First Trust Senior Floating Rate Income Fund II announces its monthly common stock distribution of $ 0.0896 per share for August
WHEATON, Fig – (BUSINESS WIRE) – The First Trust Senior Floating Rate Income Fund II (the “Fund”) (NYSE: FCT) announced the regularly scheduled monthly distribution of common stock of the Fund of $ 0.0896 per share, on August 16 2021 is payable to registered shareholders starting August 3, 2021. The ex-dividend date is expected to be August 2, 2021. The monthly distribution information for the Fund is set out below.
First Trust Senior Floating Rate Income Fund II (FCT):
Distribution per share:
Payout Rate based on NAV as of July 19, 2021 of $ 12.53:
Payout rate based on the closing price on July 19, 2021 of USD 12.35:
This distribution consists of the fund’s net investment income and the return on capital and may also consist of net capital gains realized in the short term. The final determination of the source and tax status of all distributions in 2021 will be made after the end of 2021 and will be provided on Form 1099-DIV.
The fund is a diversified, closed management company. The primary investment objective of the Fund is to achieve high ongoing income. As a secondary objective, the fund seeks to preserve the capital. The Fund pursues these investment objectives by investing primarily in senior secured floating rate corporate loans. Under normal market conditions, the Fund will invest at least 80% of its assets under management in lower-rated debt securities.
First Trust Advisors LP (“FTA”) is a government registered investment advisor and acts as the investment advisor to the Fund. FTA and its subsidiary First Trust Portfolios LP (“FTP”), a FINRA registered broker-dealer, are privately held companies that provide a variety of investment services. The FTA manages or regulates joint assets of approximately $ 205 billion as of June 30, 2021 through mutual funds, exchange-traded funds, closed-end funds, mutual funds, and separate managed accounts. FTA is the regulator of the First Trust mutual funds, while FTP is the sponsor. FTP also sells mutual fund shares and exchange traded fund shares. FTA and FTP are based in Wheaton, Illinois.
Past performance is no guarantee of future results. The return on investment and the market value of an investment in the Fund will fluctuate. Shares on sale may be worth more or less than their original cost. There can be no guarantee that the investment objectives of the Fund will be achieved. The Fund may not be suitable for all investors.
Main Risk Factors: Securities held by a fund, as well as shares in a fund itself, are subject to market fluctuations caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Due to the risk of loss associated with these market fluctuations, units in a fund may lose value or other investments may underperform. In addition, local, regional or global events such as war, terrorist attacks, the spread of infectious diseases or other public health problems, recessions or other events could have a material adverse effect on a Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more than others. The December 2019 outbreak of the respiratory disease known as COVID-19 has resulted in significant volatility and declines in global financial markets that have left investors with losses. While vaccine development has slowed the spread of the virus and allowed the United States to resume “reasonable” normal business, many countries continue to impose lockdown measures to slow the spread. In addition, there is no guarantee that vaccines will be effective against emerging variants of the disease.
The Fund typically invests in sub-investment grade senior debt, commonly referred to as junk or high yield securities, which are speculative due to the credit risk of their issuers. Such issuers are more likely than investment grade issuers to default on their principal and interest payments owed to the Fund and such defaults could reduce the Fund’s net asset value and income distributions. An economic downturn would generally result in a higher rate of default, and a senior loan can lose significant market value before default occurs. In addition, certain collateral used to secure a senior loan may lose value or become illiquid, which would adversely affect the value of the senior loan.
The senior loan market has seen an increase in loans with weaker lender protection that may affect recovery values and / or trade levels in the future. The absence of financial maintenance obligations in a loan agreement generally means that the lender may not be able to declare a default if financial performance deteriorates. This may affect the Fund’s ability to reassess the credit risk associated with a particular borrower and affect the Fund’s ability to restructure a problematic loan and mitigate potential losses. As a result, the Fund’s risk of loss from investments in senior credit may be increased, particularly during a downturn in the credit cycle or as market or economic conditions change.
