W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive
Wheaton, IL 60187
(Name and address of agent for
service)
Form N-CSR is to be used by management investment
companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required
to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use
the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information
specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection
of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”)
control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing
the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection
of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
There have been no material changes to the procedures
by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after
the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required
by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Pursuant to the requirements of the Securities Exchange
Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
I, James M. Dykas, certify that:
I, Derek D. Maltbie, certify that:
I, James M. Dykas, President and Chief Executive Officer
of First Trust High Yield Opportunities 2027 Target Term Fund (the “Registrant”), certify that:
I, Derek D. Maltbie, Treasurer, Chief Financial Officer
and Chief Accounting Officer of First Trust High Yield Opportunities 2027 Target Term Fund (the “Registrant”), certify that:
N-2
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6 Months Ended |
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Nov. 30, 2023
$ / shares
shares
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| Cover [Abstract] |
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| Entity Central Index Key |
0001810523
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| Amendment Flag |
false
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| Entity Inv Company Type |
N-2
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| Document Type |
N-CSRS
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| Entity Registrant Name |
First
Trust High Yield Opportunities 2027 Term Fund
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| General Description of Registrant [Abstract] |
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| Investment Objectives and Practices [Text Block] |
The
investment objective of the Fund is to provide current income. Under normal market conditions, the Fund will seek to achieve its investment
objective by investing at least 80% of its Managed Assets in high yield debt securities of any maturity that are rated below investment
grade at the time of purchase or unrated securities determined by the Advisor (as defined below) to be of comparable quality. “Managed
Assets” means the total asset value of the Fund minus the sum of its liabilities, other than the principal amount of borrowings.
High yield debt securities include U.S. and non-U.S. corporate debt obligations and senior secured floating rate loans (“Senior
Loans”)
|
| Risk Factors [Table Text Block] |
Principal
Risks
The
Fund is a closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund
is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance
that the Fund will achieve its investment objective. The following discussion summarizes the principal risks associated with investing
in the Fund, which includes the risk that you could lose some or all of your investment in the Fund. The Fund is subject to the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and, in accordance therewith, files reports,
proxy statements and other information that is available for review.
CDX
Risk. CDX is an equally-weighted index of credit default swaps that is designed to track a representative
segment of the credit default swap market (e.g., high yield). A credit default swap is a financial derivative that allows an investor
to swap or offset their credit risk with that of another investor. CDX provides exposure to a basket of underlying credit default swaps
in lieu of buying or selling credit default swaps on individual debt securities. The CDX investments in which the Fund will invest are
cleared on an exchange. Regardless of whether the Fund buys or sells CDX credit protection, such investments can result in gains or losses
that may exceed gains or losses the Fund would have incurred investing directly in high yield debt securities, which may impact the Fund’s
net asset value. It is also possible that returns from CDX investments may not correlate with returns of the broader high yield credit
market. There are additional costs associated with investing in CDX, including the payment of premiums when the Fund is a buyer of CDX
credit protection. When the Fund sells CDX credit protection, it assumes additional credit risk. Investment exposure to CDX credit protection
is subject to the risks of the underlying credit default swap obligations, which include general market risk, liquidity risk, credit risk
and counterparty risk. Counterparty risk may be mitigated somewhat compared to buying or selling credit protection using individual credit
default swaps because CDX investments are cleared on an exchange.
Consumer
Discretionary Companies Risk. Consumer discretionary companies, such as retailers, media companies and
consumer services companies, provide non-essential goods and services. These companies manufacture products and provide discretionary
services directly to the consumer, and the success of these companies is tied closely to the performance of the overall domestic and international
economy, interest rates, competition and consumer confidence. Success depends heavily on disposable household income and consumer spending.
Changes in demographics and consumer tastes can also affect the demand for, and success of, consumer discretionary products in the marketplace.
Corporate
Debt Obligations Risk. The market value of corporate debt obligations generally may be expected to rise
and fall inversely with interest rates. The market value of corporate debt obligations also may be affected by factors directly related
to the issuer, such as investors’ perceptions of the creditworthiness of the issuer, the issuer’s financial performance, perceptions
of the issuer in the marketplace, performance of management of the issuer, the issuer’s capital structure and use of financial leverage
and demand for the
issuer’s
goods and services. There is a risk that the issuers of corporate debt may not be able to meet their obligations on interest and/or principal
payments at the time called for by an instrument.
Credit
Agency Risk. Credit ratings are determined by credit rating agencies and are only the opinions of such
entities. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risk or the liquidity
of securities. Any shortcomings or inefficiencies in credit rating agencies’ processes for determining credit ratings may adversely
affect the credit ratings of securities held by the Fund or such credit rating agency’s ability to evaluate creditworthiness and,
as a result, may adversely affect those securities’ perceived or actual credit risk.
Credit
and Below-Investment Grade Securities Risk. Credit risk is the risk that the issuer or other obligated
party of a debt security in the Fund’s portfolio will fail to pay, or it is perceived that it will fail to pay, dividends and/or
interest or repay principal, when due. Below-investment grade instruments, including instruments that are not rated but judged to be of
comparable quality, are commonly referred to as high yield securities or “junk” bonds and are considered speculative with
respect to the issuer’s capacity to pay dividends or interest and repay principal and are more susceptible to default or decline
in market value than investment grade securities due to adverse economic and business developments. High yield securities are often unsecured
and subordinated to other creditors of the issuer. The market values for high yield securities tend to be very volatile, and these securities
are generally less liquid than investment grade securities. For these reasons, an investment in the Fund is subject to the following specific
risks: (i) increased price sensitivity to changing interest rates and to a deteriorating economic environment; (ii) greater risk of loss
due to default or declining credit quality; (iii) adverse company specific events more likely to render the issuer unable to make dividend,
interest and/or principal payments; (iv) negative perception of the high yield market which may depress the price and liquidity of high
yield securities; (v) volatility; and (vi) liquidity.
Credit
Default Swaps Risk. Credit default swap transactions involve greater risks than if the Fund had invested
in the reference obligation directly. In addition to general market risks, credit default swaps are subject to liquidity risk, counterparty
risk and credit risks. With respect to a reference obligation, a buyer will lose its investment and recover nothing should no event of
default occur. For a seller, if an event of default were to occur, the value of the reference obligation received by the seller, coupled
with the periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of
value. When the Fund acts as a seller of a credit default swap agreement, it is exposed to the risks of leverage since if an event of
default occurs with respect to a reference obligation, the seller must pay the buyer the full notional value of the reference obligation.
