FXBY - Weekly Closed-End Fund Roundup: DEX Tender Offering Expires (February 5 2023)

Summary

• 17 out of 22 CEF sectors positive on price and 18 out of 22 sectors positive on NAV last week.
• RSF offering results.
• DEX tender offer expires.
• A new corporate actions tracker for our members.

Author’s note: This article was released to CEF/ETF Income Laboratory members on February 6, 2022. Please check latest data before investing.

The Weekly Closed-End Fund 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. Data is taken from the close of Friday, February 3rd, 2023 .

Weekly performance roundup

17 out of 22 sectors were positive on price (down from 21 last week) and the average price return was +0.83% (down from +2.96% last week). The lead gainer was U.S. Equity (+2.17%) while Commodities lagged (-3.37%).

18 out of 22 sectors were positive on NAV (down from 22 last week), while the average NAV return was +0.71% (down from +2.72% last week). The top sector by NAV was U.S. Equity (+2.06%) while the weakest sector by NAV was Commodities (-1.09%).

The sector with the highest premium was Limited Duration (+2.38%), while the sector with the widest discount is MLPs (-13.51%). The average sector discount is -5.29% (up from -6.46% last week).

The sector with the highest premium/discount increase was Limited Duration (+1.72%), while Emerging Market Income (-1.88%) showed the lowest premium/discount decline. The average change in premium/discount was +0.62% (same as last week).

The sector with the highest average 1-year z-score is Multisector Income (+1.24), while the sector with the lowest average 1-year z-score is Commodities (-3.96). The average z-score is +0.05 (up from -0.16 last week).

The sectors with the highest yields are Senior Loans (+11.19%), Multisector Income (+10.44%), and Emerging Market Income (+9.99%). Discounts are included for comparison. The average sector yield is +7.67% (down from +8.17% last week).

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.

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.

Recent corporate actions

These are from the past month. Any new news in the past week has a bolded date:

January 31, 2023 | RiverNorth Capital and Income Fund, Inc.* Announces Final Results of Rights Offering. RiverNorth Capital and Income Fund, Inc. ( RSF ) (the “Fund”) today announced the final results of its transferable rights offering (the “Offering”). The Fund will issue a total of 1,047,000 new shares of common stock as a result of the Offering, which closed on January 27, 2023 (the “Expiration Date”). The subscription price of $15.84 per share in the Offering was established on the Expiration Date based on a formula equal to 90% of the reported net asset value per share of common stock. Gross proceeds received by the Fund, before any expenses of the Offering, are expected to total approximately $16.6 million. The Offering was oversubscribed and the over-subscription requests exceeded the over-subscription shares available. Accordingly, the shares issued as part of the over-subscription privilege of the Offering will be allocated pro-rata among record date stockholders who submitted over-subscription requests based on the number of rights originally issued to them by the Fund. This press release shall not constitute an offer to sell or constitute a solicitation of an offer to buy.

December 16, 2022 | Delaware Investments National Municipal Income Fund announces final results of tender offer. Today, Delaware Investments National Municipal Income Fund (the “Fund”), a NYSE American listed closed-end fund trading under the symbol “VFL,” announced the final results of its tender offer for up to 10,478,347 of its common shares (“Common Shares”), representing up to fifty percent of its issued and outstanding Common Shares, with a par value of $0.01 per share. The offer expired at 5:00 p.m., New York City time, on Tuesday, December 13, 2022 . Based on a count by Computershare Trust Company, N.A., the depositary for the tender offer, approximately 8,678,691 Common Shares, or approximately 41.41% of the Fund’s Common Shares outstanding, were tendered. The Fund has accepted 8,678,691 shares (subject to adjustment for fractional shares) for cash payment at a price equal to $11.95 per share. This purchase price is 99% of the Fund’s net asset value per share of $12.07 as of the close of regular trading on the NYSE American on December 14, 2022, the pricing date stated in the Offer to Purchase. Following the purchase of the tendered shares, the Fund will have approximately 12,278,003 Common Shares outstanding. In order to manage its leverage level, the Fund is accordingly reducing its outstanding Muni-MultiMode Preferred Shares (“Preferred Shares”) by redeeming 360 Preferred Shares at the $100,000 liquidation preference per share, plus an additional amount representing the final accumulated dividend amounts owed to be paid to preferred shareholders. The redemption is set to occur on December 20, 2022. Following the redemption, the Fund will have 990 Preferred Shares outstanding. [ Original tender offer press release ]

