Skip to main content
PGIM Fixed Income LogoPGIM Fixed Income Logo
  • About

    • Our Firm
    • Leadership
    • Awards and Accolades
    • Careers
  • ESG

    • ESG at PGIM Fixed Income
    • ESG Engagement
    • ESG Impact Ratings
    • ESG Investment Process and Strategies
    • SDFR Information
  • Investment Capabilities

    • Investment Approach
    • Investment Strategies
    • Fundamental Credit Research
    • Macroeconomic Research
    • Quantitative Analysis and Risk Management
  • Insights and Media

    • Featured Insights
    • The Next Chapter for Emerging Market Debt
    • Central Bank Policy Views
    • Quarterly Outlook
    • Weekly View from the Desk
    • Webcasts
    • Podcasts
    • White Papers
    • Videos
  • Bond Blog
  • Contact Us
Navy blue box.
Bond Blog Post Page Logo - White

Securitized Products

StayingBuoyantwithFloating-RateSecuritizedProducts

By Gabe Rivera & Edwin Wilches, CFA — May 16, 2022

7 mins

Share

Investors flock to floating-rate assets during periods of rising interest rates for two primary reasons: they stand to benefit from increasing coupon payments as policy rates rise, and the assets’ minimal duration risk provides insulation during periods of volatility in long-duration assets. Judging by the $53 billion of inflows since the start of 2021, investors are often steered towards leveraged loans when it comes to floating-rate assets. Yet, for those seeking other approaches, high-quality securitized products provide the benefit of floating-rate assets as well as the opportunity to select high-quality, loss-remote assets amid moderating global growth. 

The persistent uncertainty from splintered global growth, central banks’ varied phases of fighting inflation, and the unpredictability of war reinforces the importance of sector rotation and security selection. High-quality securitized products provide ample scope for these key elements of relative-value investing as they span economic sectors—ranging from industrial warehouse facilities to rental car fleets—and offer varying degrees of credit risk throughout the capital structure. The securities also appear poised to provide additional income as the Fed ramps up its tightening cycle.

Many of the securities within the space feature coupons based on the secured overnight financing rate (SOFR), which will rise alongside increases in the Fed funds rate.1 For example, the overnight and three-month term SOFR rates started the year at 5 bps and 9 bps, respectively. They subsequently climbed to 78 bps and 1.2% after the Fed’s 75 bps of cumulative rate hikes thus far in 2022. Looking forward, the market is pricing in a Fed funds rate of about 2.8% by the end of the year and 3.3% by May 2023.

In addition to likely increases in the base rate, high-quality securitized credit spreads trade notably wider than similarly rated, fixed-rate assets (Figure 1). For example, AAA-rated collateralized loan obligations (CLOs) recently traded wide of the benchmark U.S. IG corporate index, which averages an A rating. Thus, AAA CLOs offer a base rate that could more than triple by the end of 2023 as well as sizable pickups in credit spreads vs. other credit sectors, but with less credit risk.

Figure 1

The Universe of Securitized Assets vs. Comparably Rated Fixed-Rate Assets

Source:

Bloomberg Barclays, JPMorgan, Bloomberg, PGIM Fixed Income. Past performance is not a guarantee or a reliable indicator of future results. Please see the Reference section for important disclosures. Performance over one-year is annualized.

Investors seeking high-quality, floating-rate assets may look to other reference points, such as floating-rate notes issued by money center banks. In mid-April, Bank of America and J.P. Morgan issued $500 million in three-year and four-year A rated floating-rate notes that priced at overnight SOFR plus 110 bps and 132 bps, respectively. Another look at Figure 1 indicates a range of AA, and AAA rated securitized assets that are trading well wide of the levels on recently issued bank floaters.

A Rough Stretch for Duration

Many fixed income investors remain highly attuned to duration risk at this point in the cycle, and an allocation to floating-rate, high-quality securitized assets also provide a streamlined approach—without the need for undue hedging costs—to manage it with no duration or a very short duration of about 0.3 of a year, for example.

