![]() All else equal, the discount will narrow on its own as we approach the CEF's term maturity. Blackstone actually changed the CEF name back in February 2023 to reflect the term structure for the fund, but that did not have an impact on the discount. This in itself is a bit surprising given the Blackstone family name which usually commands a premium. We can see the CEF having a -10% to 0% range for its discount to NAV. Very wide discount for a term fundīSL's current discount to net asset value sits towards the bottom of its historic range: With its large -10% discount, which is at the bottom of its historic range, the CEF could produce even a greater upside. We believe default rates will stay low in the leveraged loan space and rates will stay higher for longer, which will provide a total return in excess of 10% for this name in the upcoming year. We are still a long ways away, and what matters now is the outlook for the fund and its return in the next twelve months. ![]() We covered this name before here, where we were warning investors they should be cognizant of the term maturity for the CEF in 2027. Blackstone Senior Floating Rate 2027 Term Fund ( NYSE: BSL) is an ideal fund to take advantage of such an environment. If unemployment stays low, PMIs stay above 50 and the economy is moving along at a healthy GDP growth rate, there is no incentive for the Fed to stimulate said economy via monetary policy. Something needs to break in the economy for the Fed to start lowering rates. As yields collapsed in the past two months, many analysts were hurrying-up to call upon the demise of floating rate assets. How does this translate into an investment thesis? Well, a goldilocks economy for longer will translate into floating rate assets yielding attractive dividend yields for much longer than expected. The economy seems to be humming along, with no recession in sight, although economic leading indicators have been deteriorating in the past year. ![]() The labor market continues to be more resilient than expected, and without a high unemployment rate the Fed has absolutely no reason to cut rates. With the jobs report just out, and non-farm payrolls rising more than expected, treasury yields are yet again rising.
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