XAI Octagon Floating Rate & Alternative Income Trust Declares its Monthly Common Shares Distribution of $0.077 per Share

Rhea-AI Summary

XAI Octagon Floating Rate & Alternative Income Trust (XFLT) has announced a monthly distribution of $0.077 per share, representing a 9.41% decrease from the previous month's $0.085 distribution. The reduction follows two Federal Reserve rate cuts totaling 0.75% in the past three months, which impacted floating rate securities' income generation. The distribution is payable on December 30, 2024, to shareholders of record as of December 16, 2024. The Trust's annualized distribution rate stands at 13.28% on market price and 13.85% on NAV as of November 26, 2024.

Positive

• Maintains high annualized distribution rate of 13.28% on market price
• Continues monthly dividend payments despite rate environment challenges

Negative

• 9.41% decrease in monthly distribution from $0.085 to $0.077 per share
• Declining net investment income due to Federal Reserve rate cuts

Insights

Financial Analyst

The $0.077 monthly distribution reduction from $0.085, representing a 9.41% decrease, is a significant development for income-focused investors. This adjustment reflects the direct impact of recent Federal Reserve rate cuts totaling 0.75% on floating-rate securities. Despite the reduction, the Trust maintains an attractive annualized distribution rate of 13.28% on market price and 13.85% on NAV.

The Trust's portfolio, heavily weighted in floating-rate credit instruments, demonstrates heightened sensitivity to interest rate movements. This structural characteristic, while beneficial in rising rate environments, now presents challenges as rates decline. Investors should note that future distributions may face additional pressure if the Federal Reserve continues its rate-cutting cycle.

CHICAGO--(BUSINESS WIRE)-- XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) has declared its regular monthly distribution of $0.077 per share on the Trust’s common shares (NYSE: XFLT), payable on December 30, 2024, to common shareholders of record as of December 16, 2024, as noted below. The amount of the distribution represents a 9.41% decrease from the previous month's distribution of $0.085 per share.

The Trust’s investment objective is to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle. The Trust’s investment portfolio is comprised largely of floating-rate credit instruments and other structured credit investments. In the past three months, the Federal Reserve has cut the base rate twice resulting in a 0.75% decline in interest rates, impacting floating rate securities’ income generation. As a result, the Trust’s net investment income has declined. With the new distribution amount of $0.077 per share, the Trust’s annualized distribution rate on market price is 13.28% and the annualized distribution rate on NAV is 13.85% as of market close on November 26, 2024.

The following dates apply to the declaration:

Ex-Dividend Date		December 16, 2024
Record Date		December 16, 2024
Payable Date		December 30, 2024
Amount		$0.077 per common share
Change from Previous Month		9.41% decrease

Common share distributions may be paid from net investment income (regular interest and dividends), capital gains and/or a return of capital. The specific tax characteristics of the distributions will be reported to the Trust’s common shareholders on Form 1099 after the end of the 2024 calendar year. Shareholders should not assume that the source of a distribution from the Trust is net income or profit. For further information regarding the Trust’s distributions, please visit www.xainvestments.com.

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XFLT Q3 Webinar

The Trust plans to host its Quarterly Webinar on December 6, 2024, at 11:00 am (Eastern Time). Kevin Davis, Managing Director at XA Investments will moderate the Q&A style webinar with Kimberly Flynn, President at XA Investments, and Lauren Law, Senior Portfolio Manager at Octagon Credit Investors.

TO JOIN VIA WEB: Please go to the Knowledge Bank section of xainvestments.com or click here to find the online registration link.

TO USE YOUR TELEPHONE: After joining via web, if you prefer to use your phone for audio, you must select that option and call in using a number below, based on your current location.

Dial: (720) 928-9299 or (213) 338-8477 or (267) 831-0333 or (312) 626-6799 or (646) 558-8656

Webinar ID: 845 9508 2601

REPLAY: A replay of the webinar will be available in the Knowledge Bank section of xainvestments.com

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The Trust’s net investment income and capital gain can vary significantly over time; however, the Trust seeks to maintain more stable common share monthly distributions over time. The Trust’s investments in CLOs are subject to complex tax rules and the calculation of taxable income attributed to an investment in CLO subordinated notes can be dramatically different from the calculation of income for financial reporting purposes under accounting principles generally accepted in the United States (“U.S. GAAP”), and, as a result, there may be significant differences between the Trust’s GAAP income and its taxable income. The Trust’s final taxable income for the current fiscal year will not be known until the Trust’s tax returns are filed.

As a registered investment company, the Trust is subject to a 4% excise tax that is imposed if the Trust does not distribute to common shareholders by the end of any calendar year at least the sum of (i) 98% of its ordinary income (not taking into account any capital gain or loss) for the calendar year and (ii) 98.2% of its capital gain in excess of its capital loss (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made to use the Trust’s fiscal year). In certain circumstances, the Trust may elect to retain income or capital gain to the extent that the Board of Trustees, in consultation with Trust management, determines it to be in the interest of shareholders to do so.

