FS Credit Opportunities Corp. (FSCO) is currently yielding 13.7% while trading at a significant 27% discount. This means the fund is priced at 73 cents on the dollar, a stark contrast to its previous trading above par last year. The current average discount among closed-end funds (CEFs) is 6.3%. This discount may narrow in the coming months, influenced by geopolitical events such as the Iran conflict, which has driven crude oil prices above $100 a barrel.
Last week, the yield on the 10-year Treasury note hit 5%, the highest since 2007, contributing to rising corporate bond yields. FSCO is particularly attractive due to its reliance on first-lien loans, which carry floating rates, making them more resilient in a rising-rate environment. Additionally, the fund maintains strong diversification across industries, mitigating risk from overexposure to the tech sector.
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