Western Asset High Income Fund II

HIX

Market cap $359M

The Western Asset High Income Fund II (HIX) offers a 14.74% yield but suffers persistent net asset value (NAV) erosion, raising sustainability concerns. HIX's distribution exceeds net investment income, relying on unrealized gains and capital, which threatens long-term NAV and future payouts. Exposure to Spirit Airlines bankruptcy may result in further portfolio losses, though position size is not dominant but still material.

NEW YORK--(BUSINESS WIRE)--Category: Fund Announcement.

NEW YORK--(BUSINESS WIRE)--Category: Financials.

NEW YORK--(BUSINESS WIRE)--Category: Fund Announcement.

HIX: Limited Appeal As Long As Rates Remain Elevated

Some of our favorite bond funds (yielding 8%+) just took a header. And it's setting up the best buying opportunity we've seen in nearly three years for CEF investors.

Western Asset High Income Fund II offers a 13.6% yield and global diversification, appealing to income-focused investors. HIX's NAV has improved due to net realized gains, but high leverage and below-investment-grade holdings increase risk, especially in a high-rate environment. The fund's dividend appears sustainable, with recent earnings covering distributions at 163%, though payouts are taxed as ordinary income.

Western Asset High Income Fund II (HIX) offers a 13.64% yield, far surpassing major bond indices and most closed-end fund peers. HIX's high yield is undermined by declining net asset value and unsustainable distributions, raising concerns about future distribution cuts. Upcoming Federal Reserve rate cuts threaten HIX's income generation, especially from its floating-rate assets.

NEW YORK--(BUSINESS WIRE)--Category: Financials.

NEW YORK--(BUSINESS WIRE)--Category: Fund Announcement.