The common share distributions paid by the Trust for any particular period may be more than the amount of net investment income from that period. As a result, all or a portion of a distribution may be a return of capital, which is in effect a partial return of the amount a common shareholder invested in the Trust, up to the amount of the common shareholder’s tax basis in their common shares, which would reduce such tax basis. Although a return of capital may not be taxable, it will generally increase the common shareholder’s potential gain, or reduce the common shareholder’s potential loss, on any subsequent sale or other disposition of common shares.

The distribution shall be paid on the Payment Date unless the payment of such distribution is deferred by the Board of Trustees upon a determination that such deferral is required in order to comply with applicable law to ensure that the Trust remains solvent and able to pay its debts as they become due and continue as a going concern, or to comply with the applicable terms or financial covenants of the Trust’s senior securities.

Future common share distributions will be made if and when declared by the Trust’s Board of Trustees, based on a consideration of number of factors, including the Trust’s continued compliance with terms and financial covenants of its senior securities, the Trust’s net investment income, financial performance and available cash. There can be no assurance that the amount or timing of common share distributions in the future will be equal or similar to that described herein or that the Board of Trustees will not decide to suspend or discontinue the payment of common share distributions in the future.

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The investment objective of the Trust is to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle. The Trust seeks to achieve its investment objective by investing in a dynamically managed portfolio of opportunities primarily within the private credit markets. Under normal market conditions, the Trust will invest at least 80% of its Managed Assets in floating rate credit instruments and other structured credit investments. There can be no assurance that the Trust will achieve its investment objective.

The Trust’s common shares are traded on the New York Stock Exchange under the symbol “XFLT,” and the Trust’s 6.50% Series 2026 Term Preferred Shares are traded on the New York Stock Exchange under the symbol “XFLTPRA”.

About XA Investments

XA Investments LLC (“XAI”) serves as the Trust’s investment adviser. XAI is a Chicago-based firm founded by XMS Capital Partners in 2016. XAI serves as the investment adviser for two listed closed-end funds and an interval closed-end fund. The listed closed-end funds, the XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT) and Madison Covered Call & Equity Strategy Fund (NYSE: MCN) both trade on the New York Stock Exchange. The interval closed-end fund, Octagon XAI CLO Income Fund (OCTIX), is newly launched and has been made widely available to investors.

In addition to investment advisory services, the firm also provides investment fund structuring and consulting services focused on registered closed-end funds to meet institutional client needs. XAI offers custom product build and consulting services, including development and market research, sales, marketing and fund management.

XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. XAI provides individual investors with access to institutional-caliber alternative managers. For more information, please visit www.xainvestments.com.

About XMS Capital Partners

XMS Capital Partners, LLC, established in 2006, is a global, independent, financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.

About Octagon Credit Investors

Octagon Credit Investors, LLC (“Octagon”) serves as the Trust’s investment sub-adviser. Octagon is a 25+ year old, $33.4B below-investment grade corporate credit investment adviser focused on leveraged loan, high yield bond and structured credit (CLO debt and equity) investments. Through fundamental credit analysis and active portfolio management, Octagon’s investment team identifies attractive relative value opportunities across below-investment grade asset classes, sectors and issuers. Octagon’s investment philosophy and methodology encourage and rely upon dynamic internal communication to manage portfolio risk. Over its history, the firm has applied a disciplined, repeatable and scalable approach in its effort to generate attractive risk-adjusted returns for its investors. For more information, please visit www.octagoncredit.com.

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XAI does not provide tax advice; please consult a professional tax advisor regarding your specific tax situation. Income may be subject to state and local taxes, as well as the federal alternative minimum tax.

Investors should consider the investment objectives and policies, risk considerations, charges and expenses of the Trust carefully before investing. For more information on the Trust, please visit the Trust’s webpage at www.xainvestments.com.

This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

NOT FDIC INSURED		NO BANK GUARANTEE		MAY LOSE VALUE

Paralel Distributors, LLC - Distributor

View source version on businesswire.com: https://www.businesswire.com/news/home/20241202717275/en/

Kimberly Flynn, President

XA Investments LLC

Phone: 888-903-3358

Email: KFlynn@XAInvestments.com

www.xainvestments.com

Source: XA Investments

FAQ

What is XFLT's new monthly distribution amount for December 2024?

XFLT's new monthly distribution amount is $0.077 per share, payable on December 30, 2024.

How much did XFLT reduce its monthly distribution in December 2024?

XFLT reduced its monthly distribution by 9.41%, from $0.085 to $0.077 per share.

What is XFLT's current annualized distribution rate as of November 26, 2024?

XFLT's annualized distribution rate is 13.28% on market price and 13.85% on NAV.

Why did XFLT reduce its distribution in December 2024?

XFLT reduced its distribution due to declining net investment income following two Federal Reserve rate cuts totaling 0.75% in the past three months.