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Fitch put three Gabelli funds preferreds on watch
Fitch Ratings said it placed on rating watch negative the AA ratings assigned to the auction rate cumulative preferred stock issued by Gabelli Equity Trust Inc., the auction market cumulative preferred shares issued by Gabelli Utility Trust and the AMPS of Gabelli Dividend & Income Trust.
The Fitch ratings above are assigned only to the auction preferred shares outstanding by each fund. Fitch said it has not reviewed or assigned ratings to the retail fixed-rate preferred shares outstanding by the funds.
“The 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 de-leverage,” the agency said in a press release.
“While the Gabelli closed-end funds were able to manage leverage and asset coverage in line with required guidelines specified in transaction documentation, risks remain with regards to the funds' ability to sell assets at sufficient valuations at stress levels corresponding to the current high ratings,” Fitch said.
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