Current
Market Conditions Risk. Current market conditions risk is the risk that a particular investment, or
shares of the Fund in general, may fall in value due to current market conditions. As a means to fight inflation, which remains at elevated
levels, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal
Reserve has announced that it intends to reverse previously implemented quantitative easing. U.S. regulators have proposed several changes
to market and issuer regulations which would directly impact the Fund, and any regulatory changes could adversely impact the Fund’s
ability to achieve its investment strategies or make certain investments. Recent and potential future bank failures could result in disruption
to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which
may also heighten market volatility and reduce liquidity. The ongoing adversarial political climate in the United States, as well as political
and diplomatic events both domestic and abroad, have and may continue to have an adverse impact the U.S. regulatory landscape, markets
and investor behavior, which could have a negative impact on the Fund’s investments and operations. Other unexpected political,
regulatory and diplomatic events within the U.S. and abroad may affect investor and consumer confidence and may adversely impact financial
markets and the broader economy. For example, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant
market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting
from those hostilities have and could continue to have a significant impact on certain Fund investments as well as Fund performance and
liquidity. The economies of the United States and its trading partners, as well as the financial markets generally, may be adversely impacted
by trade disputes and other matters. For example, the United States has imposed trade barriers and restrictions on China. In addition,
the Chinese government is engaged in a longstanding dispute with Taiwan, continually threatening an invasion. If the political climate
between the United States and China does not improve or continues to deteriorate, if China were to attempt invading Taiwan, or if other
geopolitical conflicts develop or worsen, economies, markets and individual securities may be adversely affected, and the value of the
Fund’s assets may go down. The COVID-19 global pandemic, or any future public health crisis, and the ensuing policies enacted by
governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets,
negatively impacting global growth prospects. While vaccines have been developed, there is no guarantee that vaccines will be effective
against emerging future variants of the disease. As this global pandemic illustrated, such events may affect certain geographic regions,
countries, sectors and industries more significantly than others. Advancements in technology may also adversely impact markets and the
overall performance of the Fund. For instance, the economy may be significantly impacted by the advanced development and increased regulation
of artificial intelligence. These events, and any other future events, may adversely affect the prices and liquidity of the Fund’s
portfolio investments and could result in disruptions in the trading markets.
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent or custodian, or
issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches.
The Fund has established risk management systems designed to reduce the risks associated with cyber security. However, there is no guarantee
that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third party
service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber incidents in the future.
Defaulted
and Distressed Securities Risk. The Fund may invest in securities that may be in default or distressed—i.e.,
securities of companies whose financial condition is troubled or uncertain and that may be involved in bankruptcy proceedings, reorganizations
or financial restructurings. Distressed securities present a substantial risk of future default which may cause the Fund to incur losses,
including additional expenses, to the extent it is required to seek recovery upon a default in the payment of principal or interest on
those securities. The Fund also will be subject to significant uncertainty as to when, in what manner and for what value the obligations
evidenced by the defaulted or distressed securities will eventually be satisfied.
In
addition, the Fund may invest in loans of borrowers that are experiencing, or are likely to experience, financial difficulty. These loans
are subject to greater credit and liquidity risks than other types of loans. In addition, the Fund can invest in loans of borrowers that
have filed for bankruptcy protection or that have had involuntary bankruptcy petitions filed against them by creditors. A bankruptcy proceeding
or other court proceeding could delay or limit the ability of the Fund to collect the principal and interest payments on that borrower’s
loans or adversely affect the Fund’s rights in collateral relating to a loan.
Earnings
Risk. The Fund’s limited term may cause it to invest in lower yielding securities or hold the
proceeds of securities sold near the end of its term in cash or cash equivalents, which may adversely affect the performance of the Fund
or the Fund’s ability to maintain its dividend.
Emerging
Markets Risk. Investing in emerging market countries, as compared to foreign developed markets, involves
substantial additional risk due to more limited information about the issuer and/or the security (including limited financial and accounting
information); higher brokerage costs; different accounting, auditing and financial reporting standards; less developed legal systems and
thinner trading markets; the possibility of currency blockages or transfer restrictions; an emerging market country’s dependence
on revenue from particular commodities or international aid; and the risk of expropriation, nationalization or other adverse political
or economic developments.
Emerging
market countries may lack the social, political and economic stability and characteristics of more developed countries, and their political
and economic structures may undergo unpredictable, significant and rapid changes from time to time, any of which could adversely impact
the value of investments in emerging markets as well as the availability of additional investments in such markets. The securities markets
of emerging market countries may be substantially smaller, less developed, less liquid and more volatile than the major securities markets
in the United States and other developed nations. The limited size of these securities markets and the limited trading volume of securities
issued by emerging market issuers could cause prices to be erratic and investments in emerging markets can become illiquid. As a result
of the foregoing risks, it may be difficult to assess the value or prospects of an investment in such securities.
Europe
Risk. The Fund is subject to certain risks associated specifically with investments in securities of
European issuers, in addition to the risks associated with investments in non-U.S. securities generally. Political or economic disruptions
in European countries, even in countries in which the Fund is not invested, may adversely affect security values and thus the Fund’s
holdings. A significant number of countries in Europe are member states in the European Union (“EU”), and the member states
no longer control their own monetary policies by directing independent interest rates for their currencies. In these member states, the
authority to direct monetary policies, including money supply and official interest rates for the Euro, is exercised by the European Central
Bank. In a 2016 referendum, the United Kingdom elected to withdraw from the EU (“Brexit”). After years of negotiations between
the United Kingdom and the EU, a withdrawal agreement was reached whereby the United Kingdom formally left the EU. As the second largest
economy among EU members, the implications of the United Kingdom’s withdrawal are difficult to gauge and cannot be fully known.
Trade between the United Kingdom and the EU is highly integrated through supply chains and trade in services, as well as through multinational
companies. The United Kingdom’s departure may negatively impact the EU and Europe as a whole by causing volatility within the EU,
triggering prolonged economic downturns in certain European countries or sparking additional member states to contemplate departing the
EU (thereby perpetuating political instability in the region).
Foreign
Currency Risk. Currency risk is the risk that fluctuations in exchange rates may adversely affect the
value of the Fund’s investments. Currency exchange rates fluctuate significantly for many reasons, including changes in supply and
demand in the currency exchange markets, actual or perceived changes in interest rates, intervention (or the failure to intervene) by
U.S. or foreign governments, central banks, or supranational agencies such as the International Monetary Fund, and currency controls or
other political and economic developments in the U.S. or abroad.
