Pimco Delays Dividend Payment on Two Closed-End Funds (Update1)
bloomberg.com
By Adam L. Cataldo
Dec. 31 (Bloomberg) -- The Pacific Investment Management Co. said it is postponing two dividend payments to investors in a pair of closed-end municipal bond funds.
Proceeds from the Pimco Municipal Income Fund and the Pimco New York Municipal Income Fund II were due today and on Feb. 2, Newport Beach, California-based Pimco said in a statement.
“The funds intend to resume paying and declaring dividends as soon as possible,” the company said. Pimco said continuing problems in the capital market caused the values of the funds’ portfolios to decline and led the decision.
Auction-rate preferred shares, with which the funds borrowed money to boost returns, must be backed by underlying assets worth at least 200 percent, the company said. When that threshold was missed, dividends couldn’t be paid.
The funds may redeem some of the auction-rate shares so dividends may resume, Pimco said. Shares in the funds are sold to investors and are exchange traded.
Pimco previously said it would redeem preferred shares from six closed-end municipal funds that lost as much as 60 percent this year. Those funds are the Pimco New York Municipal Income, Municipal Income Fund II, California Municipal Income Fund II, Municipal California Municipal Income Fund II, Municipal Income Fund III, California Municipal Income Fund III and New York Municipal Income Fund III.
Pimco is a unit of Munich-based Allianz SE.
To contact the reporter on this story: Adam L. Cataldo in New York at acataldo@bloomberg.net.
Last Updated: December 31, 2008 11:13 EST |
