Weekly CEF Roundup: DSU Tender Offer Expires

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Includes: APB, AVK, CCA, CEN, CIF, CRF, CUBA, CXH, DDF, DEX, DMO, DPG, DSU, ECC, EHT, FDEU, GGO, GIM, HQH, HQL, HTY, MCR, MFV, MGF, MIN, MMT, MZF, NAV, NCB, NML, PAI, RCG, RFI, SPXX, SRV
by: Stanford Chemist
Summary

16 out of 31 sectors positive by price, and 10 sectors positive by NAV.

Only 11 distribution cuts announced so far this month, with only two of these being deeper than -5%.

Don't forget to tender your DSU shares.

Author's Note: Data are taken from the close of Friday Apr. 6, 2018.

The Weekly CEF Roundup will be put out at the start of each week to summarize recent price movements in closed-end fund [CEF] sectors in the last week, as well as to highlight recently concluded or upcoming corporate actions on CEFs, such as tender offers. Most of the information has been sourced from CEFInsight or the Closed-End Fund Center. I will also link to some articles from Seeking Alpha that I have found for useful reading over the past week. The searchable tag for this feature is "cildoc".

Weekly performance roundup

16 out of 31 sectors were positive (down from 29 last week) and the average price return was +0.01% (down from +0.99%). The highest gainers by price were MLPs at +1.63%, followed by U.S. growth & income at +1.58% and energy/resources at +0.80%. The largest loser by price was U.S. health/biotech at -2.56%, followed by other non-U.S. equity at -1.25% and emerging market equity at -1.01%.

(Source: Stanford Chemist, CEFConnect)

10 out of 31 sectors were positive on NAV (down from 31 last week), while the average NAV return was -0.25% (down from 0.90%). Latin America equity led with 1.16% NAV return, while health/biotech lagged with -1.52% return.

(Source: Stanford Chemist, CEFConnect)

The sector with the highest premium is multi-sector income (-0.36%), while the sector with the highest discount is Latin American equity (-12.22%). The average sector discount is -6.43% (up from -6.69% last week).

(Source: Stanford Chemist, CEFConnect)

MLPs showed the largest premium/discount increase (+2.02%), while U.S. health/biotech showed the largest premium/discount decline (-0.99%). The average change in premium/discount was 0.26% (up from 0.07% last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest average 1-year z-score is MLPs (+1.17) while the sector with the lowest z-score is CA munis (-2.03). The average z-score is -0.51 (up from -0.76 last week).

(Source: Stanford Chemist, CEFConnect)

The sector with the highest yield is MLPs (11.29%), followed by global growth & income (9.53%), global equity dividend (8.98%), multi-sector income (8.78%) and U.S. real estate (8.63%). Discounts and z-scores for the sectors are included for comparison. The average sector yield is 6.85% (up from 6.70% last week).

(Source: Stanford Chemist, CEFConnect)

Individual CEFs that have undergone a significant decrease in premium/discount value over the past week, coupled optionally with an increasing NAV trend, a negative z-score, and/or are trading at a discount, are potential buy candidates.

Ticker

P/D decrease

Yield

P/D

z-score

Price change

NAV change

(FDEU)

-3.83%

8.38%

-6.32%

-1.4

-3.62%

0.33%

(NCB)

-3.39%

4.19%

-2.70%

-2.1

-3.43%

-0.06%

(HTY)

-3.10%

10.13%

6.36%

0.5

-2.47%

0.37%

(HQH)

-2.99%

9.36%

-10.86%

-2.0

-4.69%

-1.50%

(CUBA)

-2.90%

1.66%

-17.65%

-0.9

-1.34%

2.14%

(CIF)

-2.67%

9.14%

4.15%

0.7

-2.13%

0.38%

(DPG)

-2.62%

10.33%

-11.67%

-1.4

-3.01%

-0.13%

(APB)

-2.60%

2.03%

-6.31%

-0.3

-3.65%

-0.98%

(HQL)

-2.28%

8.71%

-5.45%

-1.0

-4.37%

-2.07%

(HQL)

-2.28%

8.71%

-5.45%

-1.0

-4.37%

-2.07%

(Source: Stanford Chemist, CEFConnect)

Conversely, individual CEFs that have undergone a significant increase in premium/discount value in the past week, coupled optionally with a decreasing NAV trend, a positive z-score, and/or are trading at a premium, are potential sell candidates.

