abrdn Income Credit Strategies Fund's 17% payout is unsustainable amid tight credit spreads and high risk.

The abrdn Income Credit Strategies Fund (ACP), a high-beta global high-yield bond closed-end fund with 30% leverage, currently offers a 17% distribution rate. However, this payout is unsustainable as only 49% is supported by net investment income, with 40% coming from return of capital. Given historically tight credit spreads and the current macroeconomic environment, the fund faces limited upside and increased downside risk. Analysts recommend selling ACP, suggesting it is better suited as a trading instrument during market dislocations rather than a buy-and-hold investment in stable conditions.