Yield Hunting Part 12: Close To 8% YTM With PhenixFIN And Its Baby Bond PFXNZ

2025-02-24 07:07:47 ET

Summary

• Our focus shifts to smaller BDC companies, specifically PhenixFIN Corporation, emphasizing its internally managed structure and diversified portfolio of senior secured loans and equity.
• PFXNZ bond offers a current yield of 5.68% and a yield to maturity of 7.96%, trading below par value, presenting an attractive investment opportunity.
• PFX boasts a decent credit rating with a final score of 8.5 (Baa2 equivalent), reflecting strong asset quality, profitability, and financial flexibility.
• Despite its smaller size, PFXNZ bonds outperform peers, offering higher returns relative to their credit score, making them a compelling addition to a diversified portfolio.

Our readers are already familiar with our series of low-duration picks. We have presented you with some of the best BDC companies, with their bonds, high credit ratings, and low-duration portfolios with high yields. We already know that trading such bonds is safer than investing in the assets of the BDC. In fact, our bonds are derivatives of the capital structure of a BDC company. Since we have already presented you with the best structure of BDC companies, now it is time to show you the same structure, but we go a little further down the credit quality ladder and continue with smaller companies. Before that, let us remind you again where the bond yields stand currently....

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