Ticker

P/D increase

Yield

P/D

z-score

Price change

NAV change

(GGO)

8.49%

4.28%

-3.11%

2.8

8.53%

-0.97%

(RCG)

7.26%

%

-4.67%

0.4

8.25%

0.00%

(ECC)

5.62%

12.66%

11.27%

-0.5

4.47%

-0.82%

(CEN)

5.09%

14.21%

8.51%

5.7

3.90%

-0.98%

(DMO)

4.47%

10.48%

19.19%

0.5

4.09%

0.19%

(CRF)

4.44%

17.79%

26.28%

1.4

2.65%

-0.97%

(SPXX)

4.36%

6.36%

12.31%

2.6

2.92%

-1.07%

(NML)

4.34%

7.84%

2.18%

4.2

3.19%

-1.20%

(SRV)

4.31%

9.91%

-4.29%

2.4

5.00%

0.26%

(RFI)

3.66%

7.84%

0.16%

2.9

3.29%

-0.49%

(Source: Stanford Chemist, CEFConnect)

Recent corporate actions

These are from the last month and are quoted from Closed-End Fund Center , Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

March 22, 2018 | The Cushing® Renaissance Fund (NYSE: SZC) (the "Fund") announced the results of its transferable rights offering (the "Offer"). The Offer commenced on February 16, 2018 and expired on March 22, 2018 (the "Expiration Date"). The Offer entitled rights holders to subscribe for up to an aggregate of 1,951,286 of the Fund's common shares of beneficial interest, par value $0.001 per share ("Common Shares"). The subscription price was $14.88 per Common Share and was determined based upon a formula equal to 78% of the Fund's net asset value ("NAV") per Common Share at the close of trading on the New York Stock Exchange ("NYSE") on the Expiration Date. The Offer was over-subscribed. Common Shares will be issued promptly after completion and receipt of all shareholder payments and the pro-rata allocation of Common Shares in respect of the over-subscription privilege. Gross proceeds of the Offer are expected to be approximately $29.3 million. The Fund intends to invest the net proceeds of the Offer in accordance with its investment objective and policies.

Upcoming corporate actions

These are from the last month and are quoted from Closed-End Fund Center , Morningstar, or CEFInsight (email alerts); any new news in the past week has a bolded date:

March 16, 2018 | BlackRock Debt Strategies Fund, Inc. (the "Fund") (DSU) announced that it has today commenced a tender offer (the "Tender Offer"). As previously announced, the Fund will purchase for cash up to 10% of its outstanding shares of common stock, at a price equal to 98% of the net asset value ("NAV") per share, determined on the first business day after the Tender Offer expires. The Tender Offer will expire on April 17, 2018 at 5:00 p.m. Eastern time, unless otherwise extended. The terms and conditions of the Tender Offer are set forth in the Issuer Tender Offer Statement and related Letter of Transmittal that have been filed with the Securities and Exchange Commission (the "SEC").

March 14, 2018 | Advent Claymore Convertible Securities and Income Fund (AVK), Advent Claymore Convertible Securities and Income Fund II (AGC), and Advent/Claymore Enhanced Growth & Income Fund (LCM), each a closed-end fund (together, the “Funds”) announced today that each Fund’s Board of Trustees has approved the mergers outlined below [AGC and LCM acquired by AVK]. The mergers are intended to provide potential benefits to common shareholders, including lower operating expenses and greater secondary market liquidity, among other things. The Funds have similar (but not identical) investment policies. Following completion of the mergers, AVK will continue to pursue its investment objective to provide total return through a combination of capital appreciation and current income by investing at least 80% of its managed assets in a diversified portfolio of convertible and non-convertible income-producing securities.

