As fair as I know we are still awaiting pricing and ticker information for some recently announced new issues.
The previously announced new preferred from CEF Aberdeen Income Credit Strategies (ACP) has not been priced as far as I know. I did see that the issue is rated A2 by Moodys–very solid investment grade. I suspect the coupon will be low and the issue will likely trade weak (based upon the 4.375% issue from RiverNorth/DoubleLine Strategic Opportunity Fund which is rated A1 and is trading today at $24.30 as it is ex today).
Also I have seen nothing new on the Lument Finance Trust (LFT) which priced earlier in the week at 7.875%–don’t see it trading and no OTC trading has taken place. The permanent ticker is LFT-A. It is possible it will NOT trade OTC grey market but will start straight away on the permanent exchange (NYSE).
With the RiverNorth/DoubleLine Strategic Opportunity Fund having an A1 rating, would you consider owning the common (OPP) which yields over 12%, pays monthly and trades close to NAV? I would note that the dividend was lowered from 18 cents/mo in 2020 to $0.1586/mo thus far in 2021.
The attractiveness of a CEF common and its preferred have almost nothing to do with each other. So I would never assume that because one looks good, the other would be, too.
Dave-
OPP is trading at par (no discount) because we are going to be voting on the fund to open-end within the next month or two. If the fund open-ends, (i.e. becomes are regular mutual fund) the discount goes away which is why it is trading so tight. But if it does NOT open end, I would suspect the discount to widen out a bit – likely because they will do a rights offering. We removed OPP from our Core Portfolio based on this. Also, the 12% looks nice but it is not earned. In fact, 60% of that distribution is simply a return of capital or your own money coming back to you.
Thanks to both Alpha Gen Capital and sc for their input.
I’ve not looked at the numbers but my impression is that Aberdeen is a much larger and longer established firm than is RiverNorth and has more funds under management. RiverNorth may have nice numbers but you need to look closely at the firm as I always think of them as less than shareholder friendly. Also that they are very aggressive. Just one person’s view. I would much rather hold Aberdeen paper.- any day. SC