Ivy High Income Opportunties Fund

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-22800

Ivy High Income Opportunities Fund

(Exact name of registrant as specified in charter)

6300 Lamar Avenue, Overland Park, Kansas 66202

(Address of principal executive offices) (Zip code)

Jennifer K. Dulski

6300 Lamar Avenue

Overland Park, Kansas 66202

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (913) 236-2000

Date of fiscal year end: September 30

Date of reporting period: December 31, 2018

 

 

 

ITEM 1.    SCHEDULE OF INVESTMENTS.

 

SCHEDULE OF INVESTMENTS

Ivy High Income Opportunities Fund (in thousands)

    DECEMBER 31, 2018 (UNAUDITED)

 

COMMON STOCKS    Shares        Value  

Communication Services

 

Broadcasting – 0.0%

 

Cumulus Media, Inc., Class A (A)

      10        $ 105  
       

 

 

  

Total Communication Services – 0.0%

 

        105  

Consumer Discretionary

 

Apparel Retail – 0.2%

 

True Religion Apparel, Inc. (A)(B)(E)

      34          579  
       

 

 

  

Hotels, Resorts & Cruise Lines – 0.8%

 

Studio City International Holdings Ltd.
ADR (A)

      108          1,811  
       

 

 

  

Total Consumer Discretionary – 1.0%

 

        2,390  

Energy

 

Oil & Gas Equipment & Services – 0.2%

 

Larchmont Resources LLC (A)(B)(C)(D)(E)

      2          415  
       

 

 

  

Oil & Gas Exploration & Production – 0.1%

 

Midstates Petroleum Co., Inc. (A)

      32          239  
       

 

 

  

Total Energy – 0.3%

 

        654  

Financials

 

Other Diversified Financial Services – 1.1%

 

J.G. Wentworth Co. (The) (B)(C)

      249          2,489  
       

 

 

  

Total Financials – 1.1%

 

        2,489  

Health Care

 

Pharmaceuticals – 0.1%

 

Concordia International Corp. (A)(E)

      9          176  
       

 

 

  

Total Health Care – 0.1%

 

        176  

Industrials

 

Air Freight & Logistics – 0.0%

 

BIS Industries Ltd. (B)(C)

      804          15  
       

 

 

  

Total Industrials – 0.0%

 

        15  

TOTAL COMMON STOCKS – 2.5%

 

      $ 5,829  

(Cost: $5,452)

 

PREFERRED STOCKS

                    

Consumer Staples

 

Agricultural Products – 0.0%

 

Pinnacle Agriculture Enterprises
LLC (A)(B)(C)

      1,358          122  
       

 

 

  

Total Consumer Staples – 0.0%

 

        122  

Energy

 

Oil & Gas Exploration & Production – 1.3%

 

Targa Resources Corp.,
9.500% (A)(C)

      3          3,160  
       

 

 

  

Total Energy – 1.3%

 

        3,160  

TOTAL PREFERRED STOCKS – 1.3%

 

      $ 3,282  

(Cost: $3,909)

 

CORPORATE DEBT SECURITIES    Principal            

Communication Services

 

Advertising – 0.2%

 

Acosta, Inc.,
7.750%, 10-1-22 (F)

    $ 687          127  

Outfront Media Capital LLC and Outfront Media Capital Corp.,
5.625%, 2-15-24

      387          381  
       

 

 

  
          508  
       

 

 

  

Alternative Carriers – 0.4%

 

Consolidated Communications Finance II Co.,
6.500%, 10-1-22 (G)

      952          838  
       

 

 

  

Broadcasting – 4.3%

 

Clear Channel International B.V.,
8.750%, 12-15-20 (F)

      282          284  

Clear Channel Outdoor Holdings, Inc.,
6.500%, 11-15-22 (G)

      2,289          2,289  

Clear Channel Worldwide Holdings, Inc., Series A,
7.625%, 3-15-20

      54          53  

Clear Channel Worldwide Holdings, Inc., Series B,
7.625%, 3-15-20 (G)

      6,669          6,502  

Sirius XM Radio, Inc.,
4.625%, 5-15-23 (F)(G)

      887          849  
       

 

 

  
          9,977  
       

 

 

  

Cable & Satellite – 18.7%

 

Altice Financing S.A.:

        

6.625%, 2-15-23 (F)

      832          799  

7.500%, 5-15-26 (F)(G)

      1,425          1,300  

Altice France S.A.:

        

7.375%, 5-1-26 (F)(G)

      3,100          2,844  

8.125%, 2-1-27 (F)(G)

      2,659          2,506  

Altice S.A.:

        

7.250%, 5-15-22 (F)(H)

    EUR  152          162  

7.750%, 5-15-22 (F)

    $ 13,635          12,408  

6.250%, 2-15-25 (F)(H)

    EUR  184          167  

7.625%, 2-15-25 (F)(G)(I)

    $ 11,307          8,452  

Altice U.S. Finance I Corp.:

        

5.375%, 7-15-23 (F)

      1,026          1,001  

5.500%, 5-15-26 (F)

      1,216          1,146  

Block Communications, Inc.,
6.875%, 2-15-25 (F)

      269          270  

CCO Holdings LLC and CCO Holdings Capital Corp.:

        

5.500%, 5-1-26 (F)

      485          466  

5.000%, 2-1-28 (F)(G)

      1,642          1,511  

CSC Holdings LLC,
5.375%, 2-1-28 (F)(G)

      1,940          1,784  

DISH DBS Corp.:

        

5.875%, 7-15-22 (G)

      2,000          1,840  

5.875%, 11-15-24

      748          602  

7.750%, 7-1-26 (G)

