NEW YORK - (Business Wire) Fitch Ratings has undertaken a preliminary review of 49 U.S. closed-end funds with aggregate rated notes and preferred stock of approximately $6.1 billion, following the publication of updated rating criteria for debt and preferred stock issued by U.S. closed-end funds on Aug. 17, 2009. Based on this review, the ratings of notes and auction rated preferred stock (ARPS) issued by six funds have been affirmed and the ARPS issued by three funds have been downgraded. With the exception of those ratings that have been formally affirmed as part of this review, the ratings assigned to all senior securities issued by U.S. closed-end funds will continue to be reviewed pending the full adoption of updated redemption/de-leveraging procedures consistent with Fitch's rating criteria as outlined in 'Closed-End Fund Debt and Preferred Stock Rating Criteria' dated Aug. 17, 2009 and available on Fitch's website at www.fitchratings.com. The majority of these ratings are expected to be affirmed in the near future, although it is possible that some funds may ultimately decide not to fully adopt Fitch's revised criteria which could result in the ratings being lowered. In all instances, senior securities issued by funds presently maintain ratings of 'A' or higher, representing the continued credit quality of rated liabilities, based on high levels of asset coverage and the structural protections afforded by redemption/de-leveraging procedures in place. Fund-specific rating actions and commentary are listed at the end of this release.
In the majority of instances, U.S. closed-end funds reviewed by Fitch currently maintain asset coverage levels consistent with 'AAA' ratings, taking into account potential future stressed market value declines. That said, a key component of Fitch's rating criteria for closed-end funds is the existence of redemption/de-leveraging procedures designed to redeem all, or a portion of outstanding senior securities in the event of a breach of certain asset coverage ratios, in order to restore asset coverage levels to an amount consistent with the assigned rating. The majority of funds have communicated to Fitch their intention to adopt Fitch's revised ratings criteria for closed-end funds, including incorporating updated redemption/de-leveraging procedures into their fund documents. However, doing so may require approval from the funds' boards of directors as well as formal amendments to the funds' operating documents. Fitch would expect to affirm such ratings in the near future, provided funds successfully undertake these amendments in a reasonable time period, and continue to maintain appropriate levels of asset coverage to rated liabilities. Fitch does not believe rating actions are warranted at this time for funds that have no specific rating actions as outlined below, given current levels of asset coverage and management's indicated courses of action.
A limited number of funds currently have asset coverage ratios that are inconsistent with Fitch's 'AAA' rating criteria and/or have indicated that they will not be amending the funds' operating documents to incorporate updated redemption/de-leveraging procedures consistent with Fitch's rating criteria. In these instances, the ratings of the liabilities issued by such funds have been downgraded to levels consistent with Fitch's revised criteria relative to the funds existing redemption/de-leveraging procedures and available asset coverage. Closed-end fund notes and preferred stock which have been affirmed at this time are supported by asset coverage levels and redemption/de-leveraging procedures consistent with Fitch's revised criteria.
Fund-specific ratings actions and commentary are listed by rating action type and in alphabetical order by fund name as follows:
RATINGS AFFIRMATIONS:
KAYNE ANDERSON ENERGY TOTAL RETURN FUND (NYSE:KYE)
--$165,000,000 notes affirmed at 'AAA' reflecting asset coverage ratios and redemption/de-leveraging procedures in the fund's operating documents that are consistent with Fitch's 'AAA' rating criteria.
KAYNE ANDERSON MLP INVESTMENT COMPANY (NYSE:KYN)
--$304,000,000 notes and $75,000,000 preferred shares affirmed at 'AAA' and 'AA', respectively, reflecting asset coverage ratios and redemption/de-leveraging procedures in the fund's operating documents that are consistent with Fitch's rating criteria at the respective rating levels.
TORTOISE ENERGY CAPITAL CORPORATION (NYSE:TYY)
--$90,000,000 notes affirmed at 'AAA' reflecting asset coverage ratios and mandatory redemption/de-leveraging procedures in the fund's operating documents that are consistent with Fitch's 'AAA' rating criteria.
TORTOISE ENERGY INFRASTRUCTURE CORPORATION (NYSE:TYG)
--$170,000,000 notes affirmed at 'AAA' reflecting asset coverage ratios and redemption/de-leveraging procedures in the fund's operating documents that are consistent with Fitch's 'AAA' rating criteria.
TORTOISE NORTH AMERICAN ENERGY CORPORATION (NYSE:TYN)
--$15,000,000 notes affirmed at 'AAA' reflecting asset coverage ratios and redemption/de-leveraging procedures in the fund's operating documents that are consistent with Fitch's 'AAA' rating criteria.
VAN KAMPEN SENIOR INCOME TRUST (NYSE:VVR)
--$350,000,000 notes affirmed at 'AAA' reflecting asset coverage ratios and redemption/de-leveraging procedures in the fund's operating documents that are consistent with Fitch's 'AAA' rating criteria.
