Eaton funds in failed auctions get financing

Eaton Vance Corp. of Boston today announced that three of its municipal income closed-end mutual funds caught in “failed” preferred securities auctions have secured new financing and will redeem approximately $580 million of their preferred shares. The redemptions would be the first involving tax-free closed-end funds caught in failed auctions. The Eaton Vance Insured Municipal Bond Fund, Eaton Vance Insured California Municipal Bond Fund and Eaton Vance Insured New York Municipal Bond Fund plan to redeem approximately 65%, 55% and 63%, respectively, of their outