XAI Octagon Floating Rate & Alternative Income Trust Declares its Monthly Common Shares Distribution of $0.070 per Share

Rhea-AI Summary

XAI Octagon Floating Rate & Alternative Income Trust (XFLT) has announced a monthly distribution of $0.070 per common share, payable on July 1, 2025, representing a 9.09% decrease from the previous month's $0.077 distribution. The trust's annualized distribution rates as of May 30, 2025, were 14.51% on market price and 13.86% on NAV. The reduction comes amid market volatility and interest rate spread compression in loan and CLO asset classes. The trust will host a Q1 Webinar on June 4, 2025, featuring key executives from XA Investments and Octagon Credit Investors. XFLT's investment strategy focuses on floating rate credit instruments and structured credit investments, maintaining at least 80% of managed assets in these categories under normal market conditions.

Positive

• High annualized distribution rate of 14.51% on market price and 13.86% on NAV
• Trust maintains a strategic focus with 80% of assets in floating rate credit instruments
• Regular monthly distribution schedule maintained despite market challenges

Negative

• 9.09% decrease in monthly distribution from $0.077 to $0.070 per share
• Negative impact from loan and CLO asset classes due to interest rate spread compression
• Market volatility and ongoing trade tensions affecting performance

Insights

Income Fund Analyst

XFLT cuts monthly distribution by 9.09% to $0.070 due to yield compression in loan and CLO markets amid trade tensions.

XAI Octagon has announced a 9.09% reduction in its monthly distribution, lowering it from $0.077 to $0.070 per share. This adjustment comes in direct response to recent market volatility that has triggered significant interest rate spread compression in both the loan and CLO asset classes, which form the core of the trust's investment portfolio.

Despite this reduction, the fund still maintains a remarkably high yield profile with an annualized distribution rate of 14.51% based on market price and 13.86% based on NAV as of May 30. These yields remain substantially above typical fixed income alternatives, though investors should note that distributions may include return of capital components alongside traditional income.

The timing of this distribution cut is noteworthy, occurring during a period of heightened market volatility specifically attributed to tariff developments and ongoing trade tensions. These macroeconomic factors have apparently compressed spreads enough to impact the fund's ability to maintain its previous distribution level.

The trust's investment structure exposes it to both opportunities and risks across private credit markets, with at least 80% of managed assets allocated to floating rate credit instruments and structured credit investments. This positions the fund to potentially benefit from interest rate movements, but as evidenced by this announcement, also creates vulnerability to spread compression dynamics in volatile markets.

CHICAGO, June 02, 2025 (GLOBE NEWSWIRE) -- XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) has declared its regular monthly distribution of $0.070 per share on the Trust’s common shares (NYSE: XFLT), payable on July 1, 2025, to common shareholders of record as of June 16, 2025, as noted below. The amount of the distribution represents a 9.09% decrease from the previous month's distribution amount of $0.077 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. Due to recent market volatility, the loan and CLO asset classes have experienced drastic interest rate spread compression, which has negatively impacted asset class yields. In the most recent quarter, market conditions were marked by heightened volatility stemming from tariff developments and ongoing trade tensions. With the new distribution amount of $0.070 per share, the Trust’s annualized distribution rate on market price was 14.51% and the annualized distribution rate on NAV is 13.86% as of market close on May 30, 2025.

The following dates apply to the declaration:

Ex-Dividend Date		June 16, 2025
Record Date		June 16, 2025
Payable Date		July 1, 2025
Amount		$0.070 per common share
Change from Previous Month		9.09% 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 2025 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.

XFLT Q1 Webinar

The Trust plans to host its Quarterly Webinar on June 4, 2025, at 12:00 pm (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: (312) 626-6799 or (646) 558-8656 or (267) 831-0333 or (213) 338-8477 or (720) 928-9299

Webinar ID: 817 1030 7383

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

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 a 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.

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 and XAI Madison Equity Premium Income Fund both trade on the New York Stock Exchange and the interval fund, Octagon XAI CLO Income Fund is available via direct subscription and through select broker/dealers and wealth management platforms.

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, 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, $32.1B 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.

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

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Media Contact:

Kimberly Flynn, President
XA Investments LLC
Phone: 888-903-3358
Email: KFlynn@XAInvestments.com
www.xainvestments.com

FAQ

What is XFLT's new monthly distribution amount and how has it changed?

XFLT's new monthly distribution is $0.070 per share, representing a 9.09% decrease from the previous month's distribution of $0.077 per share

When is XFLT's next distribution payment date and record date?

The distribution is payable on July 1, 2025, with a record date of June 16, 2025

What is XFLT's current annualized distribution rate?

As of May 30, 2025, XFLT's annualized distribution rate was 14.51% on market price and 13.86% on NAV

What caused the reduction in XFLT's distribution?

The reduction was due to market volatility and interest rate spread compression in loan and CLO asset classes

What is XFLT's main investment strategy?

XFLT invests at least 80% of managed assets in floating rate credit instruments and structured credit investments across multiple stages of the credit cycle