MFS Investment Management to restructure up to 20% of auction shares with tender option bonds

By Cristal Cody

Springdale, Ark., June 25 - MFS Investment Management plans to restructure auction shares with tender option bonds to restore liquidity, according to a statement Wednesday.

The Boston-based management fund expects to restructure up to 20% of the leverage used by MFS California Insured Municipal Fund, MFS Investment Grade Municipal Trust, MFS Municipal Income Trust, MFS High Income Municipal Trust and MFS High Yield Municipal Trust.

Closed-end shareholders have faced continued uncertainty because of failed auctions.

To create a tender option bond, the fund will transfer a highly rated bond to a trust that will issue two classes of securities - floating-rate certificates and residual interest bonds.

The total cost of financing through tender option bonds is expected to be lower than the financing cost through auction preferred shares.

MFS Investment, which manages $184 billion in assets, said it is not sure when or if the remaining auction preferred shares will be redeemed.

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