OPPRP – New OPP Preferred

The new OPP preferred started trading the other day – 4.375% 2025 callable $25-par issued by OPP – a multi-sector fixed-income CEF. We just added this stock to the Preferreds Tool.

The issue is very welcome in a niche part of the market – CEF Preferreds. This part of the market is overlooked by income investors which is a shame because it is very resilient and it does have a number of issues trading at mid-to-high single-digit yields. All of the stocks in the sector are trading with positive total returns year-on-year which is a lot more than you can say for nearly all other income sectors.

The new issue looks fairly attractive at first glance. Decent yield + strong asset coverage north of 350% + little debt ahead of the preferred (the fund will repay a chunk of the credit facility) + relatively defensive / low-beta mortgage assets making up 40% of the portfolio + light fund leverage all combine to deliver what looks to be very attractive risk/reward.