Asset coverage
Also written coverage floor.
Total assets less other liabilities, divided by senior securities. The floor is 150% for a BDC and 200% for a registered fund's preferred.
Definition
A fund's total assets, less liabilities other than its senior securities, divided by those senior securities. The Investment Company Act sets floors: 300% for a registered fund's debt, 200% for its preferred stock and 150% for most BDCs. Below its floor a fund cannot pay common distributions or buy back common shares until coverage is restored. The preferred score reads the cushion above the floor; see dividend coverage.
Definitions describe how YieldDesk reads the term. Nothing on this page is investment advice or a recommendation to buy, sell or hold.