Health
Care Companies Risk. Through the Fund’s investments in senior loans, the Fund may be significantly
exposed to companies in the health care sector. Health care companies are involved in medical services or health care, including
biotechnology research and production, drugs and pharmaceuticals and health care facilities and services. These companies are subject
to extensive competition, generic drug sales or the loss of patent protection, product liability litigation and increased government regulation.
Research and development costs of bringing new drugs to market are substantial, and there is no guarantee that the product will ever come
to market. Health care facility operators may be affected by the demand for services, efforts by government or insurers to limit rates,
restriction of government financial assistance and competition from other providers.
Illiquid
Securities Risk. The Fund invests a substantial portion of its assets in lower-quality debt issued by
companies that are highly leveraged. Lower-quality debt tends to be less liquid than higher-quality debt. Moreover, smaller debt issues
tend to be less liquid than larger debt issues. Although the resale or secondary market for senior loans is growing, it is currently limited.
There is no organized exchange or board of trade on which senior loans are traded. Instead, the secondary market for senior loans is an
unregulated inter-dealer or inter-bank resale market. In addition, senior loans in which the Fund invests may require the consent of the
borrower and/or agent prior to the settlement of the sale or assignment. These consent requirements can delay or impede the Fund’s
ability to settle the sale of senior loans. Depending on market conditions, the Fund may have difficulty disposing its senior loans, which
may adversely impact its ability to obtain cash to repay debt, to pay dividends, to pay expenses or to take advantage of new investment
opportunities.
Illiquid
securities may be difficult to dispose of at a fair price at the times when the Fund believes it is desirable to do so. The market price
of illiquid securities generally is more volatile than that of more liquid securities, which may adversely affect the price that the Fund
pays for or recovers upon the sale of such securities. Illiquid securities are also more difficult to value, especially in challenging
markets.
Inflation
Risk. Inflation risk is the risk that the value of assets or income from investments will be worth less
in the future as inflation decreases the value of money. As inflation increases, the present value of the Fund’s assets and distributions
may decline. This risk is more prevalent with respect to debt securities. Inflation creates uncertainty over the future real value (after
inflation) of an investment. Inflation rates may change frequently and drastically as a result of various factors, including unexpected
shifts in the domestic or global economy, and the Fund’s investments may not keep pace with inflation, which may result in losses
to Fund investors.
Information
Technology Companies Risk. Information technology companies produce and provide hardware, software and
information technology systems and services. Information technology companies are generally subject to the following risks: rapidly
changing technologies and existing product obsolescence; short product life cycles; fierce competition; aggressive pricing and reduced
profit margins; the loss of patent, copyright and trademark protections; cyclical market patterns; evolving industry standards; and frequent
new product introductions and new market entrants. Information technology companies may be smaller and less experienced companies,
with limited product lines, markets or financial resources and fewer experienced management or marketing personnel. Information
technology company stocks, particularly those involved with the internet, have experienced extreme price and volume fluctuations that
are often unrelated to their operating performance. In addition, information technology companies are particularly vulnerable to
federal, state and local government regulation, and competition and consolidation, both domestically and internationally, including competition
from foreign competitors with lower production costs. Information technology companies also face competition for services of qualified
personnel and heavily rely on patents and intellectual property rights and the ability to enforce such rights to maintain a competitive
advantage.
Interest
Rate Risk. The yield on the Fund’s common shares may rise or fall as market interest rates rise
and fall, as senior loans pay interest at rates which float in response to changes in market rates. Changes in prevailing interest rates
can be expected to cause some fluctuation in the Fund’s net asset value. Similarly, a sudden and significant increase in market
interest rates may cause a decline in the Fund’s net asset value.
Many
financial instruments use or may use a floating rate based upon the LIBOR. The United Kingdom’s Financial Conduct Authority (the
“FCA”), which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began December 31,
2022. There is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate (“SOFR”) will
be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same
volume or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain Fund investments
and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential
effects
of the transition away from LIBOR on the Fund or on certain instruments in which the Fund invests can be difficult to ascertain, and they
may vary depending on a variety of factors, and they could result in losses to the Fund.
In
addition, for the Fund’s fixed rate investments, when market interest rates rise, the market value of such securities generally
will fall. Market value generally falls further for fixed rate securities with longer duration. During periods of rising interest rates,
the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market
yield, increase the security’s duration and further reduce the value of the security. Investments in fixed rate securities with
long-term maturities may experience significant price declines if long-term interest rates increase.
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor
will be higher than if the Fund did not use leverage.
Limited
Term Risk. Because the assets of the Fund will be liquidated in connection with the Fund’s termination,
the Fund may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable,
which may cause the Fund to lose money. In particular, the Fund’s portfolio may still have significant remaining average maturity
and duration, and large exposures to lower-quality credits, as the termination date approaches, and if interest rates are high (and the
value of lower-quality fixed-income securities consequently low) at the time the Fund needs to liquidate its assets in connection with
the termination, the losses due to portfolio liquidation may be significant. Moreover, as the Fund approaches the termination date, its
portfolio composition may change as more of its portfolio holdings are called or sold, which may cause the returns to decrease and the
NAV of the Common Shares to fall. Rather than reinvesting the proceeds of matured, called or sold securities, the Fund may distribute
the proceeds in one or more liquidating distributions prior to the final liquidation, which may cause fixed expenses to increase when
expressed as a percentage of assets under management, or the Fund may invest the proceeds in lower yielding securities or hold the proceeds
in cash, which may adversely affect its performance. Because the Fund will invest in below investment grade securities, it may be exposed
to the greater potential for an issuer of its securities to default, as compared to a fund that invests solely in investment grade securities.
As a result, should a Fund portfolio holding default, this may significantly reduce net investment income and, therefore, Common Share
dividends, and also may prevent or inhibit the Fund from fully being able to liquidate its portfolio at or prior to the termination date.
When terminated, the Fund’s final distribution will be based upon its NAV at the end of the term and investors in the Fund may receive
more or less than their original investment.
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends
upon the continued contributions of certain key employees of the Advisor, some of whom have unique talents and experience and would be
difficult to replace. The loss or interruption of the services of a key member of the portfolio management team could have a negative
impact on the Fund.
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
Market
Risk. Investments held by the Fund, as well as shares of the Fund itself, are subject to market
fluctuations caused by real or perceived adverse economic conditions, political events, regulatory factors or market developments,
changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments
as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war,
acts of terrorism, market manipulation, government defaults, government shutdowns, regulatory actions, political changes, diplomatic developments,
the imposition of sanctions and other similar measures, spread of infectious diseases or other public health issues, recessions,
or other events could have a significant negative impact on the Fund and its investments. Any of such circumstances could have a materially
negative impact on the value of the Fund’s shares, the liquidity of an investment, and result in increased market volatility.
