The Nuveen Floating Rate Income Fund’s (NYSE: JFR) Board of Trustees has approved the terms of the issuance of transferable rights to the holders of shares of the Fund’s common shares as of January 21, 2025 (the record date). Holders of rights will be entitled to subscribe for additional common shares at a discount to the market price of the common shares.
Thank you for your message. We will contact you shortly.
Nuveen Floating Rate Income Fund Rights Offering
Why should I exercise my rights?
The Advisor believes exposure to senior loans continues to deliver value to investors through high current income and low-interest rate sensitivity, resulting in attractive risk-adjusted returns compared to other fixed income asset classes.
- Senior loans are issued with a coupon that pays a predetermined spread above a base rate, such as SOFR (Secured Overnight Financing Rate). Therefore, as rates rise, loan coupons reset and provide investors with higher income payments. As rates decline, loan coupons reset and provide investors lower income payments.
- The combination of high coupons and relatively muted price changes at an aggregate level have enabled loans to generate high yield-like returns with investment grade-like volatility over the long term.
- The U.S. loan market has produced positive returns in 28 of the last 31 years.
- Contrary to widely held perceptions that loans only generate attractive returns in rising rate environments, U.S. senior loans have posted positive total returns in eight out of nine years when the Fed has cut rates.
The Advisor has identified opportunities to buy senior loans that it believes are attractively valued and are outliers versus the broader market, providing attractive income and potential for capital appreciation.
- The Advisor intends to invest the proceeds of the Offering in performing senior loans discounted to par. The Advisor believes this segment of the loan market represents an attractive opportunity to enhance the Fund’s portfolio yields and potential for capital appreciation.
- Loans priced between $85-$95 have a median yield premium of approximately 6.00% over loans priced $100+.
- Loans priced between $95-$100 have a median yield premium of approximately 1.50% over loans priced $100+.
The Advisor has experience investing over multiple credit cycles.
- Nuveen has 20 years of experience investing in senior loans with over 40 investment professionals who oversee our more than $43 billion1 in leveraged finance assets, giving us scale, resources, and access that are necessary for success.
- Because senior loans sit higher in the capital structure and are secured by collateral, the senior loan market has historically had attractive recovery rates in the event of default vs other high yield corporate credit investments.
- Nuveen’s proficiency in managing credit risk and protecting principal is evident in our lower average annual default rate (Nuveen 1.09% vs. JPM Loan Market Data 2.50%) and similar recovery versus the loan market2,3
The Fund has generated attractive returns over the broader loan market.
Performance data shown represents past performance and does not predict or guarantee future results.
1 As of 30 Sept 2024. Nuveen Leveraged Finance assets under management (AUM).
2 The loans referenced in this presentation are those that have been managed by Symphony Asset Management LLC since inception. As of December 31, 2020, Symphony Asset Management LLC has merged with and into Nuveen Asset Management, LLC. Along with other registered investment advisers, Nuveen Asset Management, LLC comprises part of the Nuveen Leveraged Finance platform. As such, the Nuveen name is being used contemporaneously with Symphony.
3 JP Morgan’s market default and recovery rate data was sourced from the JPMorgan North America Credit Research Default Monitor as of 31 Dec 2023. Nuveen calculates its default and recovery rate independently and includes in its universe loans for issuers outside North America. As a result Nuveen’s calculation methodologies may differ materially from JPMorgan’s. Default rates are calculated as the total loan par value that defaulted, divided by the ending par value of all loans at year-end, including all invested assets and cash equivalents. Nuveen includes in its default calculation loans that have stopped paying interest and does not include the loans of companies in bankruptcy which continue to make payments. Recovery rates are based on the first lien recovery and are calculated as the sum of all cash flows after the default date plus the residual market value of the asset (as of 31 Dec 2023), divided by the weighted-average cost of the asset. Nuveen began managing Senior Loans in November 2001. This analysis illustrates default rate information beginning in 2002. There were no defaults in loan portfolios during the last two months of 2001. There is no guarantee that Nuveen will be able to maintain such default and recovery rates relative to the loan market as measured by the JPMorgan data.
4 JFR NAV performance shown from 31 Mar 2004 to 31 Dec 2024
The common shares may decline in value or even lose all of their value. The accompanying prospectus supplement and prospectus should be read carefully before investing.
CERTAIN RISKS. Investing in the Fund involves risks, including the risk that investors may receive little or no return on their investment or may lose part or all of their investment. Below is a summary of certain principal risks of investing in the Fund. For a more complete discussion of the risks of investing in the Fund, see “Special Characteristics and Risks of the Rights Offering“ in the prospectus supplement and “Risk Factors” in the prospectus. Investors should consider carefully the following principal risks before investing in the Fund. An investment in the Fund is subject to investment and market risk, including the possible loss of an investor’s entire investment. Before making an investment decision, a prospective investor should (i) consider the suitability of this investment with respect to his or her investment objectives and personal situation and (ii) consider factors such as his or her personal net worth, income, age, risk tolerance and liquidity needs.
TAXATION. The Fund has elected to be treated and has qualified, and intends to continue to qualify annually to be treated for U.S. federal income tax purposes, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended. Accordingly, the Fund generally will not pay corporate level federal income taxes on any net ordinary income or capital gains that it currently distributes to its common shareholders. To qualify and maintain its qualification as a RIC for U.S. federal income tax purposes, the Fund must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of its net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. See “Taxation” and “Tax Matters” in the accompanying prospectus supplement and prospectus, respectively.
DILUTION Record date shareholders who do not fully exercise their Rights will, at the completion of the offer, own a smaller proportional interest in the Fund than owned prior to the offer. The completion of the offer will result in immediate voting dilution for such common shareholders. Further, the expenses associated with the offer will immediately reduce the net asset value of each outstanding common share. In addition, if the subscription price is less than the net asset value per common share as of the expiration date, the completion of this offer will result in an immediate dilution of the net asset value per common share for all existing common shareholders (i.e., will cause the net asset value per common share of the Fund to decrease). It is anticipated that existing common shareholders will experience immediate dilution even if they fully exercise their rights. Such dilution is not currently determinable because it is not known how many common shares will be subscribed for, what the net asset value per common share or market price of the Fund’s common shares will be on the expiration date or what the subscription price per common share will be. The Fund will pay expenses associated with the offer, estimated at approximately $1,260,000. All of the costs of the offer will be borne by the Fund’s common shareholders. See “Summary of Fund Expenses” in the accompanying prospectus supplement and prospectus for more information.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause the Fund’s actual results or level of performance to be materially different from any future results or level of performance expressed or implied by such forward looking statements. Such factors include, among others, those listed under “Special Characteristics and Risks of the Rights Offering” in the prospectus supplement and “Risk Factors” in the prospectus. As a result of these and other factors, the Fund cannot give you any assurances as to its future results or level of performance, and neither the Fund nor any other person assumes responsibility for the accuracy and completeness of such statements. The Fund undertakes no obligation to publicly update or revise any forward-looking statements made herein.
You are on the site for: Financial Professionals and Individual Investors. You can switch to the site for: Institutional Investors or Global Investors
You are leaving Nuveen.com.
You are about to leave Nuveen's website and access a website that is unaffiliated with Nuveen. Nuveen does not assume responsibility or liability for the content or privacy policies of external sites.Not registered yet? Register