      1,032          854  

Neptune Finco Corp.:

        

10.125%, 1-15-23 (F)

      831          894  

6.625%, 10-15-25 (F)

      394          399  

10.875%, 10-15-25 (F)

      594          667  

VTR Finance B.V.,
6.875%, 1-15-24 (F)(G)

      3,934          3,934  
       

 

 

  
          44,006  
       

 

 

  

Integrated Telecommunication Services – 11.0%

 

Frontier Communications Corp.:

        

6.875%, 1-15-25 (G)(I)

      2,556          1,297  

11.000%, 9-15-25 (G)(I)

      3,876          2,413  

8.500%, 4-1-26 (F)(G)

      6,302          5,514  

GCI, Inc.,
6.875%, 4-15-25 (G)

      2,870          2,784  

Olympus Merger Sub, Inc.,
8.500%, 10-15-25 (F)(G)

      7,035          5,522  

Sprint Corp.:

        

7.250%, 9-15-21 (G)

      5,781          5,917  

7.875%, 9-15-23 (G)

      1,538          1,579  

7.625%, 3-1-26 (G)

      777          767  
       

 

 

  
          25,793  
       

 

 

  

Movies & Entertainment – 0.3%

 

WMG Acquisition Corp.,
5.500%, 4-15-26 (F)

      780          745  
       

 

 

  

Publishing – 0.6%

 

E.W. Scripps Co.,
5.125%, 5-15-25 (F)

      142          130  

MDC Partners, Inc.,
6.500%, 5-1-24 (F)(G)

      1,471          1,339  
       

 

 

  
          1,469  
       

 

 

  

Wireless Telecommunication Service – 0.9%

 

Digicel Group Ltd.:

        

8.250%, 9-30-20 (F)

      718          484  

7.125%, 4-1-22 (F)

      535          249  

Digicel Ltd.,
6.750%, 3-1-23 (F)

      698          552  

Sable International Finance Ltd.,
6.875%, 8-1-22 (F)(G)

      548          559  

Sprint Nextel Corp.,
11.500%, 11-15-21

      178          202  
       

 

 

  
          2,046  
       

 

 

  

Total Communication Services – 36.4%

 

        85,382  

Consumer Discretionary

 

Automotive Retail – 0.7%

 

Allison Transmission, Inc.,
5.000%, 10-1-24 (F)

      315          302  

Penske Automotive Group, Inc.,
5.500%, 5-15-26 (I)

      218          203  

Sonic Automotive, Inc.,
5.000%, 5-15-23 (G)(I)

      1,379          1,251  
       

 

 

  
          1,756  
       

 

 

  

Casinos & Gaming – 3.4%

 

Everi Payments, Inc.,
7.500%, 12-15-25 (F)(G)

      1,684          1,593  

Gateway Casinos & Entertainment Ltd.,
8.250%, 3-1-24 (F)

      983          998  

Golden Nugget, Inc.:

        

6.750%, 10-15-24 (F)(G)

      2,466          2,324  

8.750%, 10-1-25 (F)

      384          370  

Stars Group Holdings B.V. and Stars Group (U.S.) Co-Borrower LLC,
7.000%, 7-15-26 (F)(G)

      1,065          1,036  

Studio City Finance Ltd.,
8.500%, 12-1-20 (F)(G)

      602          602  

Wynn Macau Ltd.:

        

4.875%, 10-1-24 (F)

      340          302  

5.500%, 10-1-27 (F)

      964          839  
       

 

 

  
          8,064  
       

 

 

  

Education Services – 3.5%

 

Laureate Education, Inc.,
8.250%, 5-1-25 (F)(G)

      7,858          8,251  
       

 

 

  
 

Hotels, Resorts & Cruise Lines – 0.4%

 

Boyne USA, Inc.,

        

    7.250%, 5-1-25 (F)

      1,019          1,052  
       

 

 

  

Leisure Facilities – 0.4%

 

Cedar Fair L.P., Magnum Management Corp., Canada’s Wonderland Co. and Millennium Operations LLC,
5.375%, 4-15-27

      877          829  
       

 

 

  

Restaurants – 0.7%

 

1011778 B.C. Unlimited Liability Co. and New Red Finance, Inc.,
5.000%, 10-15-25 (F)(G)

      1,878          1,728  
       

 

 

  

Specialized Consumer Services – 0.6%

 

Nielsen Co. (Luxembourg) S.a.r.l. (The),
5.500%, 10-1-21 (F)(G)

      1,071          1,060  

Nielsen Finance LLC and Nielsen Finance Co.,
5.000%, 4-15-22 (F)(I)

      375          358  
       

 

 

  
          1,418  
       

 

 

  

Specialty Stores – 1.8%

 

Arch Merger Sub, Inc.,
8.500%, 9-15-25 (F)(G)

      2,976          2,685  

Cumberland Farms, Inc.,
6.750%, 5-1-25 (F)

      770          778  

Party City Holdings, Inc.,
6.625%, 8-1-26 (F)(I)

      804          732  
       

 

 

  
          4,195  
       

 

 

  

Total Consumer Discretionary – 11.5%

 

        27,293  

Consumer Staples

 

Food Distributors – 1.0%

 

Performance Food Group, Inc.,

        

5.500%, 6-1-24 (F)(G)

      1,054          1,020  

U.S. Foods, Inc.,

        

5.875%, 6-15-24 (F)(G)

      1,330          1,293  
       

 

 

  
          2,313  
       

 

 

  

Packaged Foods & Meats – 5.5%

 

JBS USA LLC and JBS USA Finance, Inc.:

        

5.875%, 7-15-24 (F)(G)

