Presentation DWS Floating Rate Fund - DWS Investments
Presentation DWS Floating Rate Fund - DWS Investments
Presentation DWS Floating Rate Fund - DWS Investments
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Loans offer several benefits and distinctions<br />
U.S. loans<br />
U.S. high-yield ield bonds Relative e benefits and implications<br />
Senior<br />
Senior or<br />
subordinated<br />
Loans are the most senior debt in the capital structure of non-investment-grade firms<br />
— Interest and principal is paid before bond and equity holders<br />
Secured Unsecured Loans are usually secured by assets, which support higher recovery rates.<br />
— Historically, recovery rates for defaults have averaged over 80%<br />
Covenants Lighter covenants Loans typically have stronger financial covenants than bonds<br />
— Greater protection for investors<br />
<strong>Floating</strong>-rate Mostly fixed-rate Loans offer floating-rate coupons<br />
— Potentially less interest-rate risk<br />
6-9 year term 7-10 years term Loans are generally slightly shorter term<br />
— Less term risk<br />
Lower liquidity Higher liquidity<br />
Loans generally are less liquid than high-yield bonds<br />
— Selling loan positions quickly could be difficult<br />
Callability Call protection Loans are generally callable with little or no premium<br />
— When capital markets are open, loans trading above par are often refinanced at<br />
tighter spreads<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 32
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