NEW YORK, May 10, 2010 (BUSINESS WIRE) -- Fitch Ratings has affirmed the 'AAA' ratings assigned to auction market preferred shares (AMPS) issued by the following two leveraged U.S. closed-end funds backed primarily by convertible securities: Advent Claymore Convertible Securities and Income Fund (NYSE: AVK) -- $262,000,000 of ARPS consisting of Series M7, T28, W7, W28, Th28 and F7, each with a liquidation preference of $25,000 per share, affirmed at 'AAA'.
Advent/Claymore Global Convertible Securities & Income Fund (NYSE: AGC) -- $170,000,000 of ARPS consisting of Series T7 and W7 each with a liquidation preference of $25,000 per share, affirmed at 'AAA'.
The 'AAA' ratings are based on sufficient asset coverage provided to the AMPS by the funds' underlying portfolios of assets, structural protections afforded by mandatory de-leveraging provisions in the event of asset coverage declines, the legal and regulatory parameters that govern the funds' operations and the capabilities of the Advisor as investment manager. The affirmations reflect the recent amendments to the funds' bylaws, which include asset coverage guidelines consistent with an 'AAA' rating per Fitch's updated closed-end fund rating criteria.
As of March 31, 2010, the funds had the following net assets and leverage: -- AVK: Net assets plus leverage of approximately $709 million and total structural liabilities of $262 million or 37% of net assets. Net assets included convertible securities, corporate securities, cash and short-term investments and common and preferred equities. Total structural liabilities consisted entirely of rated AMPS. Fitch's criteria also consider the fund's use of economic leverage in the form of derivatives, if applicable.
-- AGC: Net assets plus leverage of approximately $466 million and total structural liabilities of $170 million or 36% of net assets. Net assets included convertible securities, corporate securities, cash and short-term investments and common and preferred equities. Total structural liabilities consisted of entirely of rated AMPS. Fitch's criteria also consider the fund's use of economic leverage in the form of derivatives, if applicable.
As of March 31, 2010, the funds' asset coverage ratios for total outstanding ARPS and other fund leverage, as calculated per Fitch's updated criteria were in excess of 100% for an 'AAA' rating level, which is a minimum asset coverage required by the funds' amended and restated bylaws. As of the same date, the funds' asset coverage ratios for total outstanding AMPS, as calculated in accordance with the Investment Company Act of 1940, were in excess of 200%, which is also a minimum asset coverage required by the funds' governing documents. Should either of the asset coverage tests decline below their minimum threshold amounts and not be cured within the pre-specified timeframe, the governing documents require the funds to delever the affected AMPS in a sufficient amount to restore compliance with the applicable asset coverage test(s).
Advent Capital Management, LLC serves as AGC's investment manager and AVK's investment adviser and managed over $5 billion in assets as of March 31, 2010.
Claymore Advisors, LLC, an affiliate of Claymore Securities, Inc. (Claymore), serves as investment adviser to AGC and as servicing agent to AVK. Claymore entities managed, supervised, or serviced approximately $15.9 billion in assets as of March 31, 2010.
Applicable criteria available on Fitch's web site at 'www.fitchratings.com' include: -- 'Closed-End Fund Debt and Preferred Stock Rating Criteria' (Aug. 17, 2009).
Additional information is available at 'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
SOURCE: Fitch Ratings CONTACT: Fitch Ratings Brian Bertsch, +1-212-908-0549 (New York) email@example.com Ian Rasmussen, +1-212-908-0232 (New York) Russ Thomas, +1-312-368-3189 (Chicago) Copyright Business Wire 2010 -0- KEYWORD: United States
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Finance SUBJECT CODE: Bond/Stock Rating