Fitch Affirms Preferred Share Rating of Boulder Growth & Income Fund at
CHICAGO -- January 11, 2013
Fitch Ratings has affirmed the 'AAA' rating assigned to the following
preferred shares issued by Boulder Growth & Income Fund, Inc. (NYSE: BIF), a
leveraged equity closed-end fund co-advised by Boulder Investment Advisers LLC
(BIA) and Stewart Investment Advisers (SIA):
--$25,000,000 of auction market preferred shares (AMPS), series M28, with a
liquidation preference of $25,000 per share.
KEY RATING DRIVERS
The affirmation follows Fitch's review of BIF and reflects:
--Sufficient asset coverage relative to Fitch's published criteria;
--The structural protections afforded by mandatory de-leveraging provisions in
the event of asset coverage declines;
--The legal and regulatory parameters that govern the fund's operations;
--The capabilities of BIA as the investment advisor.
Fitch's ratings on the AMPS speak only to timely payment of dividends and
principal in accordance with the terms of the AMPS and not to potential
liquidity in the secondary market.
At the time of the rating affirmation, the fund's asset coverage ratio for
preferred stock, as calculated in accordance with the Investment Company Act
of 1940 (1940 Act), was in excess of 200%, which is the minimum asset coverage
required by the 1940 Act. Also, at the time of this affirmation, the fund's
asset coverage ratios, as calculated in accordance with the Fitch total and
net overcollateralization tests per the 'AAA' rating guidelines outlined in
Fitch's applicable criteria were in excess of 100%, which are the minimum
asset coverage amounts deemed consistent with an 'AAA' rating.
Should the asset coverage tests of the AMPS decline below their minimum
threshold amounts (as tested on the last business day of each week) and are
not cured within a pre-specified timeframe of six business days, the governing
documents require the fund to reduce the leverage in a sufficient amount to
restore compliance with the applicable asset coverage tests within a specified
Boulder Growth & Income Fund, Inc. is a non-diversified, closed-end management
investment company, registered under the Investment Company Act of 1940, as
amended, that commenced investment operations in October 1972. The fund's
investment objective is total return. The fund seeks to produce both income
and long-term capital appreciation by investing in a portfolio of equity and
debt securities. The fund invests primarily in common stocks, including
dividend-paying common stocks such as those issued by utilities, real estate
investment trusts and closed-end registered investment companies. The fund
also invests in fixed income securities such as U.S. government securities,
preferred stocks, and bonds. The fund invests primarily in securities of
U.S.-based companies and to a lesser extent in foreign equity securities and
sovereign debt, in each case denominated in foreign currency.
As of Nov.30, 2012, common equity securities constituted 85% of the portfolio,
auction-rate preferred stock issued by other closed-end funds comprised 3% of
the portfolio across two distinct securities, master limited partnership
interests in one energy company represented 3%, and a limited partnership
investment in one long-short equity fund represented 3% of the portfolio. The
remaining 6% of the portfolio consisted of cash equivalents and foreign
With respect to the fund's investments in auction-rate preferred stock issued
by other closed-end funds, the fund utilizes a third party pricing service to
price such securities. Fitch affords these types of assets 40% price credit in
its asset coverage tests, consistent with its treatment of the preferred stock
asset class outlined in its rating criteria.
The fund has invested 26% of total assets in common stock of Berkshire
Hathaway, Inc., which Fitch currently views as meeting the definition of a
broadly diversified investment portfolio or holding company. As such, Fitch
utilizes a higher maximum issuer concentration threshold at 20% for this
exposure (in contrast to the maximum 10% threshold utilized for largest
issuers per Fitch's criteria) when calculating Fitch total and net
The fund has no restrictions on its ability to invest in foreign securities.
Fitch notes that potential exchange rate risk associated with investments in
foreign denominated securities is included as part of Fitch's assessment of
the sufficiency of asset coverage available to rated AMPS.
Boulder Investment Advisers, LLC and Stewart West Indies Trading Company, Ltd.
(operating under the name Stewart Investment Advisers) act as the
co-investment advisers to the fund. As of Dec. 31, 2012, the co-investment
advisors along with Rocky Mountain Advisers, LLC, an affiliate, had
approximately $991.9 million of assets under management.
The rating assigned to the AMPS may be sensitive to material changes in the
leverage composition, credit quality of portfolio assets or market risk
profile of the fund. A material adverse deviation from Fitch guidelines for
any key rating driver could cause the ratings to be lowered by Fitch.
For additional information about Fitch rating guidelines applicable to debt
and preferred stock issued by closed-end funds, please review the criteria
referenced below, which can be found on Fitch's web site at
The sources of information used to assess this rating were the public domain,
BIA and SIA.
Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Closed-End Fund Debt and Preferred Stock Rating Criteria' (Aug. 15, 2012).
Applicable Criteria and Related Research:
Rating Closed-End Fund Debt and Preferred Stock
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Russ Thomas, +1-312-368-3189
70 West Madison Street
Chicago, IL 60602
Yuriy Layvand, +1-212-908-9191
Peter Patrino, +1-312-368-3266
Brian Bertsch, New York, +1-212-908-0549
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