BlackRock Income Trust Stock Price, News & Analysis
Company Description
BlackRock Income Trust, Inc. (NYSE: BKT) is a closed-end management investment company that focuses on high-quality fixed income securities. According to available fund disclosures, BlackRock Income Trust seeks to manage a portfolio of high-quality securities with the dual objective of preservation of capital and high monthly income. The fund is associated with BlackRock, which describes its broader purpose as helping people experience financial well-being through investment and financial technology capabilities.
The fund is classified in the securities and commodity exchanges industry within the broader finance and insurance sector. It trades on the New York Stock Exchange under the ticker symbol BKT, and it operates as a closed-end fund, meaning it has a fixed number of shares that are bought and sold on an exchange rather than continuously issued and redeemed.
Investment objective and portfolio focus
BlackRock Income Trust states that its investment objective is to achieve both preservation of capital and high monthly income by investing in a portfolio of high-quality fixed income securities. According to the fund description, it seeks to achieve this objective by investing at least 65% of its assets in mortgage-backed securities. The fund also indicates that it invests at least 80% of its assets in securities that are either issued or guaranteed by the U.S. government or one of its agencies or instrumentalities, or that are rated at the time of investment AAA by S&P Global Ratings or Aaa by Moody's Investors Service, Inc. The fund may invest directly in these securities or synthetically through the use of derivatives.
Disclosures from BlackRock further note that agency mortgage-backed securities form the core of BKT. The adviser has highlighted that allocations to agency mortgage-backed securities can provide high quality diversification within U.S. fixed income portfolios, given their risk characteristics and yield profile relative to certain other high-quality fixed income assets.
Closed-end fund structure and capital actions
As a closed-end fund, BlackRock Income Trust may periodically undertake corporate actions that affect its share count and capital base. BlackRock has reported that BKT was launched in 1988 as BlackRock's first closed-end fund. Over time, the fund has engaged in actions such as reverse stock splits, rights offerings, and discount management programs, as described in public press releases.
In one announcement, BlackRock Advisors, LLC reported that the Board of Directors of BlackRock Income Trust approved a 1-for-3 reverse stock split of the fund’s common stock. The reverse split reduced the number of outstanding common shares while maintaining the overall value of shareholders’ investments, with each shareholder holding the same percentage interest in the fund, subject to adjustments for fractional shares. In connection with this reverse split, the fund’s fixed monthly distribution per share was adjusted so that the total monthly cash flow to shareholders and the distribution on net asset value were not changed as a result of the split.
BlackRock has also described a managed distribution plan for the fund, under which the fund pays a fixed monthly distribution. The reverse stock split announcement noted that the per-share distribution amount would be adjusted following the split to maintain the same overall distribution level to shareholders.
Rights offerings and growth of assets
BlackRock Income Trust has used rights offerings to raise additional capital for the fund. In a press release, the fund announced the terms of a transferable rights offering to holders of its common shares as of a specified record date. Rights holders were entitled to subscribe for additional shares at a discount to the market price, subject to a formula based on the average market price and the fund’s net asset value over a defined period. The offering included an over-subscription privilege for shareholders who fully exercised their rights, allowing them to request additional shares not taken up by other rights holders, subject to allocation limits.
BlackRock stated that the Board of Directors and the fund’s adviser determined that conducting the rights offering and increasing the fund’s assets was in the best interests of the fund and its shareholders. The adviser identified potential benefits such as the opportunity to invest additional capital in agency mortgage-backed securities consistent with the fund’s investment objective, the spreading of fixed operating costs across a larger asset base, and the potential for enhanced liquidity in trading of the fund’s shares. The adviser also noted that it would bear all expenses of the offering, rather than the fund or its shareholders.
