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Investing.com - Raymond (NSE:RYMD) James has initiated coverage of Carlyle Secured Lending (NASDAQ:CCGB) with a Market Perform rating, citing fair valuation amid uncertainty regarding its merger with CSL (OTC:CSLLY) III.
The firm notes that CCGB currently trades at approximately 0.84x price-to-NAV, a discount to the industry’s equity weighted average of 1.04x, while yielding 11.4% on a base dividend basis compared to the industry average of 10.8%.
Raymond James views CCGB positively on a general credit basis and does not anticipate a dividend cut, projecting that spillover will cover earnings shortfalls as interest rates begin trending downward.
The analyst highlighted CCGB’s unconsolidated senior loan fund, which currently represents about 6% of portfolio assets, down from a peak of roughly 15%, with a framework in place to potentially grow total loan fund assets to approximately $1 billion.
Raymond James considers the expansion of the loan fund program a positive catalyst, noting that both capital partners have committed additional capital that should be sufficient to support this growth.
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