherty, Nuveen, and First Trust preferreds CEFs have added to borrowings recently which will support income and coverage in the medium term.
- Over the longer term, the preferreds sector faces a number of headwinds of high-coupon stock refinancings, low reset yields, and rising short-term rates.
For further details see:
Preferreds CEF Sector Adds Borrowings To Boost Income