In a subsequent press release, BlackRock Income Trust reported the successful completion of the rights offering, noting that it was over-subscribed. The fund indicated that it would exercise the over-subscription privilege and that shares subscribed for under this feature would be allocated pro rata among eligible shareholders who over-subscribed. The fund also stated that it intended to invest the proceeds of the offering in accordance with its investment objective and policies, and that shares issued pursuant to the offering would be entitled to receive an upcoming monthly distribution.
Discount management program
As a listed closed-end fund, BlackRock Income Trust’s shares can trade at a premium or discount to the fund’s net asset value. BlackRock has described a discount management program under which the fund may offer to repurchase a portion of its outstanding common shares if the shares trade at an average daily discount to net asset value greater than a specified threshold over a defined measurement period.
In one update, the fund reported that during a twelve-week measurement period, the average daily premium or discount to net asset value for BKT was approximately a 1.60% discount. Because this discount level did not exceed the threshold specified in the program, the fund stated that a tender offer was not required under the program and would not be conducted for that period. BlackRock described the discount management program as part of the fund’s ongoing effort to manage its premium or discount to net asset value, support long-term shareholder value, and provide liquidity to the market for its common shareholders, while noting that there could be no assurances about the program’s effect on the market price or discount.
In a later announcement, BlackRock Income Trust reported the renewal of its discount management program. Under the renewed terms, the fund stated that it intends to offer to repurchase a portion of its common shares via tender offer if, during a future twelve-week measurement period, the fund’s common shares trade at an average daily discount to net asset value of more than a specified percentage. If that condition is met, the fund indicated that it intends to offer to repurchase at least a stated minimum percentage of its outstanding common shares at a price equal to a set percentage of net asset value, as determined following the expiration of the tender offer. The fund emphasized that even if a tender offer is triggered, there is no guarantee that shareholders would be able to sell all of the shares they wish to tender, and no assurances about the effect on the market for the fund’s shares or the discount.
Reorganization activity
BlackRock has also described reorganization activity involving BlackRock Income Trust. The Boards of Directors of BlackRock Enhanced Government Fund, Inc. (EGF) and BlackRock Income Trust, Inc. approved a reorganization of EGF with and into BKT, with BKT continuing as the surviving fund. A subsequent press release reported that this reorganization was completed, and that each EGF shareholder received common shares of BKT equal in aggregate net asset value to the EGF common shares previously held, with cash paid in lieu of fractional BKT shares.
This reorganization increased the scale of BlackRock Income Trust by combining the assets of EGF into BKT. Following the closing of the reorganization, prior announcements indicated that BKT, as the surviving fund, intended to offer to repurchase a portion of its common shares via an annual tender offer if certain conditions were met during specified time periods, in line with the fund’s discount management approach.
Role within BlackRock and investor information
BlackRock describes its broader role as a fiduciary to investors and a provider of financial technology, aiming to help people build savings that serve them throughout their lives by making investing easier and more affordable. Within this context, BlackRock Income Trust functions as a specialized closed-end fund focused on high-quality fixed income, particularly agency mortgage-backed securities and other securities issued or guaranteed by the U.S. government or highly rated by major rating agencies.
BlackRock has stated that it updates performance and certain other data for the fund on a monthly basis in the closed-end funds section of its website, and that annual and semi-annual reports and other regulatory filings for the fund are accessible on the U.S. Securities and Exchange Commission’s website. These materials may discuss additional factors that affect the fund, including its investment risks, charges, and expenses.
Key characteristics summarized
- Structure: Closed-end management investment company listed on the New York Stock Exchange under the ticker BKT.
- Sector and industry: Finance and insurance sector, securities and commodity exchanges industry classification.
- Investment objective: To manage a portfolio of high-quality securities to achieve both preservation of capital and high monthly income.
- Portfolio focus: At least 65% of assets in mortgage-backed securities; at least 80% of assets in securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, or rated AAA/Aaa at the time of investment; investments may be made directly or synthetically through derivatives.
- Core holdings: Agency mortgage-backed securities are described as forming the core of BKT.
- Capital management: History of reverse stock split, rights offerings, and discount management programs, as described in public disclosures.