In the event that a borrower fails to make scheduled interest or principal payments on a senior loan held by the Fund, the Fund will experience a decrease in its income and a depreciation in the value of the senior loan, which is likely to reduce dividends and result in a decrease in net asset value of the ordinary shares of the fund. If the fund acquires a senior loan from another lender, for example by acquiring a stake, the fund may also be subject to credit risks with this lender. Although senior loans may be secured by certain collateral, the value of the collateral may not match the investment of the Fund when the Senior Loan is acquired or may decrease below the nominal amount of the Senior Loan after the Fund is invested. To the extent that the collateral consists of shares in the borrower or its subsidiaries or affiliates, the Fund also bears the risk that the share may decline in value, be relatively illiquid and / or lose all or substantially all of its value, thereby creating the senior loan should be undercollateralised. Therefore, the liquidation of the collateral underlying a senior loan may not meet the obligation of the issuer to the Fund in the event of failure to pay the scheduled interest or principal, and the collateral may not be readily liquidated.
To the extent that a Fund invests in floating or floating rate bonds that use the London Interbank Offered Rate (“LIBOR”) as the reference interest rate, it is subject to LIBOR risk. The UK Financial Conduct Authority, which regulates LIBOR, will no longer make LIBOR available as a reference interest rate during a phase-out phase that begins immediately after December 31, 2021. The unavailability or replacement of LIBOR may affect the value, liquidity or returns of certain fund investments and may result in costs associated with closing out positions and entering into new business. Any effects of the transition from LIBOR on the Fund or on certain instruments in which the Fund invests can be difficult to determine and can vary depending on various factors and result in losses for the Fund.
The Fund’s portfolio is also subject to credit risk, interest rate risk, liquidity risk, prepayment risk and reinvestment risk. Interest rate risk is the risk that fixed income securities will lose value due to changes in market interest rates. The credit risk is the risk that an issuer of a security cannot or does not want to make dividend, interest and / or principal payments when they become due, and that the value of a security may decline as a result. Credit risk may be increased for the fund as it invests in sub-investment grade securities. Liquidity risk is the risk that the Fund will find it difficult to dispose of senior debt when trying to repay debts, pay dividends or expenses, or take advantage of a new investment opportunity. The prepayment risk is the risk that, in the event of a prepayment, the actual outstanding receivable, from which the fund generates interest income, is reduced. The Fund may not be able to reinvest the proceeds received on terms as favorable as the early loan. Reinvestment risk is the risk that income from the Fund’s portfolio will decrease if the Fund invests the proceeds of maturing, traded or terminated instruments at market rates that are lower than the current rate of return of the Fund’s portfolio.
A loan with a second lien can be entitled to the same pool of collateral as the first lien, or it can be secured by a separate set of assets. Loans with a second lien are usually secured by a second-priority security or a lien on certain collateral to secure the borrower’s liabilities from the interest. Because second lien loans are secondary to first lien loans, they pose a higher investment risk. In particular, these loans are subject to the additional risk that the borrower’s cash flow and the property securing the loan will not be sufficient to meet the scheduled payments after the higher priority loans have been drawn down. In addition, loans with a lower priority on borrower collateral than the senior loans generally have higher price volatility than loans with a higher priority and may be less liquid.
Distressed securities often generate no income during their term. The Fund may have to bear certain exceptional costs in order to protect and recover its investment. The Fund is also subject to considerable uncertainty as to when and in what manner and at what value the obligations evidenced by the distressed securities will ultimately be fulfilled.
The use of leverage can introduce additional risks and costs, and heighten the effects of losses.
The risks of investing in the Fund are set out in shareholder reports and other regulatory filings.
The information presented does not constitute investment advice or advice to any particular person. In providing this information, First Trust does not undertake to provide advice in a fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Finance professionals are responsible for independently assessing investment risks and making independent judgment to determine whether investments are appropriate for their clients.
The daily closing price of the Fund on the New York Stock Exchange and the Net Asset Value per Share and other information are available at https://www.ftportfolios.com or by calling 1-800-988-5891.