      1,892          1,854  

5.750%, 6-15-25 (F)(G)

      1,794          1,713  

JBS USA Lux S.A. and JBS USA Finance, Inc.,
6.750%, 2-15-28 (F)(G)

      1,282          1,250  

Pilgrim’s Pride Corp.:

        

5.750%, 3-15-25 (F)

      357          335  

5.875%, 9-30-27 (F)(G)

      1,275          1,157  

Post Holdings, Inc.:

        

5.500%, 3-1-25 (F)

      346          332  

5.000%, 8-15-26 (F)

      523          476  

5.750%, 3-1-27 (F)(G)

      2,222          2,083  

Simmons Foods, Inc.:

        

7.750%, 1-15-24 (F)(I)

      701          705  

5.750%, 11-1-24 (F)(G)

      4,255          3,021  
       

 

 

  
          12,926  
       

 

 

  

Total Consumer Staples – 6.5%

 

        15,239  

Energy

 

Oil & Gas Drilling – 1.6%

 

Ensco plc,

        

7.750%, 2-1-26

      1,017          752  

KCA Deutag UK Finance plc,
7.250%, 5-15-21 (F)(G)

      1,793          1,452  

Offshore Drilling Holding S.A.,
8.375%, 9-20-20 (F)(G)(J)

      3,385          1,714  

Offshore Group Investment Ltd.,
0.000%, 11-1-19 (B)(K)

      883          — *  
       

 

 

  
          3,918  
       

 

 

  

Oil & Gas Equipment & Services – 1.5%

 

Brand Energy & Infrastructure Services, Inc.,
8.500%, 7-15-25 (F)

      767          654  

McDermott Escrow 1, Inc. and McDermott Escrow 2, Inc.,
10.625%, 5-1-24 (F)(G)(I)

      2,112          1,782  

Nine Energy Service, Inc.,
8.750%, 11-1-23 (F)

      806          766  

SESI LLC,
7.125%, 12-15-21

      401          341  
       

 

 

  
          3,543  
       

 

 

  

Oil & Gas Exploration & Production – 5.3%

 

Bellatrix Exploration Ltd.,
8.500%, 5-15-20 (F)

      1,215          680  

Chesapeake Energy Corp.:

        

7.000%, 10-1-24 (G)

      1,867          1,615  

8.000%, 1-15-25 (I)

      157          139  

Crownrock L.P.,

        

5.625%, 10-15-25 (F)(G)

      2,927          2,634  

Endeavor Energy Resources L.P.:

        

5.500%, 1-30-26 (F)

      1,014          1,039  

5.750%, 1-30-28 (F)

      728          743  

Extraction Oil & Gas, Inc.,
5.625%, 2-1-26 (F)(G)

      1,377          1,005  

Laredo Petroleum, Inc.,
6.250%, 3-15-23

      339          304  

Parsley Energy LLC and Parsley Finance Corp.,
5.625%, 10-15-27 (F)

      683          621  

Sanchez Energy Corp.,
7.250%, 2-15-23 (F)(I)

      257          209  

Seven Generations Energy Ltd.:

        

6.750%, 5-1-23 (F)(G)

      1,866          1,847  

5.375%, 9-30-25 (F)

      975          873  

Ultra Resources, Inc.,
6.875%, 4-15-22 (F)

      565          198  

Whiting Petroleum Corp.,
6.625%, 1-15-26 (I)

      510          437  
       

 

 

  
          12,344  
       

 

 

  

Oil & Gas Refining & Marketing – 2.6%

 

Callon Petroleum Co. (GTD by Callon Petroleum Operating Co.):

        

6.125%, 10-1-24

      468          435  

6.375%, 7-1-26

      158          147  

Comstock Escrow Corp.,
9.750%, 8-15-26 (F)(G)

      4,556          3,850  

EP Energy LLC and Everest Acquisition Finance, Inc.:

        

9.375%, 5-1-24 (F)

      277          123  

8.000%, 2-15-25 (F)(I)

      588          243  

7.750%, 5-15-26 (F)

      793          702  

QEP Resources, Inc.,
5.625%, 3-1-26 (I)

      628          521  
       

 

 

  
          6,021  
       

 

 

  

Total Energy – 11.0%

 

        25,826  

Financials

 

Consumer Finance – 1.1%

 

CURO Group Holdings Corp.,
8.250%, 9-1-25 (F)(G)

      1,340          1,052  

Quicken Loans, Inc.,
5.750%, 5-1-25 (F)(G)

      1,688          1,578  
       

 

 

  
          2,630  
       

 

 

  

Financial Exchanges & Data – 1.8%

 

Financial & Risk U.S. Holdings, Inc.:

        

6.250%, 5-15-26 (F)

      1,068          1,031  

8.250%, 11-15-26 (F)(G)

      3,526          3,222  
       

 

 

  
          4,253  
       

 

 

  

Insurance Brokers – 1.5%

 

NFP Corp.,

        

6.875%, 7-15-25 (F)(G)

      3,971          3,554  
       

 

 

  

Investment Banking & Brokerage – 0.1%

 

VHF Parent LLC,

        

6.750%, 6-15-22 (F)

      340          330  
       

 

 

  

Other Diversified Financial Services – 3.8%

 

Balboa Merger Sub, Inc.,
11.375%, 12-1-21 (F)(G)

      2,687          2,815  

Icahn Enterprises L.P. and Icahn Enterprises Finance Corp.:

        

6.250%, 2-1-22 (G)

      1,523          1,504  

6.375%, 12-15-25

      508          489  

New Cotai LLC and New Cotai Capital Corp.

