PHILADELPHIA, Sept. 9, 2024 /PRNewswire/ -- The Board of Directors of FS Credit Opportunities Corp. (the Fund) (NYSE: FSCO) announced the monthly distribution for September 2024. The distribution of $0.06 per share will be paid on September 30, 2024. Further information on the distribution is summarized in the charts below. The current annualized distribution rate equates to an annualized distribution yield1 of 10.1% and 11.4%, respectively, based on the Fund's net asset value (NAV) and market price as of A ...

Financial Data and Key Metrics - The Fund delivered a net return of 2.75% based on NAV in Q2 2024, with the top 10 contributors accounting for over 40% of total realized and unrealized appreciation [5] - Year-to-date net return as of June 30, 2024, was 8.67% based on NAV, outperforming high-yield bonds by 609 basis points and loans by 432 basis points [5] - The Fund paid distributions of $0.18 per share in Q2 2024, with net investment income fully covering distributions [6] - The Fund's annualized distribution yield was 10% based on NAV and 11.5% based on the stock price as of August 30, 2024 [6] - The Fund issued $100 million of term preferred shares in May 2024, with a cash balance of approximately $104 million as of June 30, 2024 [7] Business Line Data and Key Metrics - Approximately 67% of new investment activity in Q2 2024 was in privately originated investments, with purchases weighted towards first lien senior secured loans and subordinated debt [13] - Public credit investments represented 33% of the investment activity, with 91% of purchases in first lien loans [13] - As of June 30, 2024, 83% of the portfolio consisted of senior secured debt, unchanged from the previous quarter, while subordinated debt allocation decreased to 4% from 5% in March [13] - Asset-based finance represented 4% of the portfolio, and equities under investments represented 9% [13] - Public credit comprised 48% of the portfolio, while private credit comprised 52% [13] Market Data and Key Metrics - U.S. economic growth was solid in Q2 2024, with Treasury yields rising modestly (10-year yield increased 14 basis points to 4.34%, and 2-year yield increased 10 basis points to 4.72%) [9] - Senior secured loans returned 1.85%, while high-yield bonds returned 1.05% in Q2 2024 [9] - Default rates, including distressed exchanges, ended the quarter below the 25-year average for both high-yield bonds and loans [10] - Recovery rates for high-yield bonds over the last 12 months were 40%, in line with the long-term average, while loan recoveries were 43%, below the historical average of approximately 64% [11] Company Strategy and Industry Competition - The Fund focuses on investing across public and private credit, targeting return premiums driven by balance sheet complexity, asset illiquidity, and unconventional ownership [6] - The Fund leverages its $82 billion asset management platform and deep relationships with banks, sponsors, and other investment firms to drive steady portfolio investments [12] - The Fund's strategy includes maintaining a diversified portfolio with a focus on senior debt investments, avoiding highly cyclical areas of the economy, and maintaining buying power to capitalize on market volatility [15][16] - The Fund differentiates itself by investing across public and private markets, allowing dynamic allocation to the most attractive risk-adjusted return opportunities [18] Management Commentary on Operating Environment and Future Outlook - Management expects defaults to increase through next year, with a higher pace of distressed transactions, particularly in loans [10] - The Fund is positioned to navigate potential volatility in 2024, with a focus on businesses with strong cash flows, modest leverage profiles, and experienced management teams [15] - Management believes the current discount at which the Fund's shares trade relative to NAV does not reflect the health of the portfolio or the quality of its investment program [7] - The Fund aims to generate attractive spreads over the risk-free rate, with 62% of the portfolio in floating-rate assets, providing some insulation from rate changes [23] Other Important Information - The Fund's largest sector exposures at quarter-end were consumer services, commercial and professional services, and healthcare equipment and services [14] - The Fund's leverage structure includes 58% drawn leverage as of June 30, 2024, with a focus on preferred debt financings for favorable regulatory treatment and flexibility [14] - Non-accrual investments represented 2.7% of the portfolio's fair market value, predominantly in first lien positions [40] Q&A Session Summary Question: What is the target LTV for portfolio companies? - The Fund typically targets loan-to-value (LTV) ratios between 50% and 60%, based on its view of asset or enterprise value [20] Question: Are there considerations for buying back equity? - The Fund and its Board are constantly evaluating the best use of capital, balancing share buybacks, distribution policy, and investment opportunities [21] Question: How does the expected decline in rates affect the Fund's dividend? - The Fund believes its dividend is well-protected, with a significant portion of earnings generated from fee-based income, which is less tied to rate changes [22][23] Question: How does the Fund's valuation compare to peers? - The Fund trades at a discount due to its lower absolute dividend yield on a NAV basis compared to peers that over-distribute [24] Question: How are net earnings generated from dividends and fee-based income? - Fee income is tied to originations and exits, while dividends are generated from equity stakes acquired in private transactions [25][26] Question: What are the current market spreads and pricing trends? - Private credit spreads have tightened by approximately 100 basis points, with average yields on private originations at 12.6% and public investments at 600 basis points over SOFR [27][28][31] Question: How has the macro view changed, and is the market shifting to a borrower's market? - The market is transitioning to a borrower's market, with increased competition and more favorable non-economic terms for lenders [29][30] Question: Why is private credit attractive, and what spreads are being deployed? - Private credit offers higher spreads, with the Fund focusing on opportunities in less traditional areas of the market [32][33] Question: How is the Fund positioned for a potential economic slowdown? - The Fund focuses on downside protection, investing in good businesses with strong creditor protections and sector expertise to navigate slowdowns [34][35] Question: Where are the best risk-adjusted returns in the portfolio? - The Fund prioritizes secured investments, focusing on principal protection and avoiding losses [36][37] Question: How does the Fund's fee structure compare to peers? - The Fund's fee structure sits between closed-end funds and BDCs, reflecting its hybrid public-private investment approach [38][39] Question: What is the update on non-accrual investments? - Non-accruals represent 2.7% of the portfolio, with two new non-accruals in Q2 2024 [40] Question: What are the leverage targets and capital structure plans? - Leverage was 0.48x at quarter-end, with plans to address 2024 maturities and maintain current leverage targets [41][42][44]

