2024-06-07 09:52:14 ET
Summary
- XFLT.PR.A term preferred shares have been downgraded to Hold due to the security trading close to par and tight overall spreads in the credit markets.
- The current yield of the preferred shares is too low to buy, at only 6.6%, making it less attractive compared to other options.
- As the preferred shares near their maturity date in March 2026, they will become more of a cash parking vehicle with low duration, offering stability and predictability for investors.
- XFLT's collateral has performed admirably in the past year, helping the CEF's preferred shares trade close to par.
Thesis
We wrote about the 6.50% Series 2026 Term Preferred Shares ( XFLT.PR.A ) half a year ago, when we started covering the securities with a 'Buy' rating. In our original article, we highlighted the strong coverage for the securities and the appealing yields. The security is up since our rating:
Prior Rating (Seeking Alpha)
Read the full article on Seeking Alpha
For further details see:
XFLT.PR.A: With The Shares Close To Par, This Is A Hold Now (Rating Downgrade)