   (10.625% Cash or 10.625% PIK),
10.625%, 5-1-19 (F)(G)(L)

      7,835          4,309  
       

 

 

  
          9,117  
       

 

 

  

Property & Casualty Insurance – 1.5%

 

Amwins Group, Inc.,
7.750%, 7-1-26 (F)

      1,329          1,256  

Hub International Ltd.,
7.000%, 5-1-26 (F)(G)

      2,617          2,375  
       

 

 

  
          3,631  
       

 

 

  

Specialized Finance – 1.9%

 

Compass Group Diversified Holdings LLC,
8.000%, 5-1-26 (F)(G)

      1,050          1,039  

Hadrian Merger Sub, Inc.,
8.500%, 5-1-26 (F)(G)

      1,931          1,738  

Tervita Escrow Corp.,
7.625%, 12-1-21 (F)

      529          504  

TMX Finance LLC and TitleMax Finance Corp.,
11.125%, 4-1-23 (F)(G)

      1,581          1,272  
       

 

 

  
          4,553  
       

 

 

  

Thrifts & Mortgage Finance – 0.5%

 

Provident Funding Associates L.P. and PFG Finance Corp.,
6.375%, 6-15-25 (F)

      1,220          1,098  
       

 

 

  

Total Financials – 12.2%

 

        29,166  

Health Care

 

Health Care Facilities – 3.5%

 

DaVita HealthCare Partners, Inc.,
5.125%, 7-15-24

      242          227  

MPH Acquisition Holdings LLC,
7.125%, 6-1-24 (F)

      870          811  

RegionalCare Hospital Partners Holdings, Inc. and Legend Merger Sub, Inc.,
9.750%, 12-1-26 (F)(G)

      5,458          5,172  

Surgery Center Holdings, Inc.,
8.875%, 4-15-21 (F)(G)(I)

      1,863          1,858  
       

 

 

  
          8,068  
       

 

 

  

Health Care Supplies – 2.2%

 

Kinetic Concepts, Inc. and KCI USA, Inc.,
12.500%, 11-1-21 (F)(G)

      2,213          2,368  

Universal Hospital Services, Inc.,
7.625%, 8-15-20 (G)

      2,679          2,659  
       

 

 

  
          5,027  
       

 

 

  
 

Health Care Technology – 1.7%

 

Verscend Holding Corp.,
9.750%, 8-15-26 (F)(G)

      4,179          3,928  
       

 

 

  

Life Sciences Tools & Services – 1.5%

 

Avantor, Inc.:

        

6.000%, 10-1-24 (F)

      837          822  

9.000%, 10-1-25 (F)(G)

      2,788          2,788  
       

 

 

  
          3,610  
       

 

 

  

Pharmaceuticals – 2.3%

 

Advanz Pharma Corp.,
8.000%, 9-6-24 (I)

      177          168  

HLF Financing S.a.r.l. LLC and Herbalife International, Inc.,
7.250%, 8-15-26 (F)

      375          370  

Jaguar Holding Co. II and Pharmaceutical Product Development LLC,
6.375%, 8-1-23 (F)(G)

      1,061          1,014  

Valeant Pharmaceuticals International, Inc.:

        

5.500%, 3-1-23 (F)

      48          44  

5.500%, 11-1-25 (F)

      488          455  

9.000%, 12-15-25 (F)

      351          349  

9.250%, 4-1-26 (F)

      1,042          1,042  

8.500%, 1-31-27 (F)

      792          768  

VRX Escrow Corp.:

        

5.875%, 5-15-23 (F)

      777          719  

6.125%, 4-15-25 (F)

      715          624  
       

 

 

  
          5,553  
       

 

 

  

Total Health Care – 11.2%

 

        26,186  

Industrials

 

Aerospace & Defense – 1.9%

 

TransDigm UK Holdings plc,
6.875%, 5-15-26 (F)

      893          850  

TransDigm, Inc. (GTD by TransDigm Group, Inc.):

        

6.000%, 7-15-22

      1,000          976  

6.500%, 7-15-24 (G)

      2,260          2,198  

6.500%, 5-15-25

      471          450  
       

 

 

  
          4,474  
       

 

 

  

Building Products – 0.2%

 

WESCO Distribution, Inc. (GTD by WESCO International, Inc.),
5.375%, 6-15-24

      436          411  
       

 

 

  

Diversified Support Services – 0.8%

 

Ahern Rentals, Inc.,
7.375%, 5-15-23 (F)(G)

      2,037          1,630  

United Rentals (North America), Inc. (GTD by United Rentals, Inc.),
5.875%, 9-15-26

      217          204  
       

 

 

  
          1,834  
       

 

 

  

Environmental & Facilities Services – 1.5%

 

GFL Environmental, Inc.:

        

5.625%, 5-1-22 (F)

      339          313  

5.375%, 3-1-23 (F)(G)

      1,840          1,610  

7.000%, 6-1-26 (F)(G)

      1,578          1,377  

Waste Pro USA, Inc.,
5.500%, 2-15-26 (F)

      198          182  
       

 

 

  
          3,482  
       

 

 

  

Industrial Machinery – 0.2%

 

Apex Tool Group LLC and BC Mountain Finance, Inc.,
9.000%, 2-15-23 (F)(I)

      529          447  
       

 

 

  

Security & Alarm Services – 1.4%

 

Prime Security Services Borrower LLC,
9.250%, 5-15-23 (F)(G)

      3,102          3,199  
       

 

 

  

Total Industrials – 6.0%

 

        13,847  

Information Technology

 

Application Software – 2.8%

 

Kronos Acquisition Holdings, Inc.,
9.000%, 8-15-23 (F)(G)