During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value, the bid/ask spread
on the Fund’s shares may widen and the returns on investment may fluctuate.
Non-U.S.
Securities Risk. The Fund may invest a portion of its assets in securities of non-U.S. issuers. Investing
in securities of non-U.S. issuers, which are generally denominated in non-U.S. currencies, may involve certain risks not typically associated
with investing in securities of U.S. issuers. These risks include: (i) there may be less publicly available information about non-U.S.
issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices; (ii) non-U.S. markets may be smaller,
less
liquid
and more volatile than the U.S. market; (iii) potential adverse effects of fluctuations in currency exchange rates or controls on the
value of the Fund’s investments; (iv) the economies of non-U.S. countries may grow at slower rates than expected or may experience
a downturn or recession; (v) the impact of economic, political, social or diplomatic events; (vi) certain non-U.S. countries may impose
restrictions on the ability of non-U.S. issuers to make payments of principal and interest to investors located in the United States due
to blockage of non-U.S. currency exchanges or otherwise; and (vii) withholding and other non-U.S. taxes may decrease the Fund’s
return. Foreign companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies.
In addition, there may be difficulty in obtaining or enforcing a court judgment abroad. These risks may be more pronounced to the extent
that the Fund invests a significant amount of its assets in companies located in one region or in emerging markets.
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its
investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures, there
is no way to completely protect against such risks.
Potential
Conflicts of Interest Risk. First Trust and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust currently manages and may in the future manage and/or advise other investment
funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund
is using leverage, the amount of the fees paid to First Trust for investment advisory and management services are higher than if the Fund
did not use leverage because the fees paid are calculated based on managed assets. Therefore, First Trust has a financial incentive to
leverage the Fund.
Prepayment
Risk. Loans and corporate bonds are subject to prepayment risk. Prepayment risk is the risk that the
borrower on a loan or issuer of a bond will repay principal (in part or in whole) prior to the scheduled maturity date. The degree to
which such repayment occurs may be affected by general business conditions, interest rates, the financial condition of the borrower or
issuer and competitive conditions among investors, among others. As such, prepayments cannot be predicted with accuracy. Upon a prepayment,
either in part or in full, the actual outstanding debt on which the Fund derives interest income will be reduced which, in turn, may result
in a decline in distributions to common shareholders. The Fund may not be able to reinvest the proceeds received on terms as favorable
as the prepaid loan or bond.
Reinvestment
Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if the
Fund invests the proceeds from matured, traded or called instruments at market interest rates that are below the Fund’s portfolio’s
current earnings rate. A decline in income could affect the common shares’ market price, level of distributions or the overall return
of the Fund.
Second
Lien Loan Risk. A second lien loan may have a claim on the same collateral pool as the first lien or
it may be secured by a separate set of assets. Second lien loans are typically secured by a second priority security interest or lien
on specified collateral securing the borrower’s obligation under the interest. Because second lien loans are second to first lien
loans, they present a greater degree of investment risk. Specifically, these loans are subject to the additional risk that the cash flow
of the borrower and property securing the loan may be insufficient to meet scheduled payments after giving effect to those loans with
a higher priority. In addition, loans that have a lower than first lien priority on collateral of the borrower generally have greater
price volatility than those loans with a higher priority and may be less liquid.
Senior
Loan Risk. The Fund invests in senior loans and therefore is subject to the risks associated therewith.
Investments in senior loans are subject to the same risks as investments in other types of debt securities, including credit risk, interest
rate risk, liquidity risk and valuation risk (which may be heightened because of the limited public information available regarding senior
loans and because loan borrowers may be leveraged and tend to be more adversely affected by changes in market or economic conditions).
Further, no active trading market may exist for certain senior loans, which may impair the ability of the Fund to realize full value in
the event of the need to sell a senior loan and which may make it difficult to value senior loans. Senior loans may not be considered
“securities” and the Fund may not be entitled to rely on the anti-fraud protections of the federal securities laws.
In
the event a borrower fails to pay scheduled interest or principal payments on a senior loan held by the Fund, the Fund will experience
a reduction in its income and a decline in the value of the senior loan, which will likely reduce dividends and lead to a decline in the
net asset value of the Fund’s common shares. If the Fund acquires a senior loan from another lender, for example, by acquiring a
participation, the Fund may also be subject to credit risks with respect to that lender. Although senior loans may be secured by specific
collateral, the value of the collateral may not equal the Fund’s investment when the senior loan is acquired or may decline below
the principal amount of the senior loan subsequent to the Fund’s investment. Also, to the extent that collateral consists of stock
of the borrower or its subsidiaries or affiliates, the Fund bears the risk that the stock may decline in value, be relatively illiquid,
and/or
may
lose all or substantially all of its value, causing the senior loan to be under collateralized. Therefore, the liquidation of the collateral
underlying a senior loan may not satisfy the issuer’s obligation to the Fund in the event of non-payment of scheduled interest or
principal, and the collateral may not be readily liquidated. The senior loan market has seen a significant increase in loans with weaker
lender protections including, but not limited to, limited financial maintenance covenants or, in some cases, no financial maintenance
covenants (i.e., “covenant-lite loans”) that would typically be included in a traditional loan agreement and general weakening
of other restrictive covenants applicable to the borrower such as limitations on incurrence of additional debt, restrictions on payments
of junior debt or restrictions on dividends and distributions. Weaker lender protections such as the absence of financial maintenance
covenants in a loan agreement and the inclusion of “borrower-favorable” terms may impact recovery values and/or trading levels
of senior loans in the future. The absence of financial maintenance covenants in a loan agreement generally means that the lender may
not be able to declare a default if financial performance deteriorates. This may hinder the Fund’s ability to reprice credit risk
associated with a particular borrower and reduce the Fund’s ability to restructure a problematic loan and mitigate potential loss.
As a result, the Fund’s exposure to losses on investments in senior loans may be increased, especially during a downturn in the
credit cycle or changes in market or economic conditions.
