KBRA Affirms Ratings to the Senior Notes and Series B Mandatory Redeemable Preferred Shares Issued by abrdn Asia-Pacific Income Fund, Inc. (FAX)
13 Aug 2025 | New York
KBRA affirms the ‘AAA’ rating and maintains a Stable Outlook assigned to the Senior Notes and affirms the 'AA-' rating and maintains a Stable Outlook assigned to Series B Mandatory Redeemable Preferred Shares ("MRPS") issued by abrdn Asia-Pacific Income Fund, Inc. (NYSE: FAX)(“FAX” or the “Fund”).
The ratings continue to be supported by the asset coverage, the credit quality and liquidity of the underlying assets, and the management experience of the Fund's investment adviser, abrdn Asia Limited. As of April 30, 2025, senior asset coverage was 342% and total asset coverage was 262%. The Fund is registered under the Investment Company Act of 1940 and is a non-diversified closed-end investment fund. The Fund had its Initial Public Offering in April 1986, and its shares are listed on the New York Stock Exchange under the symbol FAX. The Fund invests primarily in Asia Pacific debt securities
Key Credit Considerations
- Asset Coverage: As a fund registered under the ꞌ40 Act, regulatory requirements dictate minimum asset coverage ratios of 300% on senior debt and 200% on total leverage (with respect to senior debt and preferred stock) to issue additional debt or preferred shares. Furthermore, distributions to common shareholders are only permitted as long as total asset coverage is greater than 225%. As of April 30, 2025, senior asset coverage was 342% and total asset coverage was 262%.
- Asset Liquidity: As of April 30, 2025, the portfolio was primarily invested in corporate bonds (51.2%) and government bonds (46.1%) both of which are publicly traded and carry transparent secondary market values.
- Valuation: Majority of the Fund’s assets are public securities which can expose investors to volatile valuations which may not always be correlated to the intrinsic value and quality of the underlying issuers. The asset valuations can differ to such extent that the assigned values can be materially different from actual realized asset values, when the investments in question are liquidated.
- Exposure to Sub-Investment Grade Securities: Majority of the Fund’s assets are invested in unrated and/or below investment grade rated securities that are considered speculative in nature with respect to the issuer’s capacity to pay interest and repay principal.
- Firm Experience: abrdn plc is a United Kingdom-based investment company headquartered in Edinburgh, Scotland. The firm was established in 1825 and is organized around three business areas: Investments, Adviser, and Personal. It operates across multiple regions, including Europe, the Americas, Asia-Pacific, and the Middle East. As of June 30, 2025, abrdn reported approximately $504.2 billion in total assets under management. Its investment activities are grouped into four strategy areas: Asia, Sustainability, Alternatives, and UK Savings and Wealth. The Fund is managed by abrdn’s Asia-Pacific Fixed Income team, which has managed credit and sovereign bond strategies in the region for approximately 15 years.
Rating Sensitivities
- Asset Coverage: A deterioration in asset coverage levels below ꞌ40 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 a negative rating change. Conversely, 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.
Related Publications
- abrdn Asia-Pacific Income Fund, Inc. (FAX) Rating Report
- KBRA Assigns a Rating to Series B Mandatory Redeemable Preferred Shares and Affirms Ratings of the Senior Notes Issued by abrdn Asia-Pacific Income Fund, Inc. (FAX)
- abrdn Asia-Pacific Income Fund, Inc. (FAX) Surveillance Report
- KBRA Assigns Ratings to the Senior Notes and Mandatory Redeemable Preferred Shares Issued by abrdn Asia-Pacific Income Fund, Inc. (FAX)