      3,668          2,815  

Solera LLC and Solera Finance, Inc.,
10.500%, 3-1-24 (F)(G)

      3,379          3,599  
       

 

 

  
          6,414  
       

 

 

  

Data Processing & Outsourced Services – 3.1%

 

Alliance Data Systems Corp.,
5.375%, 8-1-22 (F)(G)

      1,853          1,807  

Italics Merger Sub, Inc.,
7.125%, 7-15-23 (F)(G)

      5,170          5,035  

j2 Cloud Services LLC and j2 Global, Inc.,
6.000%, 7-15-25 (F)

      468          457  
       

 

 

  
          7,299  
       

 

 

  

IT Consulting & Other Services – 1.5%

 

Cardtronics, Inc. and Cardtronics USA, Inc.,
5.500%, 5-1-25 (F)

      294          272  

NCR Escrow Corp.,
6.375%, 12-15-23 (G)

      1,765          1,711  

Pioneer Holding Corp.,
9.000%, 11-1-22 (F)(G)

      1,461          1,468  
       

 

 

  
          3,451  
       

 

 

  

Total Information Technology – 7.4%

 

        17,164  

Materials

 

Aluminum – 1.5%

 

Constellium N.V.:

        

6.625%, 3-1-25 (F)(G)

      1,803          1,672  

5.875%, 2-15-26 (F)

      911          811  

Novelis Corp. (GTD by Novelis, Inc.):

        

6.250%, 8-15-24 (F)

      674          633  

5.875%, 9-30-26 (F)

      446          395  
       

 

 

  
          3,511  
       

 

 

  

Commodity Chemicals – 0.7%

 

NOVA Chemicals Corp.:

        

4.875%, 6-1-24 (F)(G)

      1,215          1,096  

5.250%, 6-1-27 (F)(G)

      486          430  
       

 

 

  
          1,526  
       

 

 

  

Construction Materials – 1.1%

 

Hillman Group, Inc. (The),
6.375%, 7-15-22 (F)(G)

      3,027          2,452  
       

 

 

  

Fertilizers & Agricultural Chemicals – 0.5%

 

Pinnacle Operating Corp.,
9.000%, 5-15-23 (F)(G)

      1,956          1,272  
       

 

 

  

Metal & Glass Containers – 0.5%

 

ARD Finance S.A. (7.125% Cash or 7.875% PIK),
7.125%, 9-15-23 (L)

      248          223  

ARD Securities Finance S.a.r.l.
(8.750% Cash or 8.750% PIK),
8.750%, 1-31-23 (F)(L)

      627          530  

HudBay Minerals, Inc.:

        

7.250%, 1-15-23 (F)

      188          185  

7.625%, 1-15-25 (F)

      282          276  
       

 

 

  
          1,214  
       

 

 

  

Paper Packaging – 0.1%

 

Flex Acquisition Co., Inc.,
6.875%, 1-15-25 (F)

      321          286  
       

 

 

  

Specialty Chemicals – 0.2%

 

Kraton Polymers LLC and Kraton Polymers Capital Corp.,
7.000%, 4-15-25 (F)(I)

      475          437  
       

 

 

  

Total Materials – 4.6%

 

        10,698  

TOTAL CORPORATE DEBT SECURITIES – 106.8%

 

      $ 250,801  

(Cost: $277,060)

 

LOANS(M)

 

           

Communication Services

 

Advertising – 0.4%

 

Advantage Sales & Marketing, Inc. (ICE LIBOR plus 325 bps),
5.772%, 7-25-21

      329          290  

Advantage Sales & Marketing, Inc. (ICE LIBOR plus 650 bps),
9.022%, 7-25-22

      896          699  
       

 

 

  
          989  
       

 

 

  

Broadcasting – 0.1%

 

MLN U.S. Holdco LLC,
0.000%, 11-30-26 (N)

      221          215  
       

 

 

  

Cable & Satellite – 0.0%

 

Liberty Cablevision of Puerto Rico LLC
(ICE LIBOR plus 350 bps),
5.936%, 1-7-22

      39          37  
       

 

 

  

Integrated Telecommunication Services – 1.2%

 

West Corp. (3-Month ICE LIBOR plus 400 bps),
6.527%, 10-10-24

      3,168          2,901  
       

 

 

  

Publishing – 0.2%

 

Recorded Books, Inc. (ICE LIBOR plus 450 bps),
7.303%, 8-31-25

      481          472  
       

 

 

  

Wireless Telecommunication Service – 0.1%

 

Digicel International Finance Ltd.
(ICE LIBOR plus 325 bps),
5.960%, 5-10-24

      276          250  
       

 

 

  

Total Communication Services – 2.0%

 

        4,864  

Consumer Discretionary

 

Apparel Retail – 3.1%

 

Talbots, Inc. (The) (ICE LIBOR plus 700 bps),
9.506%, 11-28-22 (B)

      3,286          3,237  

TRLG Intermediate Holdings LLC,
10.000%, 10-27-22

      4,111          3,919  
       

 

 

  
          7,156  
       

 

 

  

Education Services – 1.1%

 

Laureate Education, Inc. (ICE LIBOR plus 350 bps),
6.027%, 4-26-24

      2,602          2,546  
       

 

 

  

Housewares & Specialties – 0.5%

 

KIK Custom Products, Inc. (ICE LIBOR plus 400 bps),
6.552%, 5-15-23

      1,162          1,093  
       

 

 

  
 

Restaurants – 0.7%

 

NPC International, Inc. (ICE LIBOR plus 350 bps),
6.022%, 4-20-24

      326        304  

NPC International, Inc. (ICE LIBOR plus 750 bps),
10.022%, 4-18-25

      1,346        1,258  
     

 

