First Trust Senior Floating Rate Income Fund II Cuts Monthly Dividend by 16.19% — First Trust Advisors L.P.

Event summary

First Trust Senior Floating Rate Income Fund II (FCT) reduced its monthly common share distribution from $0.097 to $0.0813 per share for July 2026.
The distribution will be payable on July 15, 2026, to shareholders of record as of July 1, 2026.
The decrease represents a 16.19% reduction in the return of capital from the prior distribution.
The Fund's distribution rate based on the June 17, 2026 NAV is 10.00%, and based on the closing market price is 10.15%.
The Fund invests primarily in senior secured floating-rate corporate loans, with at least 80% of its assets in lower-grade debt instruments.

The big picture

The dividend cut reflects the Fund's strategy to maintain a relatively stable monthly distribution, which may benefit its market price and premium/discount to NAV. This move comes amid broader market conditions that include increased risks associated with senior loans, such as weaker lender protections and higher non-payment rates during economic downturns. The Fund's AUM stands at approximately $342 billion as of April 30, 2026, highlighting its significant scale in the closed-end fund space.

What we're watching

Distribution Stability: Whether the Fund can maintain a stable distribution rate amid volatile market conditions.
Credit Risk: The impact of investing in below-investment-grade securities on the Fund's NAV and income distributions.
Market Liquidity: The Fund's ability to dispose of senior loans if it seeks to repay debt or take advantage of new investment opportunities.