I evaluate Guggenheim Taxable Municipal Bond & Investment Grade Debt Trust for its potential to provide current income and long-term capital appreciation. GBAB offers diversified exposure to taxable municipal bonds, bank loans, and high-yield credit securities. Initially cautious about GBAB in early 2024 due to high pricing and an expected hawkish Fed, which proved accurate. I now see a stronger investment case for it in 2025.
GBAB's recent price pullback offers a good opportunity to lock in a high yield of 9.6%, supported by rate-cut tailwinds and leverage benefits. The mix of municipal and investment-grade corporate bonds in the Fund's portfolio is promising, especially with historically strong performance. It offers a good bond alternative for diversification and portfolio reallocation. Despite a high expense ratio of 1.20%, GBAB maintains a consistent NAV premium, indicating market strength, but inflation remains a risk for leveraged funds.
NEW YORK, Oct. 01, 2024 (GLOBE NEWSWIRE) -- Guggenheim Investments today announced that certain closed-end funds have declared their distributions*. The table below summarizes the distribution schedule for each closed-end fund (collectively, the “Funds” and each, a “Fund”).
GBAB is a diversified fund that mainly focuses on taxable municipal bonds, bank loans, and high-yield credit securities. I had previously rated GBAB as a "hold" because of challenges and more attractive investment options, and I still believe that reasoning is valid. The high premium to NAV and narrow corporate bond spreads are factors that make me hesitant to recommend new positions in this fund.
Guggenheim Taxable Municipal Bond & Investment Grade Debt Trust offers exposure to taxable municipal bonds and has a primary objective of providing current income. GBAB has seen strong performance in the short term, but there are concerns about its ability to sustain this performance. I recommend looking for better value elsewhere and am downgrading my outlook to "hold" for this CEF.
Guggenheim Taxable Municipal Bond & Investment Grade Debt Trust offers exposure to taxable municipal bonds and other IG and high yield credit products. GBAB has struggled and experienced negative returns over the past six months, but I believe the next six months will offer gains. The fund's excessive premium no longer exists, although the extensive use of leverage and the potential for an income cut need to be weighed carefully.
The Guggenheim Taxable Municipal Bond & Investment Grade Debt Trust is a high-duration municipal bond fund that suffered heavy losses in 2022 as interest rates rose. Long-term interest rates are still rising, which may continue to negatively impact GBAB's net asset value in the short-to-medium term. The fund's distribution yield of 9.8% of NAV may not be sustainable, as the portfolio only yields 5.9%, potentially leading to a distribution shortfall.