AFT Stock Recent News

We review CEF market valuation and performance through the third week of March and highlight recent market action. Most CEF sectors saw lower NAVs due to the drop in stocks and Treasuries, but discounts tightened in all but 3 sectors. Saba is in a fight with ASA Gold & Precious Metals CEF, which has adopted a rights offering to dilute Saba.

We review CEF market valuation and performance through the first week of March and highlight recent market action. CEFs were mostly up on the week, driven by a decent PCE report. CEF investors have to contend with different levels of fund-level reporting, with semi-annual reports being particularly unhelpful.

In this article, we discuss why we recently rotated into the loan closed-end fund Apollo Senior Floating Rate Fund from its sister fund Apollo Tactical Income Fund Inc. The AFT CEF is trading at an 8.5% discount and a 12% current yield. AFT has outperformed the loan CEF sector in total NAV terms and has increased its distribution by 72% since 2022.

AFT is an income fund that offers a high yield over time for income investors. While its assets are not considered investment grade, they are backed by collateral and supported by protective covenants. Dividend history has shown the durability of its portfolio, with cuts being short-lived and yields on cost remaining attractively high.

FTF: A Good Compromise Debt CEF For A Strong Economy In 2024

Apollo Senior Floating Rate Fund offers a high level of current income with a 12.36% yield, outperforming other debt funds. The AFT closed-end fund's focus on floating-rate securities allows it to avoid the impact of interest rate swings and maintain stable returns. The fund's holdings primarily consist of below-investment-grade securities, but the majority have a credit rating of B- or above, so we should not have default problems.

We take a look at the action in business development companies through the second week of November and highlight some of the key themes we are watching. BDCs were flat on the week as markets consolidated after a recent run-up. All BDCs in coverage are in green for the month. Mid-Cap Financial Investment Corp. announced a merger agreement with two Apollo loan CEFs - not something we see every day.

Floating rate securities have strong yields, low duration, and have significantly outperformed YTD. There are several strong floating rate funds available to investors. Credit risk varies, but there are options with minimal risk and high yields in the floating rate space.

Senior loans offer some of the highest yields in the market today. AFT is a particularly strong senior loan CEF, with a growing 11.5% yield, and large 11.3% discount. Both are strong on an absolute basis, and higher than average. An overview of the fund follows.

Apollo Senior Floating Rate Fund focuses on senior secured leveraged loans, with a portfolio mainly consisting of single 'B' rated collateral. The fund has performed well, generating a total return of over 13% in the past year, benefiting from higher rates. The fund trades at a discount to NAV, which is expected to persist, but it has a low discount beta and is a good option for buy-and-hold investors.