Muni and High Yield CEFs

Discussion in 'Stocks' started by fecal_tdr, Oct 9, 2008.

  1. Anyone have any insight on how these will perform, especially the ones that use leverage? Are their short term financers still giving them liquidity at rates they want, or is it as bad the rest of the auction rate and short term markets? The share prices are attractive here but the risk is unclear.
  2. Yes, I am also eyeing some of these too.

    Obviously concerns would be:
    1. Loss potential of levered CEF's due to the ARP situation and funding issues which will ultimately come out of net invest income. However, note that a 25% discount might mitigate that somewhat.
    2. illiquidity
    3. creditworthiness of the underlying issues, which might be a real concern coming up. Some of these CEF's have swap exposure, which I can't really evaluate.

    OTOH, with a Obama presidency, I would imagine that top shelf muni bonds would be in great demand.

    Anyone else want to contribute? OP, PM me if you want to share info and attack these together. Plenty of room here for that.
  3. Daal


    Munis seem to be a play that the crisis wont get worse. its like trying to pick a bottom on the bank crunch. its going to get worse and the mispricing should get wider
  4. just wait until muni bonds freeze up like the 3 month t-bills.
  5. What are you talking about? 3 month t-bills didn't freeze up.
  6. they did a few weeks ago. people were taking negative returns
  7. Nanook


    Today's news on NCV and NCZ:
    Doug Forsyth, managing director at Nicholas-Applegate Capital Management LLC, the Funds' sub-adviser, and lead portfolio manager for the Funds commented: "The Funds will experience a reduction in leverage as a result of the partial ARPS redemption. However, we think the Funds may still be able to take advantage of income opportunities currently available in the convertible and high yield markets. Market volatility has negatively impacted the net asset value ("NAV") of the Funds' common shares and asset coverage with respect to the ARPS. We believe it to be prudent for the Funds to reduce their leverage at this time in an effort to reduce the common shares' NAV volatility in these difficult market conditions."
  8. That is not a freeze up, that is the exact opposite of a freeze up.