- History: Launched in 1988 as BlackRock’s first closed-end fund, according to fund portfolio managers quoted in a press release.
FAQs about BlackRock Income Trust, Inc. (BKT)
What is the primary investment objective of BlackRock Income Trust, Inc.?
According to the fund’s description, BlackRock Income Trust aims to manage a portfolio of high-quality securities to achieve both preservation of capital and high monthly income. The fund focuses on fixed income securities consistent with this objective.
What types of securities does BKT invest in?
The fund states that it seeks to invest at least 65% of its assets in mortgage-backed securities. It also indicates that at least 80% of its assets are invested in securities that are issued or guaranteed by the U.S. government or one of its agencies or instrumentalities, or that are rated AAA by S&P Global Ratings or Aaa by Moody’s Investors Service at the time of investment. These investments may be made directly or synthetically through derivatives.
How is BlackRock Income Trust structured?
BlackRock Income Trust is structured as a closed-end management investment company. Its shares are listed and traded on the New York Stock Exchange under the ticker symbol BKT, and the fund has a fixed number of shares that trade on the exchange rather than being continuously issued and redeemed.
What role do agency mortgage-backed securities play in BKT?
BlackRock has stated that agency mortgage-backed securities form the core of BKT. The adviser has highlighted that allocations to agency mortgage-backed securities can provide high quality diversification within U.S. fixed income portfolios, with risk and yield characteristics that complement other high-quality fixed income assets.
Has BlackRock Income Trust undertaken any reverse stock splits?
Yes. BlackRock Advisors, LLC reported that the Board of Directors of BlackRock Income Trust approved a 1-for-3 reverse stock split of the fund’s common stock. The reverse split reduced the number of outstanding shares while maintaining the total value of shareholders’ investments, with each shareholder retaining the same percentage interest in the fund, subject to adjustments for fractional shares.
What is the fund’s managed distribution plan?
BlackRock has indicated that BlackRock Income Trust adopted a managed distribution plan. In connection with the reverse stock split, the fund’s fixed monthly distribution per share was adjusted so that the total monthly cash flow to shareholders and the distribution on net asset value were unchanged by the split. This reflects the fund’s emphasis on high monthly income as part of its investment objective.
How does the discount management program work for BKT?
The fund has described a discount management program under which it intends to offer to repurchase a minimum percentage of its outstanding common shares if the shares trade at an average daily discount to net asset value greater than a specified threshold over a defined measurement period. If the condition is met, the fund may conduct a tender offer to repurchase shares at a stated percentage of net asset value. BlackRock notes that there is no assurance that such programs will affect the market discount or that shareholders will be able to tender all desired shares.
Has BlackRock Income Trust been involved in any fund reorganizations?
Yes. The Boards of Directors of BlackRock Enhanced Government Fund, Inc. (EGF) and BlackRock Income Trust, Inc. approved a reorganization in which EGF was combined with and into BKT, with BKT as the surviving fund. A later press release reported that the reorganization was completed, and that EGF shareholders received BKT common shares equal in aggregate net asset value to their former EGF holdings, with cash paid in lieu of fractional BKT shares.
How does BKT raise additional capital?
BlackRock Income Trust has used transferable rights offerings to raise additional assets. In one such offering, rights were issued to existing shareholders of record, entitling them to subscribe for additional shares at a discount to market price, subject to a pricing formula and an over-subscription privilege. BlackRock stated that the adviser would pay all expenses of the offering and that the proceeds would be invested in line with the fund’s investment objective and policies.
Where can investors find more information about BKT’s performance and risks?
BlackRock has indicated that performance and certain other data for BlackRock Income Trust are updated monthly in the closed-end funds section of its website. It has also noted that annual and semi-annual reports and other regulatory filings for the fund are available on the U.S. Securities and Exchange Commission’s website. These documents include information about the fund’s investment objectives, risks, charges, and expenses.