RATINGS DOWNGRADES:
DWS RREEF REAL ESTATE FUND, INC. (AMEX:SRQ)
--$22,000,000 preferred shares downgraded to 'AA' from 'AAA' and removed from Rating Watch Negative, reflecting asset coverage ratios inconsistent with an 'AAA' rating. The decline in asset coverage levels is attributed to more conservative treatment of issuer and sector concentration and higher discount factors being applied to preferred and common stock issued by real estate investment trusts under the new criteria. The ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
DWS RREEF REAL ESTATE FUND II, INC. (AMEX:SRO)
--$14,000,000 preferred shares downgraded to 'AA' from 'AAA' and removed from Rating Watch Negative, reflecting asset coverage ratios inconsistent with an 'AAA' rating. The decline in asset coverage levels is attributed to more conservative treatment of issuer and sector concentration and higher discount factors being applied to preferred and common stock issued by real estate investment trusts under the new criteria. The ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
REAVES UTILITY INCOME FUND (AMEX:UTG)
--$240,000,000 preferred shares downgraded to 'A' from 'AAA', reflecting asset coverage ratios inconsistent with an 'AAA' rating. The decline in asset coverage levels is attributed to more conservative treatment of sector concentration and higher discount factors being applied to common stock securities under the new criteria. The ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
COMMENT ONLY:
ADVENT/CLAYMORE CONVERTIBLE SECURITIES & INCOME FUND (NYSE:AVK)
--$262,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
ADVENT/CLAYMORE GLOBAL CONVERTIBLE SECURITIES & INCOME FUND (NYSE:AGC)
--$170,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
BLACKROCK PREFERRED INCOME STRATEGIES FUND, INC. (NYSE:PSY)
--$169,025,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
BLACKROCK PREFERRED OPPORTUNITY TRUST (NYSE:BPP)
--$70,425,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
BLACKROCK PREFERRED & CORPORATE INCOME STRATEGIES FUND, INC. (NYSE:PSW)
--$40,250,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
BLACKROCK PREFERRED & EQUITY ADVANTAGE TRUST (NYSE:BTZ)
--$231,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
BOULDER GROWTH & INCOME FUND, INC. (NYSE:BIF)
--$25,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
CLAYMORE DIVIDEND & INCOME FUND (NYSE:DCS)
--$30,000,000 preferred shares rated 'AA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
DENALI FUND (NYSE:DNY)
--$42,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
EATON VANCE CREDIT OPPORTUNITIES FUND (NYSE:EOE)
--$8,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
EATON VANCE FLOATING RATE INCOME TRUST (NYSE:EFT)
--$145,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
EATON VANCE LIMITED DURATION INCOME FUND (NYSE:EVV)
--$266,625,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
EATON VANCE SENIOR FLOATING RATE TRUST (NYSE:EFR)
--$131,300,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
EVERGREEN INCOME ADVANTAGE FUND (AMEX:EAD)
--$196,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
EVERGREEN MULTI-SECTOR INCOME FUND (AMEX:ERC)
--$80,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
FEDERATED PREMIER INTERMEDIATE MUNICIPAL INCOME FUND (NYSE:FPT)
--$41,900,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
FEDERATED PREMIER MUNICIPAL INCOME FUND (NYSE:FMN)
--$36,575,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST (AMEX:FTF)
--$90,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
FRANKLIN UNIVERSAL TRUST (NYSE:FT)
--$42,000,000 notes rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
LMP CORPORATE LOAN FUND INC. (NYSE:TLI)
--$35,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NEUBERGER BERMAN CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC. (AMEX:NBW)
--$59,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NEUBERGER BERMAN INCOME OPPORTUNITY FUND INC. (AMEX:NOX)
--$36,700,000 notes rated 'AAA' and $14,875,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NEUBERGER BERMAN INTERMEDIATE MUNICIPAL FUND INC. (AMEX:NBH)
--$179,400,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NEUBERGER BERMAN NEW YORK INTERMEDIATE MUNICIPAL FUND INC. (AMEX:NBO)
--$48,250,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND, INC. (AMEX:NRO)
--$75,200,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NEW AMERICA HIGH INCOME FUND, INC. (NYSE:HYB)
--$85,425,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
NICHOLAS-APPLEGATE CONVERTIBLE & INCOME FUND II (NYSE:NCZ)
--$274,000,000 preferred shares rated 'AAA', Rating Watch Negative by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIMCO CORPORATE INCOME FUND (NYSE:PCN)
--$169,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIMCO FLOATING RATE INCOME FUND (NYSE:PFL)
--$78,975,000 preferred shares rated 'AAA', Rating Watch Negative by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIMCO FLOATING RATE STRATEGY FUND (NYSE:PFN)
--$161,000,000 preferred shares rated 'AAA', Rating Watch Negative by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIMCO HIGH INCOME FUND (NYSE:PHK)
--$292,000,000 preferred shares rated 'AAA', Rating Watch Negative by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIONEER FLOATING RATE TRUST (NYSE:PHD)
--$182,450,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIONEER HIGH INCOME TRUST (NYSE:PHT)
--$151,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIONEER MUNICIPAL HIGH INCOME ADVANTAGE TRUST (NYSE:MAV)
--$150,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
PIONEER MUNICIPAL HIGH INCOME TRUST (NYSE:MHI)
--$101,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
RMR REAL ESTATE INCOME FUND (AMEX:RIF)
--$16,675,000 preferred shares rated 'AA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
TS&W/CLAYMORE TAX ADVANTAGED BALANCED TRUST (NYSE:TYW)
--$105,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
WESTERN ASSET INTERMEDIATE MUNI FUND, INC. (AMEX:SBI)
--$50,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
WESTERN ASSET MANAGED MUNICIPALS PORTFOLIO INC. (NYSE:MMU)
--$250,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
WESTERN ASSET PREMIER BOND FUND (NYSE:WEA)
--$72,000,000 preferred shares rated 'AAA' by Fitch: no action at this time, although ratings will continue to be reviewed pending full adoption of Fitch's updated rating criteria for closed-end funds and continued sufficiency of asset coverage.
For more information of the specifics of the updated rating criteria, please see the criteria report titled 'Closed-End Fund Debt and Preferred Stock Rating Criteria', dated Aug. 17, 2009 and available on Fitch's website at www.fitchratings.com under the following headers:
Sectors >> Financial Institutions >> Fund & Asset Manager Ratings >> Criteria.
Additional information is available at www.fitchratings.com.
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