Drenched Alaskan

What Will Happen to Closed End Funds?

Certainly, on the surface there appear to be tremendous opportunities for income investors with a longer horizon but I still have some nagging questions in this credit environment. I generally like the leveraged municipal bond funds and still have a small position in NMZ which has dropped tremendously and closed today down 11.2% with a yield of 11.4% tax fee, just a month after Nuveen increased the payout. I'm reluctant to add to NMZ because it holds a lot of lower rated and unrated municipal debt, but I'm looking at some of the others that have also dropped precipitously like NXZ with AA average debt rating and shorter duration. The discounts on all of the leveraged municipal closed-end funds are getting huge. Aside from the upcoming strain on governments to meet their debt obligations, is there unusual extra risk right now with the funds due to their use of leverage (i.e. interest rate spreads or ability to maintain financing for leverage)? I see that discounts average substantially lower on Nuveen's unleveraged funds.