Blackstone / GSO Strategic Credit Fund (the “Fund” or “BGB”) (NYSE: BGB) announced the closing of its credit facility (the “Credit Facility” or the “facility”) with the Bank of Nova Scotia.
The Credit Facility provides availability of up to $425 million. Assuming the facility is fully drawn, the total Fund size could be $1.28 billion based on the current net asset value. The Fund will use the proceeds of the facility to purchase additional assets for the portfolio.
BGB principally invests in credit investments and has a dynamic strategy that provides for flexibility to invest between secured loans or high yield bonds in any ratio, pursuant to the outlook of GSO / Blackstone Debt Funds Management LLC, the Fund’s investment adviser (the “Adviser”). As of December 19 th, the Fund is allocated 77% to secured loans and 23% to high yield bonds. The Adviser expects those allocations to remain consistent as proceeds of the facility are drawn, given the Adviser’s current economic and market outlook. Currently, BGB is generating an average unlevered asset yield of 6.2%. Secured loans with a LIBOR floor comprise just over 95% of the current secured loan portfolio, with the average LIBOR floor level of 1.3%. BGB’s current dividend yield is 7.6% and its NAV per share has increased to $19.17, a 0.6% price gain since issuance.
Lee Shaiman, Managing Director of GSO Capital Partners LP (“GSO”), the parent company of the Adviser, and senior portfolio manager of the Fund said, “We expect secured loans and high yield bonds to end the year on a positive note as the asset classes have returned 9.3% and 14.7%, respectively, year to date based on the Credit Suisse indices.“Corporate fundamentals continue to be favorable and we believe that trend will continue into 2013. Market technicals for secured loans and high yield bonds have further supported credit fundamentals as we see strong demand for these higher yielding asset classes from both institutional and retail investors. Secured loans in particular are among the few fixed income alternatives providing high current income while trading at or near par value. The short duration attributes of secured loans provide additional protection for fixed income investors given the historically low absolute level of interest rates available across the fixed income spectrum. We believe that secured loans and, to a lesser degree, high yield bonds will continue to exhibit good performance and provide compelling risk adjusted returns well into next year.”