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Credit Suisse Asset Management Message Board

  • yando1946 yando1946 Jul 28, 2005 2:46 PM Flag

    Why the drop?

    No news on dividend cuts, etc. Anyone know what is going on?

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    • was div cut.....read two posts before this....not including yours.....

      just opinions....tug

      • 3 Replies to tug8boat
      • generally speaking.....recent div cuts are mostly a factor of two CEFJ fundamentals.......

        REFIs (refinancing of holdings for lower rates and thus early payoff of holdings for CEFJs)....69% of all newly issued junk debt has been for refinancing of existing junk debt at substantially lower rates...

        this creates a doubble whammy on a CEFJ......

        they first loose the higher yield as replacement purchases yield less........

        most of holdings that are being refied are selling at premiums ..thus an immediate loss to company of NAV when redeemed at issue price (unless co was in at a lower than issue price).........

        next in line to whack the divs is increasing cost of leverage........

        followed by the natural maturing of debts (again replaced with lower yielding stuff) and the defaults........even though currently at lows (12 mo trailing average of around 2%)....

        will also add.....as most CEFJs project divs several mos in advance and most holdings pay interest semi-annually.....is a lag period of several mos before is reflected by company in change of divs..........thus by time is changed, is reasonable chance that cu8rrent div is already not being earned........

        just opionions...tug

      • Rate reduced from .035 to .030 Nuf said?

      • Go to company web site, was announced 7/22...

 
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