Voya Credit Income Fund Quarterly Commentary - 4Q25

• The final quarter of 2025 opened under the shadow of the government shutdown, which had implications for both financial markets and the broader economy.
• Class I shares of the Fund outperformed the benchmark on a net asset value (NAV) basis, the 50% Bloomberg High Yield Bond—2% Issuer Constrained Composite Index/ 50% Morningstar LSTA US Leveraged Loan Index (benchmark).
• We believe the macro backdrop will remain broadly supportive for issuers across leveraged credit, with positive growth expectations underpinned by easing financial conditions and continued fiscal support.

Class I shares of the Fund outperformed the benchmark on a NAV basis in 4Q25. Issuer selection was a key driver of outperformance during the period. Across sectors, the Fund benefitted from selection within consumer cyclical services, financials, energy, and automotive. Across ratings, the Fund’s relatively defensive posture and underweight in the CCC rating cohort provided a material benefit during the quarter, as CCC were notable underperformers for the period. In addition, selection within B rated credits was additive to results. Asset allocation did not have a material impact on relative performance given the similar returns across the two markets.

The final quarter of 2025 opened under the shadow of the government shutdown, which had implications for both financial markets and the broader economy. With key agencies shuttered, official data on labor markets and inflation was delayed, leaving policymakers and investors to rely on secondary indicators. This lack of transparency complicated the U.S. Federal Reserve’s decision-making and injected uncertainty into financial markets. While the shutdown’s direct economic impact was modest, it weighed on sentiment and marginally dampened activity. When official data finally arrived post-shutdown, it confirmed a softening labor market. While government layoffs drove much of the weakness, private-sector gains were modest, reinforcing a narrative of slowing momentum. Inflation, though elevated, showed no signs of acceleration, giving the Fed marginal room to act. After one rate cut in 3Q25, policymakers delivered two more in 4Q25, citing a policy rate above neutral and labor market fragility, while signaling caution around future easing plans. Credit markets faced some additional turbulence, driven by high-profile bankruptcies and aggressive capital spending trends, as the quarter was marked by a surge in corporate investment in artificial intelligence and data center infrastructure that resulted in increased spread volatility. Against this backdrop, fixed-income markets delivered mixed but generally positive performance. Front-end rates declined in response to Fed easing, while longer maturities held steady, reflecting persistent growth and inflation expectations. Most credit sectors delivered modest excess returns for the period. 

Across below-investment grade credit, performance was relatively stable during the period, although returns were more modest compared to the third quarter. High yield (HY) bond spreads widened to an intra-quarter high of 303 basis points (bp) in mid-November before retracing that move as the quarter progressed. By quarter-end, spreads ended the period 1 bp tighter at 266 bp, which is 21 bp tighter than at the start of the year. Meanwhile, secondary trading levels in the loan market saw a pullback in October and November. As a result, the average loan index bid price finished the year at 96.64, representing a 42 bp decline from the prior quarter and a 69 bp decrease from the beginning of the year. Fourth quarter returns were modestly in favor of the HY bond market, as the Bloomberg U.S. High Yield 2% Issuer Constrained Index returned 1.31%, while the Morningstar LSTA US Leveraged Loan Index registered a gain of 1.22%. On a full-year basis, the outperformance of HY was more pronounced given the benefit from the Treasury move (8.62% return for HY versus 5.90% for the loan market). When looking at ratings, idiosyncratic headlines increased during the quarter, leading to a sharp risk-off tone across both markets. Returns were relatively uniform for BB and B rated securities, while CCC rated securities underperformed significantly. The technical backdrop firmed on the back of a notable supply shortage, as total leveraged credit issuance was materially lower, primarily driven by lower refinancing activity. Meanwhile, demand remained healthy, as collateralized loan obligations (CLOs) issuance underpinned loan demand despite higher retail fund outflows, while HY flows were a net positive for the quarter.

We believe the macro backdrop will remain broadly supportive for issuers across leveraged credit, with positive growth expectations underpinned by easing financial conditions and continued fiscal support. Economic data releases resumed following the government shutdown and have generally met or exceeded expectations. Moreover, disruptions stemming from tariff and trade headlines earlier in the year have yet to meaningfully manifest in hard economic data, at least thus far. A key area of concern remains the softening labor market, as job gains have decelerated noticeably. That said, the Fed is expected to provide a policy backstop should labor conditions deteriorate further and growth slow more sharply than anticipated. 

Leveraged credit balance sheets remain in good shape with leverage and coverage levels at healthy levels heading into the new year. Overall, the third quarter earnings season was positive, but dispersion at the sector level was meaningful. The technical backdrop remains constructive, as the quarter ended with another supply shortfall. This has been driven by steady investor demand, while new-issue activity remains modest overall. However, the imbalance could moderate in 2026, as net issuance is expected to pick up on the back of a potentially stronger merger and acquisitions (M&A) pipeline.

In terms of asset allocation, we remain overweight to loans, which continue to have a carry advantage over HY. By ratings, we maintain a single-B average credit profile, while staying focused on name-specific risk given the increased bifurcation in performance among borrowers. With policy uncertainty and tight spreads remaining a key theme in the market, we maintain our preference for more defensive business models and balance sheets, such as capital goods, food and beverage as well as select areas of healthcare and financials. We maintain our cautious stance within consumer cyclicals, chemicals, and structurally challenged media and telecom business models. Within energy, we favor midstream over exploration and production (E&P) and natural gas over oil.

Companies mentioned in this report—percentage of Fund investments, as of 12/31/25: N/A.