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The BlackRock Floating Rate Income Trust Fund offers an attractive current yield of 11.26%, which is in line with its peers.

The article evaluates the BlackRock Floating Rate Income Trust as an investment option at its current market price. Investing in floating rate securities has been a successful strategy, delivering strong total returns. But that could change next year. I see an uptick in default rates and a more dovish Fed in 2024 as potential headwinds that will moderate returns going forward.

The BlackRock Floating Rate Income Trust is a closed-end fund that focuses on leveraged loans with the primary goal of generating current income for investors. The fund's distribution yield is well-covered, with most of the distribution coming from income received from underlying loans (96%) rather than return of capital. BGT maintains a balanced composition, with 62% of the portfolio in 'B' rated loans and only 9.35% in 'CCC' loans, demonstrating a diversified risk approach.

BlackRock Floating Rate Income Trust has been a strong performer, outpacing the S&P 500. The fund is currently trading at a discount to its net asset value, making it an attractive investment. BGT's income has been increasing along with higher interest rates, making it a good option for investors looking for a high income stream.

We review CEF market valuation and performance through the first week of July and highlight recent market action. CEFs were roughly flat on the week as NAVs fell while discounts remained resilient. CEF discounts tend to be procyclical, which remains an odd but welcome feature of the CEF market.

BGT generates a high distribution yield from a portfolio of junk loans. BlackRock Floating Rate Income Trust pays an attractive 11.8% forward distribution yield. However, I recommend investors avoid BGT as there is a mismatch between the fund's long-term returns of 5.4% over 15 years and the double-digit distribution yield paid.

19 out of 22 CEF sectors were positive on price and 12 out of 22 sectors were positive on NAV last week. Delaware/Abrdn mergers are closing this week.

Floating rate debt should remain in demand as the Fed continues to raise its benchmark rate. Further, the market is starting to come to terms with the fact that rates will be "higher for longer".

BlackRock announced its latest distributions earlier this month, with several boosts and cuts. Of those that boosted, two of those were FRA and BGT.

Floating rate debt should perform well as interest rates keep rising. With higher rates being a primary concern for markets, investors can front-run this through buying funds like BGT. BGT still offers a sizable discount to NAV, although it has narrowed since April.