PML - PIMCO Update: Starting To Get Nervous And Taking Action

• The most recent UNII report showed continued deterioration in the coverage ratios and UNII values of the taxable funds.
• Coverage ratios were weaker on the taxable side in part because of a weaker dollar relative to the pound. Muni CEF coverage remains very strong.
• I'm concerned about the combination of lower coverage, lower UNII, and weaker NAVs all converging at the same time. NAVs, up to this point, have been rising.
• Distributions are going to be increasingly difficult to maintain given the rate environment. NAVs over the last year are down between 5% and 15% and special distributions are long gone.
• Those who are worried can swap to PFLEX if they have access through an advisor or by swapping to the new CEF, PDO.

For further details see: