Preferred stocks of closed end funds (CEFs) tend to be some of the safest preferred stock in existence. This is because of the requirements that the CEF have at least 200% asset coverage for preferred stock and 300% for debt asset coverage of “senior securities” which means debt and preferred stocks. While technically the coverage ratio can stay below for a long time the fund will be unable to pay common dividends or buy back common shares while they lack the asset coverage ratio.
The Investment Company Act of 1940 (sec 18) governs closed end funds–you can read it here.
As you can see in the chart below MOST of the issues are solidly investment grade.
It is CAUTIONED that most of these issues are perpetual preferreds meaning they are sensitive to interest rate movements.
In this case safety of the security doesn’t mean safety of the share price. While the shares are extremely safe the share PRICE can be decimated if interest rates move strongly higher.
We note that BDC’s are organized as closed end funds, but we do NOT include them here.
We note that the issue from Kayne Anderson and those from Oxford Lane and RiverNorth are term preferreds thus they have mandatory redemption dates.
A click on the ticker symbol takes you to the issue detail page.
The few issues highlighted in Grey are Month Payers.
Asset coverage is calculated by dividing total assets by total preferred stock liquidation value
I add debt and preferred stock liquidation together for the coverage ratio below.
CLICK THE TAB AT THE TOP OF THE LIST TO SORT BY ALPHA OR BY CURRENT YIELD