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PIMCO Income Strategy Fund II holds steady with 12.5% yield but rising risks from higher leverage and strategy changes.

Company Fundamentals
11 Sep 2026
Seeking Alpha
View Source
Neutral
PIMCO Income Strategy Fund II holds steady with 12.5% yield but rising risks from higher leverage and strategy changes.

PIMCO Income Strategy Fund II (PFN) is rated hold, trading near its net asset value with a 12.5% yield. The fund recently shifted its strategy to allow direct loan origination, increasing credit flexibility but also exposure to illiquid and higher-risk assets. Its leverage has doubled to about 31%, which boosts potential returns but also raises downside risks, especially with uncertain interest rates. Dividend coverage is below 100%, and the fund has relied on increased leverage to cover income shortfalls, raising concerns about sustainability if credit performance weakens.

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