Valuation
Risk. The valuation of senior loans may carry more risk than that of common stock. Market quotations
may not be readily available for some senior loans and securities in which the Fund invests and valuation may require more research than
for liquid securities. In addition, elements of judgment may play a greater role in the valuation of senior loans and certain other securities
than for securities with a secondary market, because there is less reliable objective data available. These difficulties may lead
to inaccurate asset pricing.
|
| Share Price |
$ 13.58
|
| NAV Per Share |
$ 15.59
|
| Latest Premium (Discount) to NAV [Percent] |
(12.89%)
|
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
|
| Outstanding Security, Title [Text Block] |
Common Shares outstanding (unlimited number of Common Shares has been authorized)
|
| Outstanding Security, Held [Shares] | shares |
36,772,989
|
| Document Period End Date |
Nov. 30, 2023
|
| C D X Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
CDX
Risk. CDX is an equally-weighted index of credit default swaps that is designed to track a representative
segment of the credit default swap market (e.g., high yield). A credit default swap is a financial derivative that allows an investor
to swap or offset their credit risk with that of another investor. CDX provides exposure to a basket of underlying credit default swaps
in lieu of buying or selling credit default swaps on individual debt securities. The CDX investments in which the Fund will invest are
cleared on an exchange. Regardless of whether the Fund buys or sells CDX credit protection, such investments can result in gains or losses
that may exceed gains or losses the Fund would have incurred investing directly in high yield debt securities, which may impact the Fund’s
net asset value. It is also possible that returns from CDX investments may not correlate with returns of the broader high yield credit
market. There are additional costs associated with investing in CDX, including the payment of premiums when the Fund is a buyer of CDX
credit protection. When the Fund sells CDX credit protection, it assumes additional credit risk. Investment exposure to CDX credit protection
is subject to the risks of the underlying credit default swap obligations, which include general market risk, liquidity risk, credit risk
and counterparty risk. Counterparty risk may be mitigated somewhat compared to buying or selling credit protection using individual credit
default swaps because CDX investments are cleared on an exchange.
|
| Consumer Discretionary Companies Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Consumer
Discretionary Companies Risk. Consumer discretionary companies, such as retailers, media companies and
consumer services companies, provide non-essential goods and services. These companies manufacture products and provide discretionary
services directly to the consumer, and the success of these companies is tied closely to the performance of the overall domestic and international
economy, interest rates, competition and consumer confidence. Success depends heavily on disposable household income and consumer spending.
Changes in demographics and consumer tastes can also affect the demand for, and success of, consumer discretionary products in the marketplace.
|
| Corporate Debt Obligations Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Corporate
Debt Obligations Risk. The market value of corporate debt obligations generally may be expected to rise
and fall inversely with interest rates. The market value of corporate debt obligations also may be affected by factors directly related
to the issuer, such as investors’ perceptions of the creditworthiness of the issuer, the issuer’s financial performance, perceptions
of the issuer in the marketplace, performance of management of the issuer, the issuer’s capital structure and use of financial leverage
and demand for the
issuer’s
goods and services. There is a risk that the issuers of corporate debt may not be able to meet their obligations on interest and/or principal
payments at the time called for by an instrument.
|
| Credit Agency Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Credit
Agency Risk. Credit ratings are determined by credit rating agencies and are only the opinions of such
entities. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risk or the liquidity
of securities. Any shortcomings or inefficiencies in credit rating agencies’ processes for determining credit ratings may adversely
affect the credit ratings of securities held by the Fund or such credit rating agency’s ability to evaluate creditworthiness and,
as a result, may adversely affect those securities’ perceived or actual credit risk.
|
| Credit And Below Investment Grade Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Credit
and Below-Investment Grade Securities Risk. Credit risk is the risk that the issuer or other obligated
party of a debt security in the Fund’s portfolio will fail to pay, or it is perceived that it will fail to pay, dividends and/or
interest or repay principal, when due. Below-investment grade instruments, including instruments that are not rated but judged to be of
comparable quality, are commonly referred to as high yield securities or “junk” bonds and are considered speculative with
respect to the issuer’s capacity to pay dividends or interest and repay principal and are more susceptible to default or decline
in market value than investment grade securities due to adverse economic and business developments. High yield securities are often unsecured
and subordinated to other creditors of the issuer. The market values for high yield securities tend to be very volatile, and these securities
are generally less liquid than investment grade securities. For these reasons, an investment in the Fund is subject to the following specific
risks: (i) increased price sensitivity to changing interest rates and to a deteriorating economic environment; (ii) greater risk of loss
due to default or declining credit quality; (iii) adverse company specific events more likely to render the issuer unable to make dividend,
interest and/or principal payments; (iv) negative perception of the high yield market which may depress the price and liquidity of high
yield securities; (v) volatility; and (vi) liquidity.
|
| Credit Default Swaps Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Credit
Default Swaps Risk. Credit default swap transactions involve greater risks than if the Fund had invested
in the reference obligation directly. In addition to general market risks, credit default swaps are subject to liquidity risk, counterparty
risk and credit risks. With respect to a reference obligation, a buyer will lose its investment and recover nothing should no event of
default occur. For a seller, if an event of default were to occur, the value of the reference obligation received by the seller, coupled
with the periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of
value. When the Fund acts as a seller of a credit default swap agreement, it is exposed to the risks of leverage since if an event of
default occurs with respect to a reference obligation, the seller must pay the buyer the full notional value of the reference obligation.
|
| Current Market Conditions Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Current
Market Conditions Risk. Current market conditions risk is the risk that a particular investment, or
shares of the Fund in general, may fall in value due to current market conditions. As a means to fight inflation, which remains at elevated
levels, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal
Reserve has announced that it intends to reverse previously implemented quantitative easing. U.S. regulators have proposed several changes
to market and issuer regulations which would directly impact the Fund, and any regulatory changes could adversely impact the Fund’s
ability to achieve its investment strategies or make certain investments. Recent and potential future bank failures could result in disruption
to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which
may also heighten market volatility and reduce liquidity. The ongoing adversarial political climate in the United States, as well as political
and diplomatic events both domestic and abroad, have and may continue to have an adverse impact the U.S. regulatory landscape, markets
and investor behavior, which could have a negative impact on the Fund’s investments and operations. Other unexpected political,
regulatory and diplomatic events within the U.S. and abroad may affect investor and consumer confidence and may adversely impact financial
markets and the broader economy. For example, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant
market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting
from those hostilities have and could continue to have a significant impact on certain Fund investments as well as Fund performance and
liquidity. The economies of the United States and its trading partners, as well as the financial markets generally, may be adversely impacted
by trade disputes and other matters. For example, the United States has imposed trade barriers and restrictions on China. In addition,
the Chinese government is engaged in a longstanding dispute with Taiwan, continually threatening an invasion. If the political climate
between the United States and China does not improve or continues to deteriorate, if China were to attempt invading Taiwan, or if other
geopolitical conflicts develop or worsen, economies, markets and individual securities may be adversely affected, and the value of the
Fund’s assets may go down. The COVID-19 global pandemic, or any future public health crisis, and the ensuing policies enacted by
governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets,
negatively impacting global growth prospects. While vaccines have been developed, there is no guarantee that vaccines will be effective
against emerging future variants of the disease. As this global pandemic illustrated, such events may affect certain geographic regions,
countries, sectors and industries more significantly than others. Advancements in technology may also adversely impact markets and the
overall performance of the Fund. For instance, the economy may be significantly impacted by the advanced development and increased regulation
of artificial intelligence. These events, and any other future events, may adversely affect the prices and liquidity of the Fund’s
portfolio investments and could result in disruptions in the trading markets.
|
| Cyber Security Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Cyber
Security Risk. The Fund is susceptible to potential operational risks through breaches in cyber security.