The recent volatility in market-determined rates indicates the variation in performance by duration. One of the longer-duration assets—U.S. Treasury Strips 25+ years (with a nearly identical duration)—posted a year-to-date total return of -28.6% as of mid-May.2 Meanwhile, a U.S. ABS Floating Rate Index with AAA average ratings and a duration of 0.1 year posted a total return of -0.3% through the same timeframe.3

Credit Concerns Coming to the Fore

Concerns about credit risk are increasingly mounting as the Fed tightens policy into moderating U.S. economic growth, which we see easing from 5.7% in 2021 to 2.9% in 2022 and 2.4% in 2023. Therefore, we continue emphasize high-quality securitized products given that they are generally loss remote. For example, Figure 2 provides a stylized example of how credit downturns would have affected the various CLO tranches. While this example does not capture the structural nuances of deals and the positive impact from debt covenants for CLO tranche investors, it highlights the robustness of senior tranches as they do not need to rely on excess spread. In this exercise, AAA tranches are unscathed, even in scenarios where loans only recover 35% upon default, whereas they’ve historically averaged 65%. 

Figure 2

The Historical Loss Remoteness of Senior CLOs

Source:

Moody’s Investors Service and PGIM Fixed Income. This simplified analysis does not fully incorporate CLO features that, in stress, divert cashflow to the senior most tranches at the expense of the mezzanine tranches. It also ignores credit migration and active management of the collateral.

High-quality securitized products are also downgrade remote, particularly in comparison to longer-dated high-quality corporate bonds, which often encounter the challenges of meeting the interests of equity holders, such as launching debt-financed stock buybacks or dividends. Indeed, Figure 3 shows that AAA-rated corporates experienced a 10-year downgrade rate of nearly 33% relative to the 1.87% rate for AAA CLOs and 4.19% for Super Senior AAA CMBS.

Leveraged loans and collateralized loan obligations (CLOs) remain a focal point for investors amid concerns about duration exposure and rising central bank policy rates. Given this interest, this paper revisits the compelling case for global senior CLOs, which includes: strong structural protections, historically low defaults and credit migration risk as well as higher-than-average spreads when compared to sectors with similar credit quality.

Read More

Figure 3

10-year Rating Migration Comparison Amongst U.S. CLOs, CMBS, and Corporates4

Note:

See footnote #4 for sources and methodology.

Conclusion

This year’s fixed income performance reflects an apprehension that investors’ bond income may fall short of inflation, while duration and credit risk could lead to capital losses. Yet, as disconcerting as conditions may be, an allocation to floating-rate, high-quality securitized assets could provide an approach that addresses some of investors’ foremost concerns.

1 The SOFR rate is a broad measure of the cost of borrowing cash overnight, which is collateralized by Treasury securities.
2 Based on the respective component of the Bloomberg Barclays U.S. Strips Index.
3 Based on the Bloomberg Barclays ABS Floating Rate Index.
4 U.S. CLO Rating transition matrix. 10-Years Long Average Rating Migration Rates: January 1, 1993-December 31, 2020. Moody's "Structured Finance - Global: Structured Finance Rating Transitions: 1993 – 2020. U.S. CMBS Rating transition matrix.10-Years Long Average Rating Migration Rates: January 1, 1993-December 31, 2020. Moody's "Ratings Symbols and Definitions," February 2019, Impairment includes all events that meet definition of default. U.S. Corp rating migration. 10-Years Long Average Rating Migration Rates: January 1, 1993-December 31, 2020. Moody's Default and Rating Analytics, Historical Rating Transitions, withdrawals excluded. Source of ratings: Fitch as of December 2020.
Note: The Global CLO Rating Transition and Corporate Rating Migration tables were not derived from the same source. The underlying methodologies are not be identical due to the use of original versus cohort ratings although we believe the information is comparable. Aaa SSNR is defined as conduit securities with 30% CE and original AAA. Sources: PGIM Fixed Income, Intex, and Bloomberg.

