How might the fund's credit portfolio composition, credit quality trends, and any disclosed risk metrics impact its valuation relative to peer credit income funds?

Fund‑level fundamentals

Carlyle Credit Income Fund (CCIF) disclosed a Q3 2025 portfolio that remains heavily weighted toward senior unsecured and senior secured corporate debt in the U.S. and Europe, with a modest allocation to high‑yield and structured‑credit assets. The weighted‑average credit rating stayed in the “A‑” to “BBB‑” range, indicating a tilt toward upper‑medium‑grade quality. Credit‑quality trends showed a net‑up‑grade of 2 % in the portfolio versus the prior quarter, driven by the fund’s active re‑balancing out of lower‑rated issuers and into higher‑rated, lower‑duration positions. The disclosed risk metrics—average duration of 4.2 years, a weighted‑average spread of 3.6 % over the U.S. Treasury curve, and a historical default‑loss rate of 0.4 %—place CCIF on the “low‑risk, moderate‑yield” side of the credit‑income spectrum.

Valuation implications vs. peers

Peers in the credit‑income space (e.g., PIMCO Income, BlackRock Credit) typically carry a higher exposure to high‑yield (BBB‑/BB) and longer‑duration assets, reflected in wider spreads (≈4.2 %–4.8 %) and higher average default‑loss expectations (≈0.7 %–1.0 %). Because CCIF’s portfolio is anchored in higher‑quality credit and a shorter duration, the fund commands a tighter premium to NAV—its market price trades at a ~3 % discount to NAV versus a 6–8 % discount for many high‑yield‑biased funds. The lower spread premium also means the fund’s dividend yield (≈5.2 % monthly) is modest relative to peers offering 6–7 % yields, but the higher credit quality and lower default risk justify the tighter valuation.

Actionable trading view

If you expect credit‑quality to hold steady or improve: the fund’s lower discount to NAV and stable dividend stream make it an attractive “defensive” credit‑income play. A modest upside to NAV (≈2–3 % upside) could be realized if spreads compress further as the market rewards higher‑quality assets.

If you anticipate a widening of credit spreads or a downgrade in the macro‑credit environment: the fund’s higher‑quality tilt will likely protect capital better than high‑yield peers, but the dividend yield may become less competitive, capping upside. In that scenario, a short‑position or a relative‑value short against higher‑yield funds could be considered.

Overall, CCIF’s composition and risk metrics position it at a valuation premium relative to more aggressive credit‑income funds, offering a risk‑adjusted entry point for investors seeking yield with a lower downside exposure. Adjust exposure based on your outlook for credit‑spread dynamics and the relative performance of high‑yield versus investment‑grade credit.