BlackRock Credit Allocation Income Trust Stock News

We upgrade BlackRock Credit Allocation Income Trust from 'Sell' to 'Hold' due to fair valuation amidst wider spreads and macro uncertainties. Recent violent price action and a significant discount to NAV have brought BTZ to a more balanced valuation. The macro outlook remains uncertain, with potential tariff reinstatements and slowing GDP growth, warranting a cautious 'Hold' rating for BTZ.

Recent market volatility has driven investors to safer assets like US Treasury debt and corporate bonds, with notable ETFs and funds showing positive returns. The BlackRock Credit Allocation Income Trust offers a 9.5% dividend yield, investing primarily in credit-related securities with a diversified portfolio and significant leverage. Bonds are expected to perform well in 2025, but BTZ is reco...

BTZ, a fixed income CEF, has a high 34% leverage ratio and invests in U.S. IG and HY bonds. Current credit spreads are very tight, and a mean reversion is expected in 2025, potentially leading to a -10% drawdown. The fund's distribution is not fully covered, with only 67% from cash-flows, translating to an actual yield of 6.3%.