BlackRock considers refinancing options for auction-rate preferreds

By Toni Weeks

San Diego, May 13 - BlackRock Advisors, LLC and the boards of directors/trustees of the BlackRock closed-end funds are considering alternative financing options for every BlackRock closed-end fund with outstanding auction-rate preferred shares.

According to a press release, BlackRock is in negotiations with various liquidity providers regarding the issuance of alternative preferred stock structures, such as variable-rate demand preferreds and variable municipal term preferreds, and the expanded use of tender option bonds in order to provide liquidity to holders of the auction-rate preferreds.

If the negotiations are successful, the company intends to redeem outstanding auction-rate preferreds over the next year when it is in the best interest of each fund and its respective shareholders, the release said.

There is no guarantee that any or all of a fund's auction-rate preferreds will be redeemed. The timing for initiating alternative financing may vary and is subject to many factors that include approval by the board, the ability to obtain necessary ratings, the willingness of buyers to invest in alternative financing, the eligibility of collateral held by the funds, term-related considerations, market conditions such as interest rates, the availability of alternative financing and the cost, benefits and tax consequences to fund shareholders.

BlackRock is an investment management firm based in New York.

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