Blackstone Loan Financing (BGLF ), one of the better-performing debt funds on the London Stock Exchange, has decided to wind down, concluding that its persistent share price discount makes it impossible to grow the £344m portfolio.

After ‘extensive consultation’ with its advisers, BGLF’s board said it had decided that an orderly realisation of the company’s investments in high-yielding bundles of corporate debt, known as collateralised debt obligations (CLOs), was in the best interest of shareholders.

Although performance of the Jersey investment company in the past nine years has been ‘resilient’, with a 65.4% increase in net asset value including dividends over five years, the persistent lag in the share price had left holders of its dollar shares with a total return of 32.4% with the stock trading 25% below net asset value (NAV).

That discount has widened from a one-year average of 22% despite no evidence yet of an increase in loan defaults ahead of a recession that would hurt its returns, with the shares returning 9.1% this year, beating the 1.5% from the FTSE All Share index and the 4.4% average in the structured finance sector.

Subject to shareholder approval, ‘capital will be returned to shareholders as the company’s underlying CLOs are matured or redeemed and in a manner that seeks to maximise shareholder value. The board intends to maintain the company’s listing during the realisation period. The board intends to maintain its current target level of dividend until the commencement of the orderly realisation,’ it said.

Winterflood analyst Emma Bird, whose team had tipped the 12%-yielder in their New Year review, said it was a ‘shame’ to see the proposed liquidation but remained positive on the stock as payouts would continue as the company begins a wind-down likely to take several years.