The Fund's fundamental investment restriction regarding borrowing money and issuing senior securities
is now as follows: "The Fund may not borrow money or issue senior securities
to the extent such borrowing or issuance would violate the 1940 Act.
Fitch's expected ratings of the funds' senior securities assumed certain minimum levels of pro forma asset coverage, relative to the market value of the funds' assets at the time of the rating.
In speaking with the funds' investment manager, Neuberger Berman Management LLC, it is Fitch's understanding that the funds will not issue the maximum amount of senior securities contemplated, but rather, will issue a reduced amount of senior securities and use the proceeds from asset sales to facilitate the redemption of existing APS.
NEW YORK -- With recent stock and credit market volatility and illiquidity posing significant challenges for managers of leveraged closed-end funds, inability to adhere to asset coverage ratios could have rating implications for senior securities issued by these funds, according to Fitch Ratings.
Fitch has observed significant declines in asset coverage ratios with respect to funds issuing Fitch-rated senior securities, and in particular those funds invested in leveraged loans or common or preferred equity assets of companies in the financial services or real estate sectors.
In evidence of these pressures, Fitch has downgraded to 'AA' from 'AAA' the ratings of senior securities issued by four closed-end funds and placed on Rating Watch Negative the ratings of senior securities issued by eight other closed-end funds, following the breach of one or more coverage ratios (information on the specific rating actions in included at the end of the release).
In addition to the leverage guidelines outlined in the 1940 Act, Fitch considers the Basic Maintenance Amount (BMA) in its rating analysis of senior securities issued by closed-end funds.
The 'AAA' rating on the senior securities
reflects the 32.
Pyykkonen's experience includes having held Senior Securities
Analysts positions with Hoefer & Arnett, C.
NYSE:MXE) (NYSE:MXEPR) (the "Fund") announced today that the issuance of the Fund's preferred stock on or about January 6, 2006, pursuant to a nontransferable rights offering to all shareholders conducted between November and December 2005, may have inadvertently contravened one of the Fund's fundamental investment restrictions, which prohibits the Fund from issuing senior securities
The Commission's auditor determined that the convertible debentures issued by FCCN prior to becoming an investment company were senior securities
and should have been approved by a vote of shareholders.