(This report was published to members of Yield Hunting on May 20th. All data is from that date unless otherwise stated.)
Quicker update on Nuveen as they released their monthly UNII and coverage update on their funds. If you recall from last month, we discussed a lot of what the muni space was doing and its relative weakness - thanks to comments by Senate Majority Leader McConnell and others. We are still planning a muni update later this week or early next.
For now, let's go through the UNII and earnings coverage reports from Nuveen, first on the tax-exempt side and then on the taxable.
Tax-Exempt Funds
We saw improvement on several of the larger funds (NAD, NZF, NXP) and declines on others (NMZ, NVG, NEA). In the CA funds, 3 improved (NAC, NCB, and NCA) with the other two (NKX, NXC) experiencing small declines. In aggregate, none of the moves were very significant outside of Nuveen Municipal Credit Opps (NMCO) which saw UNII decline by 5.5 cents as that fund deleveraged.
As a side note, NONE of the Nuveen Municipal CEFs deleveraged in March or April outside of NMCO. So they were smart at avoiding that landmine preferring to keep on the leverage after the SIFMA index spiked. That spike didn't last long, so the benefit of leverage quickly came back.
Top Conviction Funds
There are five Nuveen muni CEF conviction funds, 3 national and two state-specific. We will go through them one by one in more depth and then have some shorter notes on other funds below. In general, Nuveen raised distribution rates last month on a number of their funds. To me, this indicates that they see lower leverage costs and higher net earnings ahead. However, it also means that they are not interested in increasing UNII reserves like other fund sponsors have done in
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