Muni Fund Investors Squeezed as Flattening Curve Reduces Payouts
- UBS can’t recall time in “recent memory” with so many cuts
- Higher borrowing costs, lower reinvestment rates hurt payout
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Investors who’ve come to depend on steady income checks from leveraged municipal-bond funds are starting to feel the pinch from the narrowing in the difference between short- and long-term borrowing rates.
BlackRock Inc., Nuveen Investments Inc. and Eaton Vance Corp. earlier this month made widespread cuts to distributions in their closed-end funds as the cost to borrow to boost returns rose and higher yielding bonds held were called as longer-term rates fell. The three companies are among the biggest providers of closed-end funds.