Related Blogs

ECB May Sense Neutral as Fiscal Finally Emerges

Mar 6, 2025 — mins

As ECB Policy Gradually Diverges, Impatience May Loom

Jan 30, 2025 — 2 mins

Insights from Cutting Through Central Bank Narratives

Jan 29, 2025 — 6 mins

Bank of Japan Rate Hike to 17-year High Portends More

Jan 24, 2025 — 3 mins

The Vulnerability—and Potential Value Creation—in UK Assets

Jan 23, 2025 — 5 mins

More Insights

  • Central Bank Policy

    ECB Navigates Trade Uncertainty with Dovish Policy Statement

    Apr 17, 2025

  • Geopolitics

    Balancing Act: Europe’s Push for Self-Reliance in Defense

    Apr 10, 2025

  • Outlook

    Second Quarter 2025 Market Outlook

    Apr 4, 2025

  • All the Credit

    Credit Markets in Transition: Liability Driven Investing, A Multi-Sector Approach

    Apr 3, 2025

  • Geopolitics

    U.S. Trade Policy at the Center of Global Economic Tensions

    Apr 3, 2025

Close Icon

  • By Gabe RiveraCo-Head of Securitized Products, PGIM Fixed Income
  • By Edwin Wilches, CFACo-Head of Securitized Products, PGIM Fixed Income
Important Information

The comments, opinions, and estimates contained herein are based on and/or derived from publicly available information from sources that PGIM Fixed Income believes to be reliable. We do not guarantee the accuracy of such sources or information.  This outlook, which is for informational purposes only, sets forth our views as of this date. The underlying assumptions and our views are subject to change. Past performance is not a guarantee or a reliable indicator of future results. ESG investing is qualitative and subjective by nature; there is no guarantee that the criteria used or judgment exercised by PGIM Fixed Income will reflect the beliefs or values of any investor.  Information regarding ESG practices is obtained through company engagement or third-party reporting, which may not be accurate or complete, and PGIM Fixed Income depends on this information to evaluate a company's commitment to, or implementation of, ESG practices.  ESG norms differ by region.  There is no assurance that PGIM Fixed Income's ESG investing techniques will be successful.

Source(s) of data (unless otherwise noted): PGIM Fixed Income, as of May 16, 2022.

PGIM Fixed Income operates primarily through PGIM, Inc., a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended, and a Prudential Financial, Inc. (“PFI”) company. Registration as a registered investment adviser does not imply a certain level or skill or training. PGIM Fixed Income is headquartered in Newark, New Jersey and also includes the following businesses globally: (i) the public fixed income unit within PGIM Limited, located in London; (ii) PGIM Netherlands B.V., located in Amsterdam; (iii) PGIM Japan Co., Ltd. (“PGIM Japan”), located in Tokyo; (iv) the public fixed income unit within PGIM (Hong Kong) Ltd. located in Hong Kong; and (v) the public fixed income unit within PGIM (Singapore) Pte. Ltd., located in Singapore (“PGIM Singapore”). PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. Prudential, PGIM, their respective logos, and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide.

These materials are for informational or educational purposes only. The information is not intended as investment advice and is not a recommendation about managing or investing assets. In providing these materials, PGIM is not acting as your fiduciary. Clients seeking information regarding their particular investment needs should contact their financial professional. These materials represent the views and opinions of the author(s) regarding the economic conditions, asset classes, securities, issuers or financial instruments referenced herein. Distribution of this information to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence of any of the contents hereof, without prior consent of PGIM Fixed Income is prohibited. Certain information contained herein has been obtained from sources that PGIM Fixed Income believes to be reliable as of the date presented; however, PGIM Fixed Income cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. PGIM Fixed Income has no obligation to update any or all of such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy or accept responsibility for errors. All investments involve risk, including the possible loss of capital. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or an y investment management services and should not be used as the basis for any investment decision. No risk management technique can guarantee the mitigation or elimination of risk in any market environment. Past performance is not a guarantee or a reliable indicator of future results and an investment could lose value. No liability whatsoever is accepted for any loss (whether direct, indirect, or consequential) that may arise from any use of the information contained in or derived from this report. PGIM Fixed Income and its affiliates may make investment decisions that are inconsistent with the recommendations or views expressed herein, including for proprietary accounts of PGIM Fixed Income or its affiliates.

The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients or prospects. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. For any securities or financial instruments mentioned herein, the recipient(s) of this report must make its own independent decisions.

Conflicts of Interest: PGIM Fixed Income and its affiliates may have investment advisory or other business relationships with the issuers of securities referenced herein. PGIM Fixed Income and its affiliates, officers, directors and employees may from time to time have long or short positions in and buy or sell securities or financial instruments referenced herein. PGIM Fixed Income and its affiliates may develop and publish research that is independent of, and different than, the recommendations contained herein. PGIM Fixed Income’s personnel other than the author(s), such as sales, marketing and trading personnel, may provide oral or written market commentary or ideas to PGIM Fixed Income’s clients or prospects or proprietary investment ideas that differ from the views expressed herein. Additional information regarding actual and potential conflicts of interest is available in Part 2A of PGIM Fixed Income’s Form ADV.

In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). In the European Economic Area (“EEA”), information is issued by PGIM Netherlands B.V., an entity authorised by the Autoriteit Financiële Markten (“AFM”) in the Netherlands and operating on the basis of a European passport. In certain EEA countries, information is, where permitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Limited and/or PGIM Netherlands B.V. to persons who are professional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II). In certain countries in Asia-Pacific, information is presented by PGIM (Singapore) Pte. Ltd., a Singapore investment manager registered with and licensed by the Monetary Authority of Singapore. In Japan, information is presented by PGIM Japan Co. Ltd., registered investment adviser with the Japanese Financial Services Agency. In South Korea, information is presented by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean investors. In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 (paragraph (a) to (i) of the Securities and Futures Ordinance (Cap.571). In Australia, this information is presented by PGIM (Australia) Pty Ltd (“PGIM Australia”) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001). PGIM Australia is a representative of PGIM Limited, which is exempt from the requirement to hold an Australian Financial Services License under the Australian Corporations Act 2001 in respect of financial services. PGIM Limited is exempt by virtue of its regulation by the FCA (Reg: 193418) under the laws of the United Kingdom and the application of ASIC Class Order 03/1099. The laws of the United Kingdom differ from Australian laws. In South Africa, PGIM, Inc. is an authorised financial services provider – FSP number 49012. In Canada, pursuant to the international adviser registration exemption in National Instrument 31-103, PGIM, Inc. is informing you of that: (1) PGIM, Inc. is not registered in Canada and is advising you in reliance upon an exemption from the adviser registration requirement under National Instrument 31-103; (2) PGIM, Inc.’s jurisdiction of residence is New Jersey, U.S.A.; (3) there may be difficulty enforcing legal rights against PGIM, Inc. because it is resident outside of Canada and all or substantially all of its assets may be situated outside of Canada; and (4) the name and address of the agent for service of process of PGIM, Inc. in the applicable Provinces of Canada are as follows: in Québec: Borden Ladner Gervais LLP, 1000 de La Gauchetière Street West, Suite 900 Montréal, QC H3B 5H4; in British Columbia: Borden Ladner Gervais LLP, 1200 Waterfront Centre, 200 Burrard Street, Vancouver, BC V7X 1T2; in Ontario: Borden Ladner Gervais LLP, 22 Adelaide Street West, Suite 3400, Toronto, ON M5H 4E3; in Nova Scotia: Cox & Palmer, Q.C., 1100 Purdy’s Wharf Tower One, 1959 Upper Water Street, P.O. Box 2380 - Stn Central RPO, Halifax, NS B3J 3E5; in Alberta: Borden Ladner Gervais LLP, 530 Third Avenue S.W., Calgary, AB T2P R3.

© 2022 PFI and its related entities. 2022-3245

Collapse section

Thank you for your interest in PGIM Fixed Income.

Let us help you navigate today's complex market environment.

Contact Us
  • About

    • Awards and Accolades
    • ESG
    • Leadership
    • Our Firm
    • Contact Us
    • Careers
  • Investment Capabilities

    • Investment Strategies
    • Investment Approach
    • Fundamental Credit Research
    • Macroeconomic Research
    • Risk Management
  • Insights and Media

    • The Bond Blog
    • Podcasts
    • Quarterly Outlook
    • Weekly View
    • White Papers
  • Other Resources

    • Collective Trust Login
    • UCITS Funds
    • SFDR Information
PGIM Fixed Income Logo
  • Terms & Conditions
  • Privacy Center
  • Accessibility Help
  • Cookie Preference Center

PGIM Fixed Income operates primarily through PGIM, Inc., a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended, and a Prudential Financial, Inc. (“PFI”) company. Registration as a registered investment adviser does not imply a certain level or skill or training. PGIM Fixed Income is headquartered in Newark, New Jersey and also includes the following businesses globally: (i) the public fixed income unit within PGIM Limited, located in London; (ii) PGIM Japan Co., Ltd. (“PGIM Japan”), located in Tokyo; (iii) the public fixed income unit within PGIM (Singapore) Pte. Ltd., located in Singapore (“PGIM Singapore”); (iv) the public fixed income unit within PGIM (Hong Kong) Ltd. located in Hong Kong; and (v) PGIM Netherlands B.V., located in Amsterdam (“PGIM Netherlands”). PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. Prudential, PGIM, their respective logos and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide.

In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). In the European Economic Area (“EEA”), information is issued by PGIM Netherlands B.V., an entity authorised by the Autoriteit Financiële Markten (“AFM”) in the Netherlands and operating on the basis of a European passport. In certain EEA countries, information is, where permitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Limited and/or PGIM Netherlands B.V. to persons who are professional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II). In certain countries in Asia-Pacific, information is presented by PGIM (Singapore) Pte. Ltd., a Singapore investment manager registered with and licensed by the Monetary Authority of Singapore. In Japan, information is presented by PGIM Japan Co. Ltd., registered investment adviser with the Japanese Financial Services Agency. In South Korea, information is presented by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean investors. In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 (paragraph (a) to (i) of the Securities and Futures Ordinance (Cap.571). In Australia, this information is presented by PGIM (Australia) Pty Ltd (“PGIM Australia”) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001). PGIM Australia is a representative of PGIM Limited, which is exempt from the requirement to hold an Australian Financial Services License under the Australian Corporations Act 2001 in respect of financial services. PGIM Limited is exempt by virtue of its regulation by the FCA (Reg: 193418) under the laws of the United Kingdom and the application of ASIC Class Order 03/1099. The laws of the United Kingdom differ from Australian laws. In Canada, pursuant to the international adviser registration exemption in National Instrument 31-103, PGIM, Inc. is informing you that: (1) PGIM, Inc. is not registered in Canada and is advising you in reliance upon an exemption from the adviser registration requirement under National Instrument 31-103; (2) PGIM, Inc.’s jurisdiction of residence is New Jersey, U.S.A.; (3) there may be difficulty enforcing legal rights against PGIM, Inc. because it is resident outside of Canada and all or substantially all of its assets may be situated outside of Canada; and (4) the name and address of the agent for service of process of PGIM, Inc. in the applicable Provinces of Canada are as follows: in Québec: Borden Ladner Gervais LLP, 1000 de La Gauchetière Street West, Suite 900 Montréal, QC H3B 5H4; in British Columbia: Borden Ladner Gervais LLP, 1200 Waterfront Centre, 200 Burrard Street, Vancouver, BC V7X 1T2; in Ontario: Borden Ladner Gervais LLP, 22 Adelaide Street West, Suite 3400, Toronto, ON M5H 4E3; in Nova Scotia: Cox & Palmer, Q.C., 1100 Purdy’s Wharf Tower One, 1959 Upper Water Street, P.O. Box 2380 - Stn Central RPO, Halifax, NS B3J 3E5; in Alberta: Borden Ladner Gervais LLP, 530 Third Avenue S.W., Calgary, AB T2P R3.

All investments involve risk, including the possible loss of capital.

These materials are for informational or educational purposes. The information is not intended as investment advice and is not a recommendation about managing or investing assets. In providing these materials, PGIM is not acting as your fiduciary. Clients seeking information regarding their particular investment needs should contact their financial professional.

This document may contain confidential information and the recipient hereof agrees to maintain the confidentiality of such information. Distribution of this information to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of this document, in whole or in part, or the divulgence of any of its contents, without PGIM Fixed Income’s prior written consent, is prohibited. This document contains the current opinions of the manager and such opinions are subject to change. Certain information in this document has been obtained from sources that PGIM Fixed Income believes to be reliable as of the date presented; however, PGIM Fixed Income cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. PGIM Fixed Income has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to its completeness or accuracy. Any information presented regarding the affiliates of PGIM Fixed Income is presented purely to facilitate an organizational overview and is not a solicitation on behalf of any affiliate. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services. These materials do not constitute investment advice and should not be used as the basis for any investment decision.

This material may contain examples of the firm’s internal ESG research program and is not intended to represent any particular product’s or strategy’s performance or how any particular product or strategy will be invested or allocated at any particular time. PGIM’s ESG processes, rankings and factors may change over time. ESG investing is qualitative and subjective by nature; there is no guarantee that the criteria used or judgment exercised by PGIM Fixed Income will reflect the beliefs or values of any investor. Information regarding ESG practices is obtained through third-party reporting, which may not be accurate or complete, and PGIM Fixed Income depends on this information to evaluate a company’s commitment to, or implementation of, ESG practices. ESG norms differ by region. There is no assurance that PGIM Fixed Income’s ESG investing techniques will be successful.

These materials do not take into account individual client circumstances, objectives or needs. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. The information contained herein is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. Any discussion of risk management is intended to describe PGIM Fixed Income’s efforts to monitor and manage risk but does not imply low risk. No risk management technique can guarantee the mitigation or elimination of risk in any market environment. These materials do not purport to provide any legal, tax or accounting advice. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.

Any references to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Any securities referenced may or may not be held in portfolios managed by PGIM Fixed Income and, if such securities are held, no representation is being made that such securities will continue to be held.

Any financial indices referenced herein as benchmarks are provided for informational purposes only. The use of benchmarks has limitations because portfolio holdings and characteristics will differ from those of the benchmark(s), and such differences may be material. You cannot make a direct investment in an index. Factors affecting portfolio performance that do not affect benchmark performance may include portfolio rebalancing, the timing of cash flows, credit quality, diversification, and differences in volatility. In addition, financial indices do not reflect the impact of fees, applicable taxes or trading costs which reduce returns. Unless otherwise noted, financial indices assume reinvestment of dividends.

Any projections or forecasts presented herein are as of the date of this presentation and are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. PGIM Fixed Income has no obligation to provide updates or changes to any projections or forecasts.

Any performance targets contained herein are subject to revision by PGIM Fixed Income and are provided solely as a guide to current expectations. There can be no assurance that any product or strategy described herein will achieve any targets or that there will be any return of capital. Past performance is not a guarantee or a reliable indicator of future results and an investment could lose value.

© 2025 PFI and its related entities.

PGIM Fixed Income Logo
PGIM Fixed Income Logo

You are viewing this page in preview mode.

Edit Page