This from a recent article on the Pimco funds that stopped issuing dividends:
"The Investment Company Act of 1940 stipulates that for the funds to declare and pay dividends, their total assets must be at least twice the sum borrowed from the issue of preferred shares, or their asset-coverage ratios must be above 200 percent.
"This is the first time I saw that a municipal closed-end fund has postponed the dividend," Cecilia Gondor, executive vice-president of Miami-based closed-end funds research and trading firm Thomas J. Herzfeld Advisors, told Reuters."
If I have this right, then, if the total PIA assets are now $200mm and the preferred is $100mm, then the 50% leverage ratio I calculate is equivalent to the 200 percent threshold above. Therefore, as you say, PIA is right on the edge of witholding dividends.
I noticed when one did that a couple of weeks ago, there was a lot of selling pressure. I guess that's because most fund owners are in them for the income. Actually, right there sounds like a capital gains opportunity - wait until after they stop dividends. hmmmmm
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