Nuveen gets infusion for ARS

The firm will refinance the auction rate preferred securities issued by its municipal closed-end funds.
MAY 21, 2008
Nuveen Investments LLC said today that it has received a commitment of up to $1.75 billion from an unidentified major financial institution to refinance the struggling auction rate preferred securities issued by the company’s municipal closed-end funds. A spokesman declined to name the financial institution in question. With the necessary liquidity now committed, the Chicago-based fund manager will be able to issue variable-rate demand-preferred instruments to replace the current ARPS used as leverage in its closed-end funds, according to a statement by Nuveen. Nuveen saw the market freeze on its ARPS last month when broker-dealers stopped conducting auctions that determine their rate of interest (InvestmentNews April 21). Another financial institution has agreed to help remarket the new shares, according to Nuveen officials. The deal for the new ARPS could take place within one to two months depending on whether money market funds and institutional investors decide to invest in them and if market conditions improve, the firm said.

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