MainStay DefinedTerm fund seeks capital for investing in muni bonds

By Susanna Moon

Chicago, April 25 - MainStay DefinedTerm Municipal High Income Fund registered to sell common shares at $20 each for investment purposes in an N-2 filing with the Securities and Exchange Commission.

The fund will have a term of about 12 years and invest at least 80% of its managed assets in municipal bonds of any rating category or that are unrated.

The fund will generally invest in municipal bonds that have a maturity of five years or longer at the time of purchase.

MacKay Shields LLC, the fund's sub-adviser, plans to invest at least 65% of the fund's managed assets in medium- to low-quality bonds, such as bonds rated BBB+ or lower by Standard & Poor's or Fitch Ratings or Baa1 or lower by Moody's Investors Service.

The sub-adviser plans to invest up to 10% of the managed assets in municipal bonds that are in bankruptcy proceedings, that are in default as to the payment of principal or interest or that are rated in the lowest rating category.

The fund may invest up to 100% of its managed assets in junk bonds, or those rated below investment grade, but it reserves the right to invest less than 65% of its managed assets in medium- to low-quality bonds if there is insufficient supply for investment, the filing noted.

Leverage may be used to achieve investment objectives, and the fund could invest in derivatives such as futures, options and swap agreements to seek enhanced returns or to reduce the risk of loss of some of its holdings.

New York Life Investment Management LLC is the fund's manager.

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