A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information,
suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems through “hacking” or malicious software coding, but may also result
from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the Fund’s third-party service providers, such as its administrator, transfer agent or custodian, or
issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches.
The Fund has established risk management systems designed to reduce the risks associated with cyber security. However, there is no guarantee
that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third party
service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber incidents in the future.
|
| Defaulted And Distressed Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Defaulted
and Distressed Securities Risk. The Fund may invest in securities that may be in default or distressed—i.e.,
securities of companies whose financial condition is troubled or uncertain and that may be involved in bankruptcy proceedings, reorganizations
or financial restructurings. Distressed securities present a substantial risk of future default which may cause the Fund to incur losses,
including additional expenses, to the extent it is required to seek recovery upon a default in the payment of principal or interest on
those securities. The Fund also will be subject to significant uncertainty as to when, in what manner and for what value the obligations
evidenced by the defaulted or distressed securities will eventually be satisfied.
In
addition, the Fund may invest in loans of borrowers that are experiencing, or are likely to experience, financial difficulty. These loans
are subject to greater credit and liquidity risks than other types of loans. In addition, the Fund can invest in loans of borrowers that
have filed for bankruptcy protection or that have had involuntary bankruptcy petitions filed against them by creditors. A bankruptcy proceeding
or other court proceeding could delay or limit the ability of the Fund to collect the principal and interest payments on that borrower’s
loans or adversely affect the Fund’s rights in collateral relating to a loan.
|
| Earnings Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Earnings
Risk. The Fund’s limited term may cause it to invest in lower yielding securities or hold the
proceeds of securities sold near the end of its term in cash or cash equivalents, which may adversely affect the performance of the Fund
or the Fund’s ability to maintain its dividend.
|
| Emerging Markets Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Emerging
Markets Risk. Investing in emerging market countries, as compared to foreign developed markets, involves
substantial additional risk due to more limited information about the issuer and/or the security (including limited financial and accounting
information); higher brokerage costs; different accounting, auditing and financial reporting standards; less developed legal systems and
thinner trading markets; the possibility of currency blockages or transfer restrictions; an emerging market country’s dependence
on revenue from particular commodities or international aid; and the risk of expropriation, nationalization or other adverse political
or economic developments.
Emerging
market countries may lack the social, political and economic stability and characteristics of more developed countries, and their political
and economic structures may undergo unpredictable, significant and rapid changes from time to time, any of which could adversely impact
the value of investments in emerging markets as well as the availability of additional investments in such markets. The securities markets
of emerging market countries may be substantially smaller, less developed, less liquid and more volatile than the major securities markets
in the United States and other developed nations. The limited size of these securities markets and the limited trading volume of securities
issued by emerging market issuers could cause prices to be erratic and investments in emerging markets can become illiquid. As a result
of the foregoing risks, it may be difficult to assess the value or prospects of an investment in such securities.
|
| Europe Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Europe
Risk. The Fund is subject to certain risks associated specifically with investments in securities of
European issuers, in addition to the risks associated with investments in non-U.S. securities generally. Political or economic disruptions
in European countries, even in countries in which the Fund is not invested, may adversely affect security values and thus the Fund’s
holdings. A significant number of countries in Europe are member states in the European Union (“EU”), and the member states
no longer control their own monetary policies by directing independent interest rates for their currencies. In these member states, the
authority to direct monetary policies, including money supply and official interest rates for the Euro, is exercised by the European Central
Bank. In a 2016 referendum, the United Kingdom elected to withdraw from the EU (“Brexit”). After years of negotiations between
the United Kingdom and the EU, a withdrawal agreement was reached whereby the United Kingdom formally left the EU. As the second largest
economy among EU members, the implications of the United Kingdom’s withdrawal are difficult to gauge and cannot be fully known.
Trade between the United Kingdom and the EU is highly integrated through supply chains and trade in services, as well as through multinational
companies. The United Kingdom’s departure may negatively impact the EU and Europe as a whole by causing volatility within the EU,
triggering prolonged economic downturns in certain European countries or sparking additional member states to contemplate departing the
EU (thereby perpetuating political instability in the region).
|
| Foreign Currency Member Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Foreign
Currency Risk. Currency risk is the risk that fluctuations in exchange rates may adversely affect the
value of the Fund’s investments. Currency exchange rates fluctuate significantly for many reasons, including changes in supply and
demand in the currency exchange markets, actual or perceived changes in interest rates, intervention (or the failure to intervene) by
U.S. or foreign governments, central banks, or supranational agencies such as the International Monetary Fund, and currency controls or
other political and economic developments in the U.S. or abroad.
|
| Health Care Companies Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Health
Care Companies Risk. Through the Fund’s investments in senior loans, the Fund may be significantly
exposed to companies in the health care sector. Health care companies are involved in medical services or health care, including
biotechnology research and production, drugs and pharmaceuticals and health care facilities and services. These companies are subject
to extensive competition, generic drug sales or the loss of patent protection, product liability litigation and increased government regulation.
Research and development costs of bringing new drugs to market are substantial, and there is no guarantee that the product will ever come
to market. Health care facility operators may be affected by the demand for services, efforts by government or insurers to limit rates,
restriction of government financial assistance and competition from other providers.
|
| Illiquid Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Illiquid
Securities Risk. The Fund invests a substantial portion of its assets in lower-quality debt issued by
companies that are highly leveraged. Lower-quality debt tends to be less liquid than higher-quality debt. Moreover, smaller debt issues
tend to be less liquid than larger debt issues. Although the resale or secondary market for senior loans is growing, it is currently limited.
There is no organized exchange or board of trade on which senior loans are traded. Instead, the secondary market for senior loans is an
unregulated inter-dealer or inter-bank resale market. In addition, senior loans in which the Fund invests may require the consent of the
borrower and/or agent prior to the settlement of the sale or assignment. These consent requirements can delay or impede the Fund’s
ability to settle the sale of senior loans. Depending on market conditions, the Fund may have difficulty disposing its senior loans, which
may adversely impact its ability to obtain cash to repay debt, to pay dividends, to pay expenses or to take advantage of new investment
opportunities.
Illiquid
securities may be difficult to dispose of at a fair price at the times when the Fund believes it is desirable to do so. The market price
of illiquid securities generally is more volatile than that of more liquid securities, which may adversely affect the price that the Fund
pays for or recovers upon the sale of such securities. Illiquid securities are also more difficult to value, especially in challenging
markets.
|
| Inflation Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Inflation
Risk. Inflation risk is the risk that the value of assets or income from investments will be worth less
in the future as inflation decreases the value of money. As inflation increases, the present value of the Fund’s assets and distributions
may decline. This risk is more prevalent with respect to debt securities. Inflation creates uncertainty over the future real value (after
inflation) of an investment. Inflation rates may change frequently and drastically as a result of various factors, including unexpected
shifts in the domestic or global economy, and the Fund’s investments may not keep pace with inflation, which may result in losses
to Fund investors.
|
| Information Technology Companies Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Information
Technology Companies Risk. Information technology companies produce and provide hardware, software and
information technology systems and services. Information technology companies are generally subject to the following risks: rapidly
changing technologies and existing product obsolescence; short product life cycles; fierce competition; aggressive pricing and reduced
profit margins; the loss of patent, copyright and trademark protections; cyclical market patterns; evolving industry standards; and frequent
new product introductions and new market entrants. Information technology companies may be smaller and less experienced companies,
with limited product lines, markets or financial resources and fewer experienced management or marketing personnel. Information
technology company stocks, particularly those involved with the internet, have experienced extreme price and volume fluctuations that
are often unrelated to their operating performance. In addition, information technology companies are particularly vulnerable to
federal, state and local government regulation, and competition and consolidation, both domestically and internationally, including competition
from foreign competitors with lower production costs. Information technology companies also face competition for services of qualified
personnel and heavily rely on patents and intellectual property rights and the ability to enforce such rights to maintain a competitive
advantage.
|
| Leverage Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Leverage
Risk. The use of leverage by the Fund can magnify the effect of any losses. If the income and gains
from the securities and investments purchased with leverage proceeds do not cover the cost of leverage, the return to the common shares
will be less than if leverage had not been used. Leverage involves risks and special considerations for common shareholders including:
(i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without
leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result
in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater
decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the
market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor
will be higher than if the Fund did not use leverage.
|
| Limited Term Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Limited
Term Risk. Because the assets of the Fund will be liquidated in connection with the Fund’s termination,
the Fund may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable,
which may cause the Fund to lose money. In particular, the Fund’s portfolio may still have significant remaining average maturity
and duration, and large exposures to lower-quality credits, as the termination date approaches, and if interest rates are high (and the
value of lower-quality fixed-income securities consequently low) at the time the Fund needs to liquidate its assets in connection with
the termination, the losses due to portfolio liquidation may be significant. Moreover, as the Fund approaches the termination date, its
portfolio composition may change as more of its portfolio holdings are called or sold, which may cause the returns to decrease and the
NAV of the Common Shares to fall. Rather than reinvesting the proceeds of matured, called or sold securities, the Fund may distribute
the proceeds in one or more liquidating distributions prior to the final liquidation, which may cause fixed expenses to increase when
expressed as a percentage of assets under management, or the Fund may invest the proceeds in lower yielding securities or hold the proceeds
in cash, which may adversely affect its performance. Because the Fund will invest in below investment grade securities, it may be exposed
to the greater potential for an issuer of its securities to default, as compared to a fund that invests solely in investment grade securities.
As a result, should a Fund portfolio holding default, this may significantly reduce net investment income and, therefore, Common Share
dividends, and also may prevent or inhibit the Fund from fully being able to liquidate its portfolio at or prior to the termination date.
When terminated, the Fund’s final distribution will be based upon its NAV at the end of the term and investors in the Fund may receive
more or less than their original investment.
|
| Management Risk And Reliance On Key Personnel [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Management
Risk and Reliance on Key Personnel. The implementation of the Fund’s investment strategy depends
upon the continued contributions of certain key employees of the Advisor, some of whom have unique talents and experience and would be
difficult to replace. The loss or interruption of the services of a key member of the portfolio management team could have a negative
impact on the Fund.
|
| Market Discount From Net Asset Value [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Market
Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently
trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset
value.
|
| Market Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Market
Risk. Investments held by the Fund, as well as shares of the Fund itself, are subject to market
fluctuations caused by real or perceived adverse economic conditions, political events, regulatory factors or market developments,
changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments
as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war,
acts of terrorism, market manipulation, government defaults, government shutdowns, regulatory actions, political changes, diplomatic developments,
the imposition of sanctions and other similar measures, spread of infectious diseases or other public health issues, recessions,
or other events could have a significant negative impact on the Fund and its investments. Any of such circumstances could have a materially
negative impact on the value of the Fund’s shares, the liquidity of an investment, and result in increased market volatility.
During any such events, the Fund’s shares may trade at increased premiums or discounts to their net asset value, the bid/ask spread
on the Fund’s shares may widen and the returns on investment may fluctuate.
|
| Non U S Securities Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Non-U.S.
Securities Risk. The Fund may invest a portion of its assets in securities of non-U.S. issuers. Investing
in securities of non-U.S. issuers, which are generally denominated in non-U.S. currencies, may involve certain risks not typically associated
with investing in securities of U.S. issuers. These risks include: (i) there may be less publicly available information about non-U.S.
issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices; (ii) non-U.S. markets may be smaller,
less
liquid
and more volatile than the U.S. market; (iii) potential adverse effects of fluctuations in currency exchange rates or controls on the
value of the Fund’s investments; (iv) the economies of non-U.S. countries may grow at slower rates than expected or may experience
a downturn or recession; (v) the impact of economic, political, social or diplomatic events; (vi) certain non-U.S. countries may impose
restrictions on the ability of non-U.S. issuers to make payments of principal and interest to investors located in the United States due
to blockage of non-U.S. currency exchanges or otherwise; and (vii) withholding and other non-U.S. taxes may decrease the Fund’s
return. Foreign companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies.
