Nuveen making progress toward refinancing municipal bond funds' auction-rate preferreds

By Jennifer Lanning Drey

Portland, Ore., April 3 - Nuveen Investments, Inc. is making headway at addressing legal and regulatory issues related to the development of a new form of preferred stock that could be used to restructure the leverage of its municipal bond funds' auction-rate preferred stock, William Adams IV, senior executive vice president of U.S. structured products for Nuveen, said during a conference call held Thursday.

The company is in the process of developing a new form of preferred stock called a Money Market Preferred that would include a put feature and appeal to a broader investor audience including money market funds.

"Our hope continues to be to announce the first Money Market Preferred refinancing in the next two to three months, although significant work remains to be done including reaching an agreement with a put provider on reasonable terms," Adams said during the call, which was held to discuss Nuveen's plans for the refinancing of the funds' auction-rate securities.

Adams went on to caution that if the Money Market Preferred is successful, it will take considerably longer for Nuveen's municipal funds to refinance all of their auction-rate securities than it will its taxable funds.

"We are in one of the most challenging financing environments in many years and due to that and other regulatory, market and economic factors, Nuveen cannot be certain that it will be able to refinance all of its funds' auction-rate securities," he said.

Four taxable closed-end funds sponsored by Nuveen announced on Tuesday the refinancing of $714 million of their auction-rate securities.

Nuveen sponsors 120 closed-end funds, of which 100 are leveraged and have a total of $15.4 billion in ARPS outstanding. Of these 100 leveraged funds, 13 are taxable funds that invest in equities, government and corporate debt, or combinations, and have $4.3 billion of ARPS outstanding, and 87 are municipal bond funds that invest in municipal bonds and have $11.1 billion in ARPS outstanding.

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