 

  
        1,562  
     

 

 

  

Specialized Consumer Services – 0.3%

 

Asurion LLC (ICE LIBOR plus 600 bps),
9.022%, 8-4-25

      765        755  
     

 

 

  

Specialty Stores – 1.3%

 

Jo-Ann Stores, Inc. (ICE LIBOR plus 500 bps),
7.477%, 10-16-23

      960        911  

Jo-Ann Stores, Inc. (ICE LIBOR plus 925 bps),
11.727%, 5-21-24

      2,243        2,164  
     

 

 

  
        3,075  
     

 

 

  

Textiles – 0.6%

 

SIWF Holdings, Inc. (ICE LIBOR plus 425 bps),
6.720%, 6-15-25

      1,579        1,531  
     

 

 

  

Total Consumer Discretionary – 7.6%

 

      17,718  

Consumer Staples

 

Hypermarkets & Super Centers – 0.6%

 

GOBP Holdings, Inc. (ICE LIBOR plus 375 bps),
6.553%, 10-22-25

      880        856  

GOBP Holdings, Inc. (ICE LIBOR plus 725 bps),
10.053%, 10-22-26

      590        580  
     

 

 

  
        1,436  
     

 

 

  

Total Consumer Staples – 0.6%

 

      1,436  

Energy

 

Coal & Consumable Fuels – 1.6%

 

Foresight Energy LLC (ICE LIBOR plus 725 bps),
8.277%, 3-28-22

      2,848        2,782  

Westmoreland Coal Co.,
0.000%, 5-22-19 (N)

      66        66  

Westmoreland Coal Co. (ICE LIBOR plus 650 bps),
8.834%, 12-16-20 (O)

      1,763        674  

Westmoreland Coal Co. (ICE LIBOR plus 825 bps),
10.896%, 5-21-19

      296        295  
     

 

 

  
        3,817  
     

 

 

  

Oil & Gas Drilling – 0.2%

 

KCA Deutag Alpha Ltd. (ICE LIBOR plus 525 bps),
9.553%, 5-16-20

      376        368  
     

 

 

  

Oil & Gas Equipment & Services – 0.6%

 

Larchmont Resources LLC (9.770% Cash or 9.770% PIK),
9.770%, 8-7-20 (B)(D)(L)

      1,347        1,306  
     

 

 

  

Oil & Gas Exploration & Production – 0.3%

 

California Resources Corp. (ICE LIBOR plus 475 bps),
7.256%, 12-31-22

      761        736  
     

 

 

  

Oil & Gas Storage & Transportation – 1.0%

 

Bowie Resources Holdings LLC (ICE LIBOR plus 1,075 bps),
13.457%, 2-16-21

      1,032        971  

Bowie Resources Holdings LLC (ICE LIBOR plus 575 bps),
8.457%, 8-12-20

      1,504        1,459  
     

 

 

  
        2,430  
     

 

 

  

Total Energy – 3.7%

 

      8,657  

Financials

 

Asset Management & Custody Banks – 0.7%

 

Edelman Financial Holdings II, Inc. (ICE LIBOR plus 675 bps),
9.186%, 7-20-26 (B)

      1,703        1,618  
     

 

 

  

Financial Exchanges & Data – 0.5%

 

Hudson River Trading LLC (3-Month U.S. LIBOR plus 350 bps),
6.006%, 4-3-25 (B)

      1,121        1,095  
     

 

 

  

Insurance Brokers – 0.4%

 

NFP Corp. (ICE LIBOR plus 300 bps),
5.522%, 1-8-24

      996        940  
     

 

 

  

Investment Banking & Brokerage – 0.9%

 

Jane Street Group LLC (ICE LIBOR plus 375 bps),
5.527%, 8-25-22

      2,119        2,057  
     

 

 

  

Property & Casualty Insurance – 1.7%

 

Hub International Ltd. (ICE LIBOR plus 300 bps),
5.240%, 4-25-25

      652        614  

Mayfield Agency Borrower, Inc. (ICE LIBOR plus 450 bps),
6.522%, 2-28-25

      3,363        3,271  
     

 

 

  
        3,885  
     

 

 

  

Specialized Finance – 0.5%

 

Mayfield Agency Borrower, Inc. (ICE LIBOR plus 850 bps),
11.022%, 2-28-26 (B)

      1,153        1,130  
     

 

 

  

Total Financials – 4.7%

 

      10,725  

Health Care

 

Health Care Equipment – 0.1%

 

LifeScan Global Corp. (ICE LIBOR plus 950 bps),
11.896%, 10-1-25 (B)

      266        245  
     

 

 

  

Health Care Facilities – 2.7%

 

Gentiva Health Services, Inc. (ICE LIBOR plus 375 bps),
6.313%, 7-2-25 (B)

      3,111        3,010  

Gentiva Health Services, Inc. (ICE LIBOR plus 700 bps),
9.563%, 7-2-26 (B)

      798        794  

RegionalCare Hospital Partners Holdings, Inc. (ICE LIBOR plus 450 bps),
7.129%, 11-16-25

      2,729        2,582  
     

 

 

  
        6,386  
     

 

 

  

Health Care Services – 0.8%

 

Heartland Dental LLC,
0.000%, 4-30-25 (N)

      164        157  

Heartland Dental LLC (ICE LIBOR plus 375 bps),
6.272%, 4-30-25

      1,789        1,711  
     

 

 

  
        1,868  
     

 

 

  

Health Care Technology – 1.5%

 

Verscend Holding Corp. (ICE LIBOR plus 450 bps),
7.022%, 8-27-25

      3,740        3,609  
     

 

 

  

Pharmaceuticals – 0.2%

 

Concordia International Corp. (ICE LIBOR plus 550 bps),
7.887%, 9-6-24

      488        464  
     

 

 

  

Total Health Care – 5.3%

 

      12,572  

Industrials

 

Building Products – 0.4%

 

Hampton Rubber Co. & SEI Holding Corp. (ICE LIBOR plus 800 bps),
10.522%, 3-27-22

      1,145        1,025  
     

 

 

  

Construction & Engineering – 1.6%

 

McDermott Technology (Americas), Inc. (ICE LIBOR plus 500 bps),
7.522%, 5-10-25

      3,521        3,277  

Tensar International Corp. (ICE LIBOR plus 850 bps),
11.303%, 7-10-22 (B)

      603        555  
     

 

 

  
        3,832  
     

 

 

  

Diversified Support Services – 0.2%

 

USS Ultimate Holdings, Inc. (ICE LIBOR plus 775 bps),
10.272%, 8-25-25

      472        450  
     

 

 

  

Industrial Conglomerates – 0.9%

 

PAE Holding Corp. (ICE LIBOR plus 550 bps),
8.119%, 10-20-22 (B)

      1,919        1,881  

PAE Holding Corp. (ICE LIBOR plus 950 bps),
12.119%, 10-20-23 (B)

      349        340  
     

 

 

  
        2,221  
     

 

 

  

Industrial Machinery – 2.2%

 

Dynacast International LLC (ICE LIBOR plus 850 bps):

      

0.000%, 1-30-23 (B)(N)

      1,750        1,627  

11.303%, 1-30-23 (B)

      3,719        3,459  
     

 

 

  
        5,086  
     

 

 

  

Total Industrials – 5.3%

 

      12,614  

Information Technology

 

Application Software – 0.3%

 

Applied Systems, Inc. (ICE LIBOR plus 700 bps),
9.522%, 9-19-25

      788        766  
     

 

 

  

Communications Equipment – 0.5%

 

MLN U.S. Holdco LLC (ICE LIBOR plus 450 bps),
7.022%, 11-30-25

      804        778  

MLN U.S. Holdco LLC (ICE LIBOR plus 875 bps),
11.272%, 11-30-26

      536        521  
     

 

 

  
        1,299  
     

 

 

  

Data Processing & Outsourced Services – 0.9%

 

Colorado Buyer, Inc. (ICE LIBOR plus 300 bps),
9.630%, 5-1-25

      917        839  
 

Great Dane Merger Sub, Inc. (ICE LIBOR plus 375 bps),
6.272%, 5-21-25 (B)

        1,307          1,272  
         

 

 

  
            2,111  
         

 

 

  

Total Information Technology – 1.7%

                   4,176  

Materials

 

Construction Materials – 0.7%

 

Hillman Group, Inc. (The) (ICE LIBOR plus 350 bps),
6.803%, 5-31-25

        1,811          1,716  
         

 

 

  

Total Materials – 0.7%

 

        1,716  

TOTAL LOANS – 31.6%

 

      $ 74,478  

(Cost: $77,963)

 

SHORT-TERM SECURITIES

 

           

Master Note – 2.7%

 

Toyota Motor Credit Corp. (1-Month U.S. LIBOR plus 15 bps),
2.720%, 1-7-19 (P)

        6,463          6,463  
         

 

 

  

Money Market Funds – 0.7%

 

Dreyfus Institutional Preferred Government Money Market Fund - Institutional Shares,
2.400%, (Q)(R)

        1,686          1,686  
         

 

 

  

TOTAL SHORT-TERM SECURITIES – 3.4%

 

      $ 8,149  

(Cost: $8,149)

          

TOTAL INVESTMENT SECURITIES – 145.6%

 

      $ 342,539  

(Cost: $372,533)

          

BORROWINGS(S) – (47.6)%

                   (112,000 ) 

CASH AND OTHER ASSETS, NET OF
LIABILITIES – 2.0%

 

        4,660  

NET ASSETS – 100.0%

 

      $ 235,199  
 

 

Notes to Schedule of Investments

 

*

Not shown due to rounding.

 

(A)

No dividends were paid during the preceding 12 months.

 

(B)

Securities whose value was determined using significant unobservable inputs.

 

(C)

Restricted securities. At December 31, 2018, the Fund owned the following restricted securities:

 

Security    Acquisition Date(s)      Shares      Cost      Market Value  

BIS Industries Ltd.

      12-22-17        804      $ 76      $ 15  

J.G. Wentworth Co. (The)

      1-25-18        249        2,193        2,489  

Larchmont Resources LLC

      12-8-16        2        560        415  

Pinnacle Agriculture Enterprises LLC

      3-10-17        1,358        617        122  

Targa Resources Corp., 9.500%

      10-24-17        3        3,292        3,160  
         $ 6,738      $ 6,201  

The total value of these securities represented 2.6% of net assets at December 31, 2018.

 

 

(D)

Deemed to be an affiliate due to the Fund owning at least 5% of the voting securities.

 

(E)

Listed on an exchange outside the United States.

 

(F)

Securities were purchased pursuant to an exemption from registration available under Rule 144A under the Securities Act of 1933 and may only be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2018 the total value of these securities amounted to $204,289 or 86.9% of net assets.

 

(G)

All or a portion of securities with an aggregate value of $119,396 have been pledged as collateral on open borrowings.

 

(H)

Principal amounts are denominated in the indicated foreign currency, where applicable (EUR - Euro).

(I)

All or a portion of securities with an aggregate value of $2,757 are on loan.

