Fitch trims AllianzGI fund preferreds

Fitch Ratings said it downgraded the ratings assigned to the senior secured notes issued by AllianzGI Diversified Income & Convertible Fund to AA from AAA and placed the notes on rating watch negative. The mandatory redeemable preferred shares issued by the fund also were placed on RWN.

The agency also downgraded to AA from AAA AllianzGI Convertible & Income Fund’s series A cumulative preferred shares and the auction-rate preferred shares and series A cumulative preferred shares issued by AllianzGI Convertible & Income Fund II. Fitch placed the ratings on RWN, too.

“The downgrade and RWNs reflect recent extreme market volatility and reduced asset liquidity, which have quickly eroded asset coverage cushions for closed-end funds and challenged fund managers' ability to deleverage. While the Allianz funds were able to manage leverage and asset coverage in line with required guidelines specified in transaction documentation, risks remain with regard to the funds' ability to sell assets at sufficient valuations at stress levels corresponding to the current high ratings,” Fitch said in a press release.

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