Closed end fund RiverNorth Capital and Income has announced the redemption of their 5.875% term preferred (RMPL- or RMPL/P or RMPL.PR) which has a mandatory redemption date of 10/31/2024.
RiverNorth Capital and Income is an interval fund trading under the ticker RSF. The fund has had 3 names in their short histories which I outline on the term preferred page here. Their strategies changed numerous times in the last 7 years and returns since inception are around 4% annually.
RSF had a marginal asset coverage ratio of 222% on 12/31/2023 and I see now that it has increased to 235% as of 7/31/2024.
I believe that we will see a new preferred stock offering soon from RSF to pay for this redemption as the cost of the call will be over $41 million and this fund has total assets of just $116 million–at some point a fund is too small to be viable for the managers.
Is RIV-A from the same ‘RiverNorth Capital’?
I own RIV-A and was aiming to hold them in spite of 6% coupon as one of few rated A- in my portfolio (and think safer than others)
RIV-A = RiverNorth Opportunities Fund, not Capital
https://www.businesswire.com/news/home/20240904160080/en/RiverNorth-Capital-and-Income-Fund-Inc.-to-Redeem-Its-Outstanding-5.875-Series-A-Term-Preferred-Stock
Say what???? “WEST PALM BEACH, Fla.–(BUSINESS WIRE)–The Board of Directors of the RiverNorth Capital and Income Fund, Inc. (the “Fund”) (NYSE: RSF) has authorized the redemption of all 1,656,000 outstanding shares of its 5.875% Series A Term Preferred Stock (the “Series A Preferred Stock”) (NYSE: RMPL).
The anticipated redemption date is October 4, 2024 (the “Redemption Date”), but the redemption may be effected on a subsequent date no later than the mandatory redemption date of October 31, 2024, due to changes in market conditions or otherwise as determined by the Fund. The Series A Preferred Stock redemption price is estimated to be $25.20 per share of Series A Preferred Stock, which is equal to the liquidation preference of $25.00 per share plus $0.20 per share representing estimated accrued and unpaid dividends to the Redemption Date. Once redeemed, the Series A Preferred Stock will no longer be deemed outstanding, dividends will cease to accumulate and all rights of the holders of the Series A Preferred Stock with respect to the Series A Preferred Stock will cease. The Fund has filed a notice of its intention to redeem the Series A Preferred Stock with the Securities and Exchange Commission.”
So this poorly run CEF has chosen to run a poorly run notice of call where you don’t know for sure what the call date is???????? I own this one….
2 white –
Not sure how this redemption will turn out, but the risks of the preferred were mentioned in the most recent RSF Annual Report:
“However, if the Fund is unable to obtain sufficient liquidity prior to the date of redemption, it may be forced to engage in a partial redemption or delay a required redemption.”
If you folks are going to dabble in preferreds in these tiny CEFs that invest in esoteric instruments (50% of RSF’s asset base is small business merchant cash advances that those businesses pay back with a percentage of their sales), then you really can’t expect a redemption to be all peaches and cream.
But I think you will get lucky on this one, as this fund is probably going to have no problem issuing another preferred in the current very favorable preferred environment. But I wouldn’t go near the new one they issue, unless the yield is out-of-this world attractive.
do you know what the call date is??
Call date was 10/31/2020
Maturity date is 10/31/2024
I saw good numbers behind RSF
https://www.morningstar.com/cefs/xnys/rsf/quote
So you are saying you would probably not be a buyer of the potential new preferred issue?
I actually own this one so maybe I should be glad I am getting my money back.
Tim, should we be concerned about any of the other River North Closed End funds? I think you sold this one and moved over to another of their CEf’s
I’d pass on any RMPL issue unless the yield is very juicy, like 1% higher than the yield for RIV/A of NCZ/V prefs. 48% of RSF (82% when considering leverage) is comprised of “small business loans,” not exactly the type of investment which could be sold quickly.
I am fine investing in RiverNorth issues. They are an OK enough shop, on the small side, but nowhere close to Highland/Dondero.
https://www.rivernorth.com/pdf/rivernorth-rsf-annual-report.pdf