CEF Weekly Update
Leverage Refinancing
Pioneer High Income (PHT) announced last Tuesday that it plans to redeem all of its outstanding auction-rate preferred shares at par, totaling about $150 million. The board of directors plans to finance the redemption with the authorization of a third-party debt facility. The refinancing will be completed March 18, 2014. Considering that alternative forms of leverage financing are typically more expensive than ARPS, investors should expect an increase in the fund's total expense ratio.
Meanwhile, two BlackRock municipal-term trusts--BlackRock California Municipal 2018 Term(BJZ) and BlackRock Municipal 2020(BKK)--also announced the redemption of a portion of their outstanding ARPS. This redemption will be completed on March 4, 2014.
Repurchases and Tender Offers
Zweig Fund(ZF) and Zweig Total Return(ZTR) each announced that they have expanded their respective stock repurchase programs, allowing them to repurchase an additional 10% of outstanding stock as long as shares trade at a discount. As of the close of trading on Feb. 10, 2014, the fund had repurchased 9.5% and 9.1% of their outstanding shares, respectively. Both funds have been conducting their repurchase programs since March 2012. While it appears that may have been somewhat effective for Zweig Total Return, Zweig Fund has failed to substantially narrow its discount over the period.
At a special shareholder meeting, India Fund(IFN) shareholders overwhelmingly voted to eliminate the fund's semiannual repurchase offer. About 37% of all outstanding shares voted in the measure, with 80% of those voting opting to eliminate the program.
Swiss Helvetica Fund (SWZ) announced the final results of its tender offer: About 20 million shares were validly tendered, which far exceeded the fund's offer to repurchase up to 4.5 million. The fund will repurchase shares on a prorated basis at $14.93 per share. As of Friday's close, shares traded at $14.17.
A Spin-Off
Gabelli Dividend & Income's (GDV) board of directors approved a spin-off, in which Gabelli Dividend & Income would contribute a portion of its assets toward the creation of a new closed-end fund: The Gabelli Global Small and Mid Cap Value Trust. Shareholders will vote on this action at a special meeting April 15, 2014. While spin-offs in the CEF universe are relatively rare, this is the second one that has occurred in the past year; Royce Value Trust (RVT) spun-off a global version of its strategy, Royce Global Value Trust (RGT).
Another Municipal Merger
Nuveen continues to clean up its unwieldy state municipal lineup, with Nuveen Pennsylvania Investment Quality Municipal (NQP) acquiring Nuveen Pennsylvania Premium Income Municipal 2 (NPY), Nuveen Pennsylvania Dividend Advantage Municipal NXM, and Nuveen Pennsylvania Dividend Advantage Municipal 2 NVY. Shareholders of the three funds received proportionate shares of Nuveen Pennsylvania Investment Quality Municipal on a NAV basis.
Distribution Changes
Gold-rated Source Capital (SOR) increased its quarterly distribution 6.7% to $0.80 per share from $0.75 per share.
Eaton Vance Floating-Rate Income Plus(EFF) cut its monthly distribution 6.0% to $0.094 per share from $0.10 per share.
Western Asset Global Partners(GDF) cut its monthly distribution 6.1% to $0.0775 per share from $0.0825 per share.
Click here for data and commentary on individual closed-end funds. http://news.morningstar.com/articlenet/article.aspx?id=635730
Steven Pikelny does not own shares in any of the securities mentioned above.
