Company: PRIF-PJ
Filing Date: 2025-02-28
Form Type: N-CSRS
Source: 0001554625-25-000010
Chunk: 3

Company: Priority Income Fund, Inc.
Filing Date: 2025-02-28
Form: N-CSRS
Chunk 3
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We believe the long-term fundamentals for the investments held by Priority remain attractive. CLO market issuance exceeded its 2021 peak, with $202 billion issued in 2024, compared to a peak of $187 billion in 2021, $129 billion in 2022 and $116 billion in 2023. [4] Third party research analysts project 2025 CLO market issuance volumes of $200-$210 billion. [5]

Throughout 2024, there has been a significant tightening in the market for CLO debt and credit more generally. This has led to an increase in the number of refinancings and resets in the market, benefiting many of our CLO equity positions, in the market with managers and equity investors actively exploring opportunities throughout 2024. The refi/reset wave is expected to continue and potentially increase in activity throughout 2025 as CLO spreads tighten further.

#### 2025 SEMI-ANNUAL REPORT
PRIORITY INCOME FUND, INC. 5

Looking ahead to 2025, we expect macroeconomic uncertainty, including the potential for Federal Reserve rate cuts throughout the year. Senior secured loan market default rates decreased throughout 2024 (decreasing from 1.53% on 12/31/2023 to 0.94% on 12/31/2024) [6] and we expect this trend to continue, depending on the path of rates and other macroeconomics forces moving forward. Continuing rate cuts would benefit floating rate borrowers from an interest coverage perspective as well, all else equal. We expect Priority to continue seeking opportunities in both CLO equity and debt in 2025.

#### Dividend Policy
To qualify for U.S federal income tax treatment as a regulated investment company, the Company is required to pay out distributions as determined in accordance with federal income tax regulations. In certain periods, we expect the income distributable pursuant to these regulations, which we refer to as distributable income, to be higher or lower than our reportable accounting income. In addition to net investment income, our dividend policy considers in part our estimate of our distributable income, which includes: (1) interest income from our underlying CLO debt and equity investments, (2) recognition of certain mark-to-market gains or losses to the extent that the fair market value of our CLO investments is determined to deviate from its adjusted tax basis, and (3) acceleration of unamortized fees and expenses following the refinancing or reset of a C