Company: VVR
Filing Date: 2025-05-02
Form Type: N-CSR
Source: 0001193125-25-111542
Chunk: 0

Company: Invesco Senior Income Trust
Filing Date: 2025-05-02
Form: N-CSR
Chunk 0
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pacing both investment grade as well as high yield bond returns, while it exhibited far less overall volatility. 1,2As in so many prior years, loans proved yet again to be an exceptional vehicle for investors to earn relatively strong risk adjusted returns with a lower volatility as interest rate uncertainty continues to affect fixed rate securities. Loan returns were supported by their robust coupon income, which remains near all-timehighs, and we believe this trend will likely continue as current markets are pricing in a higher for longer theme, with rates not heading back down near pandemic lows. Meanwhile, a continuation of the largely benign credit environment supported broad based price stability across the loan market despite central bank efforts to tighten financial conditions and a consistent (but overall diminishing) trend of rating agency net downgrades. Continued better-than-expected economic performance in 2023 and 2024 underpinned healthy earnings progression for most borrowers, supporting their ability to service debt amid the continued elevated interest expense and continuing to facilitate access to capital markets for many to extend near-term maturities, with both the broadly syndicated and private credit markets providing options for issuers to address liquidity shortfalls or extend/refinance near-term maturities during the fiscal year. As a result, the par weighted default rate dropped to 0.81% as of fiscal year-end,while the percentage of loans trading below $80, with $100 representing par value, declined to just 3.05% of the market, which we believe is as good a signal as any that credit stress in the market is contained. 3 This credit environment and corporate balance sheet strength continued to help enable lower rated loans to outperform higher rated loans in total return for the fiscal year. This fiscal year also saw a continuation of worldwide geopolitical tensions. Fortunately loan issuers, by and large, were spared the effects of these conflicts as they have limited to no direct exposure to these regions. For the loan asset class as a whole, this fiscal year witnessed a continued surge of repricing activity, with over 50% of the asset class having repriced during the period, pushing out maturities and improving issuer balance sheets. Mergers and acquisitions and leveraged buyout activity remained muted which, combined with continued retail and institutional demand and collateralized loan obligations origination, translated to strong

net demand for loans and further translated into a continued declining default rate amid limited new default activity. 3 After three rate cuts in the second half of 2024, we believe the US Federal Reserve (Fed) will