Invesco’s Senior Loan ETF Owns Some Of Elon Musk’s X Debt Yielding 10% | BKLN

Core Viewpoint - The Invesco Senior Loan ETF (BKLN) invests in floating-rate senior secured loans to below-investment-grade companies, providing a yield of 6.4% that is sensitive to Federal Reserve policy [1] Group 1: Investment Characteristics - BKLN's portfolio includes 175 holdings, with X Corp (formerly Twitter) being a notable position, holding senior secured loans with a 10.96% coupon maturing in October 2029, representing 1.89% of the portfolio [2] - The elevated yield of X Corp loans reflects credit risk due to Elon Musk's leveraged buyout, which resulted in approximately $13 billion in debt [2] Group 2: Dividend Performance - BKLN's distributions increased from approximately $0.67 per share in 2021 to $1.82 in 2023 and 2024, but are projected to decline to around $1.41 in 2025 as the Fed shifts towards rate cuts [3][5] - The fund's year-to-date return through December 29 is 6.7%, combining its 6.4% yield with modest price appreciation [5] Group 3: Risk Factors - Credit risk is a primary concern for the sustainability of dividends, as BKLN predominantly holds junk-rated debt, which may lead to increased default rates during economic downturns [4] - The fund has a 14-year track record of uninterrupted monthly distributions, although amounts fluctuate with rate and credit conditions [4]