Asset Coverage Ratio

Asset coverage ratio is a statutory or contractual measure comparing assets with borrowings and other senior securities. The required threshold depends on the applicable structure and rules.

Why this matters to income investors

Coverage rules constrain leverage and can limit a fund’s options after asset values fall.

How to use asset coverage ratio in your research

Check the exact numerator, denominator, and reporting period in the company’s filing. Follow the trend and look for debt or interest costs growing faster than the earnings available to pay them.

This material is general education and information, not individualized investment, tax, or legal advice.