Upcoming corporate actions

These are from the past month. Any new news in the past week has a bolded date:

January 12, 2023 | KKR Income Opportunities Fund Announces Terms of Rights Offering and Declares Monthly Distributions. The Board of Trustees (the “ Board ”) of KKR Income Opportunities Fund (the “ Fund ”) ( KIO ) has approved the terms of the issuance of transferable rights to its shareholders of record as specified below. The Fund today also announced an increase in its monthly distributions per common share beginning with the distribution payable on March 31, 2023, after completion of the Rights Offering, as described below. The Board has approved the terms of the issuance of transferable rights (“Rights”) by the Fund to its shareholders of record as of the Record Date (as defined below) entitling the holders of these Rights to subscribe (the “Offer”) for common shares of beneficial interest (the “Common Shares”). The record date for the Offer is currently expected to be January 23, 2023 (the “Record Date”). Record Date Common Shareholders will be entitled to purchase one new Common Share for every three Rights held (1 for 3). The proposed subscription period is currently anticipated to expire on February 16, 2023 , unless extended by the Fund (the “Expiration Date”). The Rights are transferable and are expected to be admitted for trading on the New York Stock Exchange (the “NYSE”) under the symbol “KIO RT” during the course of the Offer. The subscription period will commence on the Record Date and expire on the Expiration Date. Rights may be exercised at any time during the subscription period. The subscription price per Common Share (the “Subscription Price”) will be determined on the Expiration Date, and will be equal to 92.5% of the average of the last reported sales price of a Common Share of the Fund on the NYSE on the Expiration Date and each of the four (4) immediately preceding trading days (the “Formula Price”). If, however, the Formula Price is less than 82% of the Fund’s net asset value (“NAV”) per Common Share at the close of trading on the NYSE on the Expiration Date, the Subscription Price will be 82% of the Fund’s NAV per Common Share at the close of trading on the NYSE on that day. Record Date Common Shareholders who exercise all of their primary subscription Rights (other than those Rights that cannot be exercised because they represent the right to acquire less than one Common Share) will be eligible for an over-subscription privilege entitling Record Date Common Shareholders to subscribe, subject to certain limitations and allotment, for any additional Common Shares not purchased pursuant to the primary subscription.­­­ The Fund also today announced its upcoming monthly distributions, payable on the dates and in the amounts below. Based on the Fund’s current share price of $11.64 per share (as of market close on January 11, 2023), the distributions represent an annualized distribution rate of 12.53% (calculated by annualizing the distribution amount and dividing it by the current share price). The increase in the Fund’s monthly distribution rate from $0.1050 per share to $0.1215 per share represents a 15.71% increase in the Fund’s monthly distribution.

December 22, 2022 | Delaware Investments® Dividend and Income Fund, Inc., Delaware Enhanced Global Dividend and Income Fund, and Delaware Ivy High Income Opportunities Fund Announce Date of Reorganizations. Today, the Board of Directors/Trustees of Delaware Investments Dividend and Income Fund (NYSE: “ DDF ”), Delaware Enhanced Global Dividend and Income Fund(NYSE: “ DEX ”), and Delaware Ivy High Income Opportunities Fund (NYSE: “ IVH ”) announced that the anticipated closing date of the reorganization of DDF and DEX into abrdn Global Dynamic Dividend Fund (NYSE: “ AGD ”) and the reorganization of IVH into abrdn Income Credit Strategies Fund (NYSE: “ ACP ”) (together, the “Reorganizations”), will each be completed by the open of business on the New York Stock Exchange on Monday, March 13, 2023, subject to the satisfaction of customary closing conditions. To facilitate the Reorganizations, all shares of DDF, DEX, and IVH will cease trading on the New York Stock Exchange as of market close on Friday, March 10, 2023.

December 22, 2022 | Macquarie Global Infrastructure Total Return Fund Inc. Announces Date of Reorganization Into abrdn Global Infrastructure Income Fund. Today, Macquarie Global Infrastructure Total Return Fund Inc. (the “Fund”), a New York Stock Exchange (NYSE)-listed closed-end fund trading under the symbol ( MGU ), announced that the anticipated closing date of the reorganization of the Fund into abrdn Global Infrastructure Income Fund, a NYSE-listed closed-end fund trading under the symbol ( ASGI ) (the “Reorganization”), will be completed by the open of business on the NYSE on Monday, March 13, 2023, subject to the satisfaction of customary closing conditions. To facilitate the Reorganization, all shares of the Fund will cease trading on the NYSE as of market close on Friday, March 10, 2023.

December 12, 2022 | Delaware Enhanced Global Dividend and Income Fund Announces Results of the Special Shareholder Meeting Relating to the Proposed Reorganization With abrdn Global Dynamic Dividend Fund and Self-Tender Offer for up to 30% of Its Shares. Today, Delaware Enhanced Global Dividend and Income Fund (the “Fund”), a New York Stock Exchange-listed closed-end fund trading under the symbol “DEX”, announced that it held its adjourned Special Meeting of Shareholders (the “Meeting”) on December 12, 2022. At the Meeting, shareholders of the Fund voted to approve the reorganization of the Fund into abrdn Global Dynamic Dividend Fund (the “Acquiring Fund”), a New York Stock Exchange-listed closed-end fund trading under the symbol “AGD” (the “Reorganization”). Today, the Fund announced that the previously announced potential self-tender offer for up to 30% of its shares will proceed. The Fund’s Board has authorized an issuer tender offer to purchase for cash up to 30% (or 3,186,291) of its issued and outstanding common shares, without par value (the “tender offer”). The tender offer will commence on Thursday, January 12, 2023, and will expire, unless extended, at 5:00pm ET, on Friday, February 10, 2023 , and purchases will be made at a price per share equal to 98% of the Fund’s net asset value per share as of the close of trading on the first business day after the expiration of the tender offer. If more shares are tendered than the amount the Board has authorized to purchase, the Fund will purchase a number of shares equal to the tender offer amount on a pro-rated basis.

November 9, 2022 | Eaton Vance Closed-End Funds Announce Proposed Merger. The Boards of Trustees of Eaton Vance Tax-Managed Buy-Write Strategy Fund ( EXD ) (the Acquired Fund) and Eaton Vance Tax-Managed Buy-Write Opportunities Fund ( ETV ) (the Acquiring Fund) have approved a proposal for the Acquired Fund to merge with and into the Acquiring Fund. The proposed merger is subject to approval by Acquired Fund shareholders at a Special Meeting of Shareholders scheduled for Thursday, February 2, 2023 . A proxy statement/prospectus containing information about the meeting and the proposed merger will be mailed to the Acquired Fund’s shareholders of record as of November 21, 2022. No action is needed by shareholders of the Acquiring Fund. Each Fund is a diversified closed-end management investment company sponsored and managed by Eaton Vance Management. Each Fund is listed on the New York Stock Exchange. The Acquired Fund has the same investment objectives and substantially the same investment policies and restrictions as the Acquiring Fund. Additional information regarding the proposed merger will be contained in the proxy statement/prospectus. The merger is currently expected to be completed in the first or second quarter of 2023, subject to required shareholder approvals and the satisfaction of applicable regulatory requirements and customary closing conditions. If the merger is approved, each Acquired Fund shareholder will be issued common shares of the Acquiring Fund at an exchange ratio based on the Funds’ respective net asset values per share. Following the merger, the Acquiring Fund will continue to be managed in accordance with its existing investment objectives and strategies.

