In This Article:
abrdn Income Credit Strategies Fund (NYSE:ACP) (the "Fund"), a closed-end fund, announced today that it has reduced its monthly distribution from US 10 cents per share to US 7.75 cents per share, commencing with the distribution payable on January 10, 2025 to shareholders of record as of December 30, 2024 (ex-dividend date December 30, 2024).
This represents a change in the annualized distribution rate from 18% to 14% based on NAV as of December 9, 2024. The Fund intends to maintain this distribution level for at least the next 12 months unless there is significant and unforeseen changes in market conditions.
The Fund's distribution policy is to provide investors with a stable monthly distribution out of current income, supplemented by realized capital gains and, to the extent necessary, paid-in capital, which is a non-taxable return of capital. The Fund's monthly distribution has remained unchanged since September 2020.
The Investment Adviser has advised the Fund's Board of Trustees (the "Board") that it believes that the reduced monthly distribution is more consistent with sustainable earnings of the Fund. The current reduction in distribution takes into account many factors, including, but not limited to, current and expected earnings and abrdn Investments Limited, the Investment Adviser, economic and market outlook.
In approving the decrease to the distribution rate, the Board considered, among other things, the strong long-term past performance of the investment advisor as well as their outlook on the market going forward. The investment advisor is optimistic on both the near term and long-term prospects for returns within the High Yield market, with the combination of an attractive level of income and the advisor's historic ability to generate capital appreciation in a range of market outcomes as the drivers of their outlook. However, as credit spreads have tightened over recent years, the Board believes it to be prudent to lower the distribution rate to reflect a decreased total return potential in excess of income over the near term.
Both the Board and the Investment Advisor remain committed to offering a product with a premium level of income, and that will not change. The pro forma level of distribution is expected to continue to stand out from the competitive set within the peer group while allowing the advisor the flexibility to invest in assets that put the best interests of the investor base as the top priority.
Circular 230 disclosure: To ensure compliance with requirements imposed by the U.S. Treasury, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code of 1986, as amended, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.