March 12, 2018 | MFS Investment Grade Municipal Trust (the "fund") (CXH) announced today that it will conduct a cash tender offer to purchase up to 7.5 percent of the fund's outstanding common shares (the “shares”) at a price per share equal to 98 percent of the fund's net asset value (NYSE:NAV) per share as of the close of regular trading on the New York Stock Exchange (NYSE) on the date the tender offer expires. The tender offer is expected to begin on April 3, 2018 and terminate at 5:00 PM Eastern Standard Time on May 2, 2018, unless extended. The pricing date will also be May 2, 2018, unless the tender offer is extended.

March 1, 2018 | BlackRock Debt Strategies Fund, Inc. (NYSE:DSU) announced on March 1 that the fund's average daily discount to NAV during the "First Measurement Period" was 8.5%, which is wider than the 7.5% threshold for the period from December 1, 2017 through February 28, 2018. Thus, the fund has determined to execute the repurchase required by the previously announced terms of the First Measurement Period of the fund's Discount Management Program by conducting a tender offer for up to 10% of its outstanding common shares at a price equal to 98% of NAV per share (at the close of the regular trading session at the NYSE on the day after the tender offer expires). The fund expects to commence the tender offer on, or about, March 16, 2018, with expiration on April 17, 2018. As the release explained, additional terms and conditions will be set forth in offering materials. If more than 10% of the Fund's outstanding common shares are tendered, the fund will purchase its shares from tendering shareholders on a pro rata basis.

Recent activist or other CEF news

These are from the last month and are quoted from Closed-End Fund Center or CEFInsight (email alerts); any new news in the past week has a bolded date:

March 29, 2018 | Western Asset Investment Grade Income Fund Inc. (the “Fund”) (NYSE: PAI) reaffirmed that effective today, March 29, 2018, the Fund’s name has changed from Western Asset Income Fund to Western Asset Investment Grade Income Fund Inc. The Fund’s shares of common stock continue to trade under its existing New York Stock Exchange symbol “PAI”. The Fund’s CUSIP, 95766T100, has not changed. In addition, also effective March 29, 2018, the Fund invests at least 80% of its net assets in fixed income securities that are rated in the Baa or BBB categories or above at the time of purchase by one or more Nationally Recognized Statistical Rating Organizations (“NRSROs”) or unrated securities of comparable quality at the time of purchase (as determined by the adviser). The Fund’s investment objectives remain unchanged.

Distribution changes announced this month

These are sorted in ascending order of distribution change percentage. Funds with ex-dates in the current and in the next month are included. Note that changes of less than 5% are not listed as those are considered to be minor. Any distribution declarations made this week are in bold. In this week's edition I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information for newly added funds. However, note the yield, coverage, discount and z-score information will not be updated every week. I've separated the funds into two sub-categories, cutters and boosters, arranged in descending order of distribution change magnitude.

I'm making another change to the section this month. I'm only going to be including the distribution changes announced this month as I believe that this what investors would be most interested in, if they are wont to to keep track of the distribution changes of their portfolio. Any changes announced in the week are shown in bold.

