| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 286.04 | 2033 |
| Intrinsic value (DCF) | 11.42 | -15 |
| Graham-Dodd Method | 1.40 | -90 |
| Graham Formula | 42.16 | 214 |
Blackstone/GSO Senior Floating Rate Term Fund (BSL) is a closed-end fixed income mutual fund managed by GSO/Blackstone Debt Funds Management LLC, a subsidiary of The Blackstone Group. Specializing in below-investment-grade senior secured floating-rate loans, BSL targets high-yield corporate debt across diversified sectors, offering investors exposure to leveraged loans with attractive risk-adjusted returns. The fund primarily invests in U.S. corporate debt, maintaining an average duration of less than one year to mitigate interest rate risk. Its benchmark, the S&P/LSTA Leveraged Loan Index, reflects its focus on floating-rate instruments, making it a strategic choice for investors seeking income in rising-rate environments. With a disciplined, research-driven credit analysis approach, BSL emphasizes capital preservation while delivering consistent dividends. As part of Blackstone’s credit platform, the fund benefits from deep institutional expertise in leveraged finance, enhancing its ability to identify undervalued credit opportunities. BSL is listed on the NYSE and appeals to income-focused investors looking for floating-rate exposure in the financial services sector.
BSL presents an attractive investment for yield-seeking investors, particularly in a rising interest rate environment, given its focus on floating-rate loans. The fund’s below-investment-grade focus offers higher yields, while its short-duration profile reduces interest rate sensitivity. Blackstone’s institutional credit expertise provides a competitive edge in credit selection and risk management. However, the fund’s exposure to leveraged loans carries inherent credit risk, particularly in economic downturns where default rates may rise. The absence of leverage (zero total debt) is a positive, but the fund’s small market cap (~$183M) may limit liquidity. With a solid dividend yield (~9.3% based on the $1.299 annual payout) and strong net income coverage (EPS of $1.43), BSL is well-positioned for income investors, though macroeconomic volatility remains a key risk.
BSL’s competitive advantage lies in its affiliation with Blackstone’s credit platform, GSO Capital Partners, which provides access to proprietary deal flow, deep credit research, and institutional-scale resources. This allows BSL to identify mispriced senior secured loans with favorable risk/reward profiles. The fund’s focus on floating-rate debt differentiates it from traditional fixed-rate bond funds, offering a hedge against rising rates. Its sub-investment-grade mandate targets higher yields than investment-grade peers, though with elevated credit risk. Compared to open-end leveraged loan funds, BSL’s closed-end structure avoids liquidity mismatches, allowing it to hold less liquid credits for longer-term gains. However, its small size may limit portfolio diversification versus larger competitors. The fund’s zero-leverage policy reduces downside risk but may cap returns relative to leveraged peers. Performance is closely tied to the health of the leveraged loan market, where Blackstone’s expertise in distressed debt could provide an edge in credit selection. The fund’s low beta (0.43) suggests lower volatility than broader equity markets, appealing to risk-averse income investors.