PM Images Overview I've grown to appreciate high-quality credit funds that have the power to provide total returns that are comprised of both income and some capital appreciation. I've come across FS Credit Opportunities (NYSE:FSCO) and I believe that this has this structure in place to be a solid choice to get some credit exposure. FSCO operates as a closed end fund that invests in a diversified portfolio of different credit instruments such as senior secured loans and high-yielding bonds. These types of f ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 5, 2024 FS CREDIT OPPORTUNITIES CORP. (Exact name of Registrant as specified in its charter) | --- | --- | --- | |-------------------------------------------------------------------|----------------------------------------|-----------------------------------------------------| | | | | | ...

PHILADELPHIA, Aug. 1, 2024 /PRNewswire/ -- The Board of Directors of FS Credit Opportunities Corp. (the Fund) (NYSE: FSCO) announced the monthly distribution for August 2024. The distribution of $0.06 per share will be paid on August 30, 2024. Further information on the distribution is summarized in the charts below. The current annualized distribution rate equates to an annualized distribution yield1 of 10.1% and 11.1%, respectively, based on the Fund's net asset value (NAV) and market price as of July 31, ...

One of our largest positions on the taxable bond side has been with FS Credit Opportunities (NYSE:FSCO), a relatively new listed closed-end fund ("CEF") from FS Investments. Prior to November 2022, the fund was unlisted, providing only quarterly liquidity to shareholders up to 5% of shares. The conversion from a quarterly liquidity to intraday liquidity vehicle allowed investors to sell out late in 2022 when bonds were falling precipitously as rates rose and investors positioned for recession. As a listed C ...

A recent insight from Voya Investment Management suggests that rate cuts have been delayed in the second quarter of 2024 but not derailed. Many income investors like me are wondering if and how "higher for longer" rates will affect investments in credit funds that offer senior secured loans, corporate bonds, and related securities that generate high yield income. Last month, we highlighted the silver lining for bond investors in this environment: For those worried they missed out on the opportunity to alloc ...

Month Ex-Date Record Date Payable Date June June 21, 2024 June 21, 2024 June 28, 2024 The Fund pays regular monthly cash distributions to common shareholders at a level rate that may be adjusted from time to time. The amount of monthly distributions may be affected by numerous factors, including changes in portfolio and market conditions. Shareholders should not use the information provided here in preparing their tax returns. The Fund will send a Form 1099-DIV to shareholders for the calendar year that wil ...

Company Participants Robert Paun FSCO does not undertake to update its forward-looking statements unless required to do so by law. Additionally, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSCO or information about the market as indicative of FSCO's future results. Following our prepared remarks, we will take questions from the audie ...

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Date of Report (Date of earliest event reported): April 22, 2024 FS CREDIT OPPORTUNITIES CORP. (Exact name of Registrant as specified in its charter) Maryland 811-22802 46-1882356 (State or other jurisdiction of incorporation) 201 Rouse Boulevard Philadelphia, Pennsylvania 19112 (Address of principal executive offices) (Zip Code) (Commission F ...