CEF RiverNorth/Doubleline Announces Preferred Stock Offering

Closed end fund RiverNorth/Doubleline Strategic Opportunity Fund (OPP) has announced a new preferred stock offering.

This is the 1st CEF preferred offering we have seen for quite a while and we will see what type of coupon the company is able to garner.

Remember that CEF’s must have an asset coverage ratio of 200% which adds some safety to the shares. This closed end fund is paying a dividend of north of 15% as the price of shares has eroded–remember lousy CEFs can have very nice preferreds.

Moodys has rated the new issue A1–high investment grade.

The preliminary prospectus can be found here.

Eugene was on this one right away.

7 thoughts on “CEF RiverNorth/Doubleline Announces Preferred Stock Offering”

  1. I’ve been watching OPP-A. It is still trading at $24.70. Based on the high Moody rating (A1), I would have thought it would be several steps above par by now. Maybe this isn’t a valid comparison, but the similar-rating PSA-M has a 1/4% lower coupon and trades a tad over $26. Maybe I’m missing something…

    1. While OPP-A might have an A1 rating, the fund invests in a lot of high yield/unrated MBS. Not something I care to be a part of even with the 200% coverage ratio provision.

  2. I’ve heard of DoubleLine and Jeff Gundlach of course but RiverNorth is a new name to me. Beyond being in business since 2000 I can’t really find much in the way of in-depth information on them.
    I was wondering how credible Moody’s A1 rating was?

  3. OPP’s paying 15% because they have a managed distribution formulated based on the average NAV on last 5 trading days of the year…. That distribution policy will continue but given NAV is lower now than end of year ’19, div is pretty much guaranteed to go down. Plus large part of div = ROC

    1. 2wr–although I didn’t do any real due diligence I figured there was plenty of ROC.

    1. My guess is 4 1/8 or lower. Anything higher than 4 1/8 and I’d be interested in buying at par.

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