In addition, there may be difficulty in obtaining or enforcing a court judgment abroad. These risks may be more pronounced to the extent
that the Fund invests a significant amount of its assets in companies located in one region or in emerging markets.
|
| Operational Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Operational
Risk. The Fund is subject to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. The Fund relies on third parties for a range of services, including
custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund’s ability to meet its
investment objective. Although the Fund and the Advisor seek to reduce these operational risks through controls and procedures, there
is no way to completely protect against such risks.
|
| Potential Conflicts Of Interest Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Potential
Conflicts of Interest Risk. First Trust and the portfolio managers have interests which may conflict
with the interests of the Fund. In particular, First Trust currently manages and may in the future manage and/or advise other investment
funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund
is using leverage, the amount of the fees paid to First Trust for investment advisory and management services are higher than if the Fund
did not use leverage because the fees paid are calculated based on managed assets. Therefore, First Trust has a financial incentive to
leverage the Fund.
|
| Prepayments Risk [Member] |
|
| General Description of Registrant [Abstract] |
|
| Risk [Text Block] |
Prepayment
Risk. Loans and corporate bonds are subject to prepayment risk. Prepayment risk is the risk that the
borrower on a loan or issuer of a bond will repay principal (in part or in whole) prior to the scheduled maturity date. The degree to
which such repayment occurs may be affected by general business conditions, interest rates, the financial condition of the borrower or
issuer and competitive conditions among investors, among others. As such, prepayments cannot be predicted with accuracy. Upon a prepayment,
either in part or in full, the actual outstanding debt on which the Fund derives interest income will be reduced which, in turn, may result
in a decline in distributions to common shareholders. The Fund may not be able to reinvest the proceeds received on terms as favorable
as the prepaid loan or bond.
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| Reinvestment Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Reinvestment
Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if the
Fund invests the proceeds from matured, traded or called instruments at market interest rates that are below the Fund’s portfolio’s
current earnings rate. A decline in income could affect the common shares’ market price, level of distributions or the overall return
of the Fund.
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| Second Lien Loan Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Second
Lien Loan Risk. A second lien loan may have a claim on the same collateral pool as the first lien or
it may be secured by a separate set of assets. Second lien loans are typically secured by a second priority security interest or lien
on specified collateral securing the borrower’s obligation under the interest. Because second lien loans are second to first lien
loans, they present a greater degree of investment risk. Specifically, these loans are subject to the additional risk that the cash flow
of the borrower and property securing the loan may be insufficient to meet scheduled payments after giving effect to those loans with
a higher priority. In addition, loans that have a lower than first lien priority on collateral of the borrower generally have greater
price volatility than those loans with a higher priority and may be less liquid.
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| Senior Loan Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Senior
Loan Risk. The Fund invests in senior loans and therefore is subject to the risks associated therewith.
Investments in senior loans are subject to the same risks as investments in other types of debt securities, including credit risk, interest
rate risk, liquidity risk and valuation risk (which may be heightened because of the limited public information available regarding senior
loans and because loan borrowers may be leveraged and tend to be more adversely affected by changes in market or economic conditions).
Further, no active trading market may exist for certain senior loans, which may impair the ability of the Fund to realize full value in
the event of the need to sell a senior loan and which may make it difficult to value senior loans. Senior loans may not be considered
“securities” and the Fund may not be entitled to rely on the anti-fraud protections of the federal securities laws.
In
the event a borrower fails to pay scheduled interest or principal payments on a senior loan held by the Fund, the Fund will experience
a reduction in its income and a decline in the value of the senior loan, which will likely reduce dividends and lead to a decline in the
net asset value of the Fund’s common shares. If the Fund acquires a senior loan from another lender, for example, by acquiring a
participation, the Fund may also be subject to credit risks with respect to that lender. Although senior loans may be secured by specific
collateral, the value of the collateral may not equal the Fund’s investment when the senior loan is acquired or may decline below
the principal amount of the senior loan subsequent to the Fund’s investment. Also, to the extent that collateral consists of stock
of the borrower or its subsidiaries or affiliates, the Fund bears the risk that the stock may decline in value, be relatively illiquid,
and/or
may
lose all or substantially all of its value, causing the senior loan to be under collateralized. Therefore, the liquidation of the collateral
underlying a senior loan may not satisfy the issuer’s obligation to the Fund in the event of non-payment of scheduled interest or
principal, and the collateral may not be readily liquidated. The senior loan market has seen a significant increase in loans with weaker
lender protections including, but not limited to, limited financial maintenance covenants or, in some cases, no financial maintenance
covenants (i.e., “covenant-lite loans”) that would typically be included in a traditional loan agreement and general weakening
of other restrictive covenants applicable to the borrower such as limitations on incurrence of additional debt, restrictions on payments
of junior debt or restrictions on dividends and distributions. Weaker lender protections such as the absence of financial maintenance
covenants in a loan agreement and the inclusion of “borrower-favorable” terms may impact recovery values and/or trading levels
of senior loans in the future. The absence of financial maintenance covenants in a loan agreement generally means that the lender may
not be able to declare a default if financial performance deteriorates. This may hinder the Fund’s ability to reprice credit risk
associated with a particular borrower and reduce the Fund’s ability to restructure a problematic loan and mitigate potential loss.
As a result, the Fund’s exposure to losses on investments in senior loans may be increased, especially during a downturn in the
credit cycle or changes in market or economic conditions.
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| Valuation Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Valuation
Risk. The valuation of senior loans may carry more risk than that of common stock. Market quotations
may not be readily available for some senior loans and securities in which the Fund invests and valuation may require more research than
for liquid securities. In addition, elements of judgment may play a greater role in the valuation of senior loans and certain other securities
than for securities with a secondary market, because there is less reliable objective data available. These difficulties may lead
to inaccurate asset pricing.
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| Interest Rate Risk [Member] |
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| General Description of Registrant [Abstract] |
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| Risk [Text Block] |
Interest
Rate Risk. The yield on the Fund’s common shares may rise or fall as market interest rates rise
and fall, as senior loans pay interest at rates which float in response to changes in market rates. Changes in prevailing interest rates
can be expected to cause some fluctuation in the Fund’s net asset value. Similarly, a sudden and significant increase in market
interest rates may cause a decline in the Fund’s net asset value.
Many
financial instruments use or may use a floating rate based upon the LIBOR. The United Kingdom’s Financial Conduct Authority (the
“FCA”), which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began December 31,
2022. There is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate (“SOFR”) will
be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same
volume or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain Fund investments
and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential
effects
of the transition away from LIBOR on the Fund or on certain instruments in which the Fund invests can be difficult to ascertain, and they
may vary depending on a variety of factors, and they could result in losses to the Fund.
In
addition, for the Fund’s fixed rate investments, when market interest rates rise, the market value of such securities generally
will fall. Market value generally falls further for fixed rate securities with longer duration. During periods of rising interest rates,
the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market
yield, increase the security’s duration and further reduce the value of the security. Investments in fixed rate securities with
long-term maturities may experience significant price declines if long-term interest rates increase.
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