(The following statement was released by the rating agency)
Oct 11 - Today, U.S. municipal leveraged closed-end funds (CEFs) have access to capital across the long, intermediate, and short-term maturities; which diversifies funding and moderates rollover risk in the sector according to a new report published by Fitch Ratings.
About $5.2 billion (or 16%) of total leverage in the sector remains in perpetual ARPS (down from $30.2 billion at end-2007), but $10.2 billion (or 32%) currently consists of newer issued term securities that mature in one to five years, with the remaining $16.4 billion (or 52%) funded with maturities of one year or less. This stand in contrast to the taxable CEF sector where newer term securities have not yet proliferated and 74% of total leverage rolls in maturities of one year or less, according to a related report published earlier by Fitch.
Access to longer-term funding for municipal CEFs was made possible by the successful proliferation of new term-preferred securities, namely MTPs, VMTPs, and VRDPs issued to redeem frozen ARPS. Furthermore, a number of municipal CEFs have recently termed out their shorter-term VRDP shares by placing them privately with investors for an initial term of three years, further moderating rollover risk.
The full report, 'Municipal Closed-End Funds Diversify Funding and Moderate Rollover Risk', is available at '.'
To receive Fitch's forthcoming research on closed-end funds please go to: