Updated CEF Preferred Ratings-Corrected

At some point in the last couple of weeks a reader (we can’t remember who for sure) notified us that the credit ratings shown for the Closed End Fund preferred shares were out of date.  Generally we use the rating given at issuance, but are unable to update changes.  In this case, since this is one of our favorite areas, we wanted them to get updated.

We have now updated the latest credit ratings–virtually all of the rated issues are rated by Moodys.  Most ratings are NOW A1 or A2.  This rating is described as upper mid level investment grade.  Previously many of these issues were rated Aa3 which is a notch higher than the current rating.  The downgrade of these issues were all because of increased levels of leverage.

CEFs are required to have an asset coverage ratio of 200%.  Coverage ratios were previously higher for these issues, but because of an increase in preferred stock outstanding leverage has increased.

We still consider the RATED ISSUES the highest quality preferred stocks outstanding for those looking for pure safety.  NOTE if interest rates risk these issues may fall in price by more than higher coupon issues.

The list is here.

5 thoughts on “Updated CEF Preferred Ratings-Corrected”

    1. Hi built–glad to have you. Let me look this issue over and get it on the list. Thanks for your input.

  1. Tim,

    Thanks for this list. The Priority Income Fund preferreds are also term preferreds. I have some of their preferred B and I like seeing it on your “safe” list.

    1. Hi Andrew–be cautious on the issues not rated. Virtually all of these are very safe, but the unrated issues (which includes Priority Income) are holders of CLO (collateralized loan obligations) and I don’t think you want to hold them if we enter a recession.

      1. It looks like Oxford Lane Capital is the same. Nice 5 star rating by Morningstr on the CEF itself. But I will pass because of this

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