Both the Virtus Convertible and Income Fund (NCV) and the Virtus Convertible and Income Fund II (NCZ) have come back into compliance with required asset coverage rations.
The 2 CEfs had to suspend their common share distributions, which is the kiss of death to a CEF because of a breaking of the asset coverage test (they must have at least 200% coverage of their ‘senior securities’). They have now scheduled the distributions.
Both funds determined they would tender for the auction rate preferred shares ($25,000/share) and were successful in having 99.7% and 99.2% of the shares tendered in an voluntary tender offer.
One would have to calculate the coverage ratio, which I have not done, but obviously now over 200%.
It is a fair assumption that the 2 funds liquidated assets to be able to fund the repurchase of the auction rate preferred shares.
Both CEFs have an issue of exchange traded preferreds outstanding. Both issues have been trading down on the fund issues and now have current yields at 6.50%.
Virtus Convertible and Income (NCV) has a 5.625% preferred which can be seen here.
Virtus Convertible and Income II (NCZ) has a 5.50% preferred which can be seen here.
The company press release is here.
4 thoughts on “CEFs Virtus Convertible and Income and Virtus Convertible and Income II Back in ‘Compliance’.”
My wife holds NCZ-A in her account at Fidelity and she was not notified about the tender offer. Can anybody enlighten me about the usual method of notification. Is it the resposibilty of the broker or the fund? and the means by which notification is delivered: email, phone call, snail mail ?
The tender offer was *NOT* for the NCZ-A preferred shares you hold but their Auction Rate Preferred Shares (par $25,000).
Stacking–Thanks for answering MFZ’s question.
Thanks StackingNickels for the clarification. All the best.