Cutters

Fund Ticker Change Previous Current Yield Discount z-score Coverage Announced Ex-date
Managed Duration InvGrade Muni (MZF) -11.1% 0.045 0.04 3.48% -4.96% 1.8 109% 4/2/2018 4/13/2018
EV High Inc 2021 Target Term (EHT) -5.0% 0.05 0.0475 5.75% -1.60% 0.6 101% 4/2/2018 4/11/2018
MFS California Municipal Fund (CCA) -2.4% 0.041 0.04 4.59% -14.12% -2.2 -118% 4/2/2018 4/17/2018
MFS Intermediate High Income (CIF) -1.7% 0.02139 0.02103 9.14% 4.15% 0.7 61% 4/2/2018 4/17/2018
MFS Special Value Trust (MFV) -1.6% 0.04919 0.04842 8.87% 14.31% 2 29% 4/2/2018 4/17/2018
Delaware Enhanced Gbl Div&Inc (DEX) -1.1% 0.1098 0.1086 11.16% -6.41% 1.7 25% 4/3/2018 4/12/2018
MFS Multi-Market Income (MMT) -1.1% 0.04295 0.04249 8.88% -9.89% -1.7 54% 4/2/2018 4/17/2018
MFS Charter Income (MCR) -0.9% 0.06022 0.05965 8.82% -9.27% -1.5 51% 4/2/2018 4/17/2018
MFS Intermediate Income (MIN) -0.9% 0.03036 0.03008 9.14% -7.06% -1.1 26% 4/2/2018 4/17/2018
Delaware Inv Div & Inc (DDF) -0.9% 0.0995 0.0986 11.19% -6.46% 3.4 27% 4/3/2018 4/12/2018
MFS Government Markets Income (MGF) -0.6% 0.02973 0.02956 7.69% -5.92% -1.1 38% 4/2/2018 4/17/2018

Boosters

Fund Ticker Change Previous Current Yield Discount z-score Coverage Announced Ex-date
Templeton Global Income (GIM) 93.1% 0.0174 0.0336 4.46% -11.46% -0.2 90% 4/2/2018

4/12/2018

CEF analysis from around Seeking Alpha...

Recommended reads are in bold.

Alpha Gen Capital presents An Update To The Greatest Bond Fund Of All Time (Apr. 5) and Another Great Opportunity In A Municipal CEF (Apr. 6)

Arbitrage Trader presents Closed-End Funds: 2 Similar Funds With Different Behavior (Apr. 4), Weekly Review: High-Yield CEFs (Apr. 4), Weekly Review: Municipal Bond CEFs (Apr. 4) and Weekly Municipal Bond CEF Trades (Apr. 5),

Douglas Albo presents Equity CEFs: Why CEFs Can Stay At Premiums/Discounts And Why It Doesn't Matter (Mar. 31) and Equity CEFs: Sell SPXX, Buy CII (Apr. 3)

Left Banker presents High-Income, Sustainable-Capital Portfolio: Reviewing A Rough Quarter (Apr. 2) and Market Beaters: These 15 CEFs Are Ahead Of The Market (Apr. 6)

Maks F.S. presents Morgan Stanley Emerging Markets Domestic Debt Fund: An Investment For The Future (Apr. 5) and JEMD - Pinch Your Nose As You Buy It (Apr. 8)

Steven Bavaria presents Savvy Senior 'Income Factory' Churns Out The Cash While Market Prices Languish (Apr. 6)

Stanford Chemist presents EXG: Is Our Old Friend Overvalued? (Apr. 2), Weekly CEF Roundup: A Rights, A Tender, A Merger (Apr. 3), The Chemist's CEF Report - March 2018: CEFs Not Overreacting To Market Volatility (Apr. 4) and Fund Spotlight: Finding Hidden Gemstones In Target Term CEFs (Apr. 5)

*To subscribers: these link to the public version of the article, which you will already have seen in the members section.

Macro/market section

Fear & Greed Trader presents S&P 500 Weekly Update: The Bull Market Is Over? Think Again (Apr. 8)

Jeff Miller presents Weighing The Week Ahead: Has The Trump Trade Reached The Tipping Point? (Apr. 8)

Lance Roberts presents Bulls Hang On By A Thread (Apr. 8)

Cambridge Income Laboratory members only

Here, we provide exclusive commentary and actionable takeaways on specific funds. In this issue, we reminded members to tender their BlackRock Debt Strategies Fund (DSU) shares, discussed the distribution changes that were newly announced this month, and identified a number of overvalued CEFs from the list of premium/discount gainers.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long the portfolio securities.