Fitch: Subset of Taxable Closed-End Funds May Seek Higher Leverage

Fitch: Subset of Taxable Closed-End Funds May Seek Higher Leverage

Fitch: Subset of Taxable Closed-End Funds May Seek Higher Leverage 150 150 Emily

Many leveraged closed-end funds (CEFs) utilized auction rate preferred stock (ARPS) pre-crisis. Since then, these CEFs have refinanced into traditional senior debt at lower leverage levels. These CEFs may increase leverage by up to $4.2 billion in the aggregate by issuing preferred stock and diversifying their funding structure in the future, according to a Fitch Ratings study.