--- title: "How We’re Playing Private Credit Panic For 8.8% Dividend Bargains" type: "News" locale: "en" url: "https://longbridge.com/en/news/281904395.md" description: "The private credit market is under pressure due to the Iran War, AI investments, and rising redemption requests exceeding withdrawal caps. This situation highlights the flaws of private-credit funds, prompting a preference for closed-end funds (CEFs) like BlackRock Science and Technology Term Trust (BSTZ), which offers an 8.8% yield and trades at a 9.2% discount to net asset value. BSTZ provides liquidity and access to both public and private tech firms, benefiting from their growth while avoiding the risks associated with private credit loans." datetime: "2026-04-07T15:25:45.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/281904395.md) - [en](https://longbridge.com/en/news/281904395.md) - [zh-HK](https://longbridge.com/zh-HK/news/281904395.md) --- # How We’re Playing Private Credit Panic For 8.8% Dividend Bargains There are three stories moving markets right now: 1. **The Iran War.** 2. **The AI revolution,** as heavy investments in the tech cause both excitement and worry, particularly around how AI affects software companies. 3. **The private-credit market.** Because many software companies relied on credit from private, non-bank lenders, the world of private credit (which went from about $500 billion a decade ago to about $3 trillion today) is wobbling. All three are combining to put pressure on private-credit funds. That, of course, is a headache for private-credit investors, especially because they were marketed on the idea that they offer lower volatility. We are now seeing managers of private-credit funds field redemption requests that exceed these funds’ withdrawal “caps.” (They’re officially “semiliquid,” allowing for withdrawals up to a certain limit, though their redemption policies vary.) In other words, the key flaw of these funds is now out in the clear light of day—and it’s one that most investors probably didn’t even read. Situations like this are _exactly_ why we prefer closed-end funds (CEFs) for generating high, predictable and often monthly paid dividends. In a moment, we’ll talk about one that gives us _liquidity_, a high dividend and lets us participate in the growth of private firms, too. Plus it trades at an unusual (and in my view temporary) 9.2% discount to net asset value (NAV, or the value of its underlying portfolio). That liquidity point is key: CEFs trade on the public markets, like stocks, and are subject to the same regulatory requirements as any other publicly traded entity. And the dividends on offer are exceptional—an average yield around 9%. And with around 400 CEFs out there, investing in everything from stocks to convertible bonds, you can build an income stream backed by a diverse portfolio. That’s something private-credit funds simply can’t offer. ## A Monthly Dividend CEF Poised to Sprint Higher A good example of this at work is **BlackRock Science and Technology Term Trust (BSTZ)**, a holding of my _CEF Insider_ service that yields 8.8% as I write this. And, yes, BSTZ trades at that 9% discount I just mentioned. The beauty of a yield that size is that it’s high enough to let us avoid selling into a downturn, since we can simply collect it while we wait for the storm to pass. BSTZ’s top holdings (which as the name says, are tech-focused) help drive that dividend, with management timing their buys and sells, then handing over the gains to us in cash. As you can see above, the fund holds well-known publicly traded tech stocks like **NVIDIA (NVDA)** and **Tower Semiconductor (TSEM)** alongside growth private tech firms like ByteDance (the company behind TikTok) and Anthropic (maker of the AI chatbot Claude). In other words, BSTZ gets us the best of both worlds: access to top publicly traded tech stocks _and_ growth-focused private tech firms—all while maintaining liquidity for us. Now let’s turn back to the dividend: As you can see above, while BSTZ’s regular payout has moved around somewhat, management has grown it by nearly 63% in the last decade, as the tech sector has grown—a trend I see continuing as AI continues to move out from the tech sector and into the broader economy. That’s in addition to the big special payouts management has offered (the spikes in the chart above). There’s another aspect of BSTZ’s portfolio that’s key, too: Its private-company investments are equity, not loans. That lets us directly benefit from these companies’ growth, and it’s not the case with private _credit_, where investors take on the risk of the creditor struggling to repay the loan without fully participating in their growth if they succeed. This is why private credit funds have struggled, while those that mix public and private equity have performed well. Finally, let’s talk about BSTZ’s discount to net asset value (NAV, or the value of its underlying portfolio). Below is a chart of both the fund’s market price–based return (in purple) and its NAV return (in orange). (The fact that a CEF can trade at different levels in relation to its holdings is a unique benefit of these funds.) As you can see, BSTZ’s total return based on market price is up 45.1% over the last year, while its total NAV return is up 43.7%. That gap doesn’t sound like much, but it’s enough to give the fund that 9.2% discount to NAV: That gap between NAV and market price has resulted in that 9.2% discount on the fund, despite its strong gains over the last year. This gap exists because fearful investors have discounted just about everything these days, as markets remain unpredictable. But the key thing to remember is that the average discount among CEFs is now around 7%, so BSTZ is overly discounted, despite its strong one-year return. That’s a sweet setup that lets us take advantage of private-credit woes, grab stakes in the growth of public and private tech firms and get a steady dividend. I don’t expect BSTZ’s discount to stick around for long, but even if it does, those who buy now will get paid handsomely to wait. _Michael Foster is the Lead Research Analyst for_ _Contrarian Outlook__. For more great retirement income ideas, click here for our latest report “_**Indestructible Income: 5 Bargain Funds with Steady 10% Dividends.****”** ### Related Stocks - [BSTZ.US](https://longbridge.com/en/quote/BSTZ.US.md) ## Related News & Research - [Short-term offers yield 4%+, expert says](https://longbridge.com/en/news/294566678.md) - [Stocks Pressured by Renewed US-Iran Hostilities](https://longbridge.com/en/news/294221798.md) - [Oil prices tumble after the US and Iran pause fighting over the weekend](https://longbridge.com/en/news/294218059.md) - [Volatility in Korean stocks complicates fundamentals story](https://longbridge.com/en/news/294150394.md) - [Traders Bet Iran Still Wants Peace, Oil Pulls Back](https://longbridge.com/en/news/294376238.md)