Biotech Values

[Jonathan Robinson]

The auction rate issues are probably not a NAV issue but are instead a dividend issue. The liability amount will not change but the cost of the liability will move to the cap impacting dividend flows. Most closed ends seem to have a cap currently in the low 4% area. It does add some risk though as many of these trade to a yield level. I would further add that many municipalities are expected to term out the debt and hence LT yields may rise from here as supply hits. This move could further hit muni prices. I saw this coming a few days back, saw my one closed end fund not go down and did nothing. It then lost 7% on Thursday. Stupid me! Should have sold and SHORTED!

Jon