Just some general info being sought about leveraged closed-end income funds.
A few days ago some talking heads on one of the financial networks were discussing the credit crisis. They were saying that some closed-end mutual fund companies which sponsor these leveraged closed-end income funds were probably going to have trouble rolling over the leverage debt in each fund when due and, as a consequence, would probably have to pay higher interest rates for this leverage if it was available. They were saying this would probably force them to cut their payouts in the future. As I recall, the fund companies mentioned were Calamos, Eaton Vance and Nuveen.
From what I can see on ETFConnect it would appear that most of this leverage for the funds I researched is in the form of Preferred Shares, not borrowed debt. Am I correct in this assessment?
I was wondering what you guys thought about this possible negative situation and how it might effect the monthly distributions going forward.
Also, one of the leveraged closed-end income funds I have recently been looking at as a possible investment is the Nuveen Floating Rate Income Opportunity Fund (JRO). The ETFConnect website shows it has a current distribution rate of 11.87% and a discount rate of a minus -8.19%. It is showing that it has a leverage ratio of 39.64%. Are any of you invested in this fund? If so, what is your opinion?
Thanks for your opinions.
Ray
