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CEFs Virtus Convertible and Income and Virtus Convertible and Income II Back in ‘Compliance’.

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.

6 thoughts on “CEFs Virtus Convertible and Income and Virtus Convertible and Income II Back in ‘Compliance’.”

  1. ‘asking for opinions not much talk about cef’s, other than there preferreds i hold a large position in STEW formerly boulder growth basically to get a dividend from Warren Buffett exposure, thinking of maxing out my position. Thanking all for your thoughts

    1. Mike, Thanks for bringing attention to this and CEF’s in general.
      Bill S mentioned on Tim’s post about interest rates try to breach 4% that he has about 90 days to retirement and is thinking about positioning his investments for income and he entered UTG which I would call a hybrid utility cef.
      There are so many out there in the universe how do you go about picking one? A blind monkey throwing darts might do better than I could.
      I went to SA and read one of many articles on UTG. I especially like reading comments.
      This might not apply to your questions, but the gist I got from reading comments is
      externally or internally managed
      high fees or low
      leveraged or not and by how much
      dividends a return of capitol or profits on investment? return of capitol could be a spiral of liquidating assets and the shares losing value on your original investment
      Stanford Chemist and I think Nick Ackerman are a good source on SA for cef’s
      Personally, I have between 50 to 60 holdings if not more in 6 different accounts with 3 brokers. about a third I don’t have to watch and the rest I monitor. Because of this, I am sticking with what few preferred’s and BB’s there are of the cef’s for added safety and less to think about.

  2. Thanks Tim,
    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 ?

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