A Look At The New 8%+ Yielding BDC Baby Bonds

Dec. 21, 2023 7:58 AM ET, , , , , 54 Comments

Summary

  • The Fed's pivot towards rate cuts raises concerns about the performance of floating-rate assets and suggests a move along the yield curve.
  • BDC baby bonds are attractive assets due to their decent quality, fixed coupons and relatively low durations.
  • We highlight a number of newly issued bonds by BDCs.
  • Drier-powder assets like BDC baby bonds can reduce volatility, protect against drawdowns, and potentially outperform higher-yield assets during market sell-offs.
  • I do much more than just articles at Systematic Income: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

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It's fair to say that the most important development across markets is the Fed's pivot. Now that the Fed is telling the market to expect 7 rate cuts over the next two years it begs the question whether it's time

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This article was written by

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ADS Analytics is a team of analysts with experience in research and trading departments at several industry-leading global investment banks. They focus on generating income ideas from a range of security types including: CEFs, ETFs and mutual funds, BDCs as well as individual preferred stocks and baby bonds.

ADS Analytics runs the investing group Systematic Income which features 3 different portfolios for a range of yield targets as well interactive tools for investors, daily updates and a vibrant community.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of CGBDL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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