Recent activist or other CEF news

These are from the past month. Any new news in the past week has a bolded date:

January 9, 2023 | BlackRock Closed-End Fund Share Repurchase Program Update. BlackRock Advisors, LLC (“BlackRock”) released today share repurchase activity for certain BlackRock-advised closed-end funds (the “Funds”) during the quarter ended December 31, 2022. The Funds have authorized open market share repurchase programs (the “Repurchase Programs”) pursuant to which each Fund may repurchase, through November 30, 2023, up to 5% of its outstanding common shares in open market transactions. The Repurchase Programs seek to enhance shareholder value by purchasing Fund shares trading at a discount from their net asset value (“NAV”) per share, which could result in incremental accretion to a Fund’s NAV. Below is a summary of share repurchase activity over this past quarter and since the inception of each Fund’s Repurchase Program:

Summary of share repurchase activity during the most recent calendar quarter ended December 31, 2022:

The amount and timing of any repurchases under each Fund’s Repurchase Program will be determined either at the discretion of the Fund’s management or pursuant to predetermined parameters and instructions subject to market conditions. There is no assurance that any Fund will repurchase shares in any particular amounts. A Fund’s repurchase activity will be disclosed in its shareholder report for the relevant fiscal period. Any repurchases made under any Repurchase Program will be made on a national securities exchange at the prevailing market price, subject to exchange requirements and certain volume and timing limitations and other regulations under federal securities laws.

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Distribution changes announced this month

These are sorted in ascending order of distribution change percentage. Funds with distribution changes announced this month are included. Any distribution declarations made this week are in bold. I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information. I've separated the funds into two sub-categories, cutters and boosters.

Cutters

Boosters

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Commentary

The RSF rights offering results will be discussed in a separate article released to the public side.

2. DEX tender offer expiring

A reminder that the tender offer for Delaware Enhanced Global Dividend and Income Fund ( DEX ) expired on February 10, 2023 . We discussed this offer in a previous CEF Weekly Roundup . As a reminder, this tender offer is for 30% of all shares at 98% of NAV.

We purchased DEX in our Tactical Income-100 portfolio last month to take advantage of this tender offer. As DEX is trading at a discount of -6.87% (as of 2/2/2023), it is still advantageous to tender shares. Our portfolio tendered 100% of our DEX shares in the portfolio.

Don't forget to inform your broker of your intention to tender shares, as the default action is not to tender! Moreover, be aware brokers may have earlier internal deadlines for corporate actions compared to the official expiry date of the offer. Finally, your broker may charge a fee for executing this voluntary corporate action, but some of our members have reported getting this fee waived by using a persistent phone call to their customer service representative.

3. New corporate actions tracker

On the topic of the Delaware funds, the mergers of four Delaware funds into the abrdn funds are slated to be completed in about one month's time, on March 10, 2023 (press releases here and here ). We have previously discussed the mergers in a previous CEF Weekly Roundup .

Because the mergers are on an NAV-to-NAV basis, it makes sense to buy the cheapest of every group of funds undergoing consolidation, regardless of whether it is the acquiring fund or the target being acquired.

To help our members keep track of this and other opportunities for obtaining alpha, I have created a corporate actions tracker page on Google Sheets that will be updated as soon as new corporate actions (i.e. rights offerings, tender offers, mergers, liquidations, are announced).

We can see from the tracker that the spread between the acquiring fund, ACP, and the acquired fund, IVH still remains very wide at +10.17%. In other words, those who own ACP should buy swap to IVH. We bought IVH in our Tactical Income-100 portfolio towards the end of last year to take advantage of this discount spread.

Those who purely want to extract the alpha from this discount spread can short ACP whilst simultaneously buying IVH, which is what I've also done in my personal account (as our portfolios do not hold short positions). However, shorting should only be done by experienced investors.

For further details see: