XFLT: A Shift In Fed Tone Presents Risk To Leveraged Loans

XAI Octagon Floating Rate & Alternative Income Trust is rated Hold due to rising inflation and elevated default risks in leveraged loans. XFLT's portfolio is heavily weighted to senior secured first lien loans (46.53%) and CLO equity (34.83%), amplifying both return potential and risk. Fed policy uncertainty and persistent inflation, driven by energy shocks from Middle East conflict, may present greater risk to interest payments by issuers, potentially impacting XFLT's cash flows.