 

(J)

Step bond that pays an initial coupon rate for the first period and then a higher or lower coupon rate for the following periods. Interest rate disclosed is that which is in effect at December 31, 2018.

 

(K)

Zero coupon bond.

 

(L)

Payment-in-kind bond which may pay interest in additional par and/or in cash. Rates shown are the current rate and possible payment rates.

 

(M)

Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2018. Description of the reference rate and spread, if applicable, are included in the security description.

 

(N)

All or a portion of this position has not settled. Full contract rates do not take effect until settlement date.

 

(O)

Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy.

 

(P)

Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2018. Date shown represents the date that the variable rate resets. Description of the reference rate and spread, if applicable, are included in the security description.

 

(Q)

Investment made with cash collateral received from securities on loan.

 

(R)

Rate shown is the annualized 7-day yield at December 31, 2018.

 

(S)

Borrowings payable as a percentage of total investment securities is 32.7%.

The following forward foreign currency contracts were outstanding at December 31, 2018:

 

      Currency to be
Delivered		            Currency to be
Received		      Settlement
Date		    Counterparty    Unrealized
Appreciation		      Unrealized
Depreciation		  
Euro      292      U.S. Dollar      341      1-7-19    Morgan Stanley International    $ 6      $ —  

The Fund’s investments are reported at fair value. Fair value is defined as the price that the Fund would receive upon selling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurement date.

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the factors that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Reoccurring fair value measurements of Level 3 securities shall include a reconciliation of the beginning to ending balances for reported fair market values. A fair value hierarchy and Level 3 reconciliation, if applicable, have been included in the Notes to Schedule of Investments for the Fund.

An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized as follows:

• Level 1 – Observable input such as quoted prices, available in active markets, for identical assets or liabilities.

• Level 2 – Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

• Level 3 – Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair market value of investments.

The following table is a summary of the valuation of the Fund’s investments by the fair value hierarchy levels as of December 31, 2018:

 

     Level 1      Level 2      Level 3  

Assets

        

Investments in Securities

        

Common Stocks

        

Communication Services

   $ 105      $ —      $ —  

Consumer Discretionary

     1,811        —        579  

Energy

     239        —        415  

Financials

     —        —        2,489  

Health Care

     176        —        —  

Industrials

     —        —        15  

Total Common Stocks

   $ 2,331      $ —      $ 3,498  

Preferred Stocks

     —        3,160        122  

Corporate Debt Securities

     —        250,801        — *  

Loans

     —        52,909        21,569  

Short-Term Securities

     1,686        6,463        —  

Total

   $ 4,017      $ 313,333      $ 25,189  

Forward Foreign Currency Contracts

   $ —      $ 6      $ —  

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

 

     Common
Stocks		     Preferred
Stocks		     Loans  

Beginning Balance 10-1-18

   $ 4,384     $ 758     $ 19,981  

Net realized gain (loss)

     —       —       3  

Net change in unrealized appreciation (depreciation)

     (1,342 )      (636 )      (36 ) 

Purchases

     —       —       6,238  

Sales

     —       —       (1,967 ) 

Amortization/Accretion of premium/discount

     —       —       10  

Transfers into Level 3 during the period

     456       —       3,115  

Transfers out of Level 3 during the period

     —       —       (5,776 ) 

Ending Balance 12-31-18

   $ 3,498     $ 122     $ 21,568  

Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 12-31-18

   $ 1,341     $ (636 )    $ (678 ) 

Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period.

Information about Level 3 fair value measurements:

 

     

Fair Value at

12-31-18

      Valuation Technique(s)    Unobservable Input(s)    Input Value(s)  

Assets

            

Common Stocks

    $ 594     

Market approach

   

Adjusted EBITDA multiple

      4.26x and 6.84x  
     415     

Third-party valuation service

   

Broker quotes

      N/A  
     2,489     

Transaction

   

Price

    $ 10 per share  

Preferred Stocks

      122     

Market comparable approach

   

Adjusted EBITDA multiple

Illiquidity discount

     

 9.27x

10%

  

 

Loans

      21,568     

Third-party valuation service

   

Broker quotes

      N/A  

Significant increases (decreases) in the adjusted EBITDA multiple inputs as of the reporting date would result in a higher (lower) fair value measurement. However, significant increases (decreases) in the illiquidity discount input as of the reporting date would result in a lower (higher) fair value measurement.

The following acronyms are used throughout this schedule:

ADR = American Depositary Receipts

GTD = Guaranteed

ICE = Intercontinental Exchange

LIBOR = London Interbank Offered Rate

PIK = Payment in Kind

For Federal income tax purposes, cost of investments owned at December 31, 2018 and the related unrealized appreciation (depreciation) were as follows:

 

Cost

   $ 372,533  
 

 

 

  

Gross unrealized appreciation

     2,710  

Gross unrealized depreciation

     (32,704 ) 
 

 

 

  

Net unrealized depreciation

   $ (29,994 ) 

ITEM 2.    CONTROLS AND PROCEDURES.

 

(a)

The Registrant’s Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant’s management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

 

(b)

There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 3.    EXHIBITS.

A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).

Attached hereto as Exhibit 99.CERT.

SIGNATURES

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.

 

Ivy High Income Opportunities Fund
(Registrant)
By       /s/ Jennifer K. Dulski
  Jennifer K. Dulski, Secretary

Date: February 27, 2019

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.

 

By       /s/ Philip J. Sanders
  Philip J. Sanders, Principal Executive Officer

Date: February 27, 2019

 

By       /s/ Joseph W. Kauten
  Joseph W. Kauten, Principal Financial Officer

Date: February 27, 2019