will delay the monthly dividends on six of its closed-end funds. The payment delay stems from the market's downturn, reports the WSJ
. All of the funds that will make later dividend payments are municipal closed-end funds and have used auction-rate preferred shares as part of their investment mix. Pimco officials pointed to "severe market dislocations and recent further erosions in the municipal bond market" as a reason for the delay.
Those market losses have caused the funds' asset-coverage ratios to fall below the 200 percent bar set by the 40 Act. While the funds' ratio of assets to senior securities remains below that level, they are barred from making dividend payments.
The funds -- Pimco's Municipal Income Fund II
, Municipal Income Fund III
, New York Municipal Income Fund
, New York Municipal Income Fund III
, California Municipal Income Fund II
and California Municipal Income Fund III
-- had been scheduled to make their dividend payments on December 31.
In addition, Pimco's Corporate Income
and Corporate Opportunity
will also postpone their December 31 payment. Both of those funds paid their regular dividend yesterday (December 1).
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