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KBRA Assigns and Affirms Ratings for Mandatory Redeemable Preferred Shares Issued by Calamos Strategic Total Return Fund

26 Aug 2026   |   New York

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KBRA assigns a ‘AA-’ rating to $151.0 million Series H Mandatory Redeemable Preferred Shares ("MRPS") issued by Calamos Strategic Total Return Fund (the “Fund” or "CSQ"). Concurrently, KBRA affirms the ratings assigned to the outstanding Series C, F, and G MRPS issued by the Fund. The Outlook on all ratings is Stable.

The rating action reflects the stable composition of the Fund’s portfolio, which is primarily invested in U.S-domiciled common stocks and convertible securities, with notable exposures to Information Technology, Financials, and Industrials sectors. Whilst total leverage asset coverage levels have varied in recent years due to market volatility, CSQ has maintained asset coverage ratios well in excess of the Investment Company Act of 1940 (the “'40 Act”) requirements. The Fund’s history of maintaining asset coverage levels that consistently exceed the ’40 Act regulatory thresholds, and the relative stable performance of the portfolio supports the affirmation of the rating.

Key Credit Considerations

  • Asset Coverage: The Fund is registered under the '40 Act which imposes minimum asset coverage requirements on leverage. The Fund must maintain at least 200% coverage on total leverage (including senior debt and MRPS) and 300% on senior debt in order to issue additional debt or preferred shares. Further, under the terms of the MRPS agreements, distributions to common shareholders are prohibited unless total asset coverage exceeds 225%, which incentives the Fund to maintain its asset coverage cushion. As of June 30, 2026, the total asset coverage was 342.3% compared to 332.3% as of July 31, 2025. Following the proposed issuance, the Fund is expected to increase total leverage and rebalance its leverage mix, resulting in pro forma total asset coverage of 322.6%
  • Asset Liquidity: The majority of the Fund’s assets are liquid securities. As of June 30, 2026, 65.2% was invested in common stocks (64.9% as of July 31, 2025) and 20.0% in convertible securities (18.5% as of July 31, 2025). These asset classes trade in active secondary markets, providing transparent pricing and trade execution should the Fund need to liquidate positions.
  • Diversified Investments: The Fund is diversified across sectors, geographies, and product types. As of June 30, 2026, the portfolio held 827 assets (compared with 814 assets as of July 31, 2025). The largest position (excluding cash) represented 5.0% of total assets, while the top 10 positions accounted for 28.2%, reflecting limited single-name concentration. Sector exposures include Information Technology (32.1%), followed by Financials (10.8%), Industrials (10.3%), and Consumer Discretionary (9.9%), with 97.5% of assets domiciled in North America. This diversification helps mitigate idiosyncratic risk by reducing exposure to issuer- or sector-specific volatility. However, the majority of the portfolio is invested in unrated securities.
  • Sponsor Experience: Calamos Investments LLC was founded by John P. Calamos, Sr. in 1977 and is headquartered in Naperville, Illinois, with additional offices in Chicago, New York, San Francisco, Milwaukee, Portland, and the Miami area. The firm oversees approximately $52 billion in assets under management (AUM) as of June 30, 2026 and employs more than 390 professionals. The platform offers a broad range of investment products, including mutual funds, closed-end funds, ETFs, interval funds, UCITS, and separately managed accounts. Strategies span convertibles, alternatives, growth equities, fixed income, sustainable equities, multi-asset, and private credit.

Rating Sensitivities

  • Asset Coverage: A deterioration in asset coverage levels below '40 Act requirements and the Fund manager’s inability to liquidate assets and demonstrate intention to cure within the 30-day time-period could result in negative rating changes.
  • Asset Quality: A trend of stable asset performance coupled with improvements to asset coverage could result in positive rating changes.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

This credit rating is endorsed by Kroll Bond Rating Agency Europe Limited for use in the European Union and by Kroll Bond Rating Agency UK Limited for use in the UK. Information on a credit rating’s endorsement status is available on its rating page at KBRA.com.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

There are certain issuers, entities or transactions rated by KBRA Europe or KBRA UK that may be or have relationships with Shareholders and/or Shareholder-Related Companies, as that term is defined in KBRA’s Shareholder and Shareholder Related Companies for KBRA Europe and KBRA UK Policy and Procedure. Relevant disclosure information may be found here.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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