Lots of thoughts as to why this has dropped, the most recent being that it takes a 5% header every month or so; that could be so; I've not looked quite that close.
But to recap some of the theories and add some thoughts:
Negative UNII in the quarterly. This indeed caught my attention, because it is not the norm. But UNII is a murky animal, some amalgam the industry needs to bridge the gap between GAAP and IRS "rules." But a positive is not a precursor to a special and a minus does not mean no year-end kicker, it seems. I doubt anyone sold based on the potential loss of a special in December. And the UNII does not indicate a drop in the regular dividend.
Too much leverage. Whoever suggested 48% leverage was the reason this has been dropping didn't really bother to see the drop in leverage a few months back when PTY unloaded virtually all their CDS. They have gotten back in a bit recently, and now are about 25% levered, 20% from ARPS and 5% from CDS. I took the quarterly result as a result of the decreased leverage.
Premium to NAV too high. Sure, could be. It's gotten quite high versus history. But, if so, why only PTY and not its PCN brother or its PHK country cousin?
Cost of leverage. At 15 basis points, can't say it's an issue. Let short term rates soar, then we can talk. ARPS default rate here is 150% of the 7-day AA Commercial Paper rate. Ain't moving soon.
Back to the serial 5% drops I have not noticed. What I have noticed is that once or twice a year, this likes to drop 10% or more over a few days for no known reason we can discern. Then it goes back up.
Would not mind it going down a bit more. Need to buy more.......................Dave
Thank you for your sensible comments. I too have seen it drop fairly suddenly ever so often and rise back up just as suddenly. This time around I managed to add at $19.82. It's hard to decide when the drop will come and how far it will go, but it looks like the bargain was short-lived and the price is climbing again. Maybe some more the next time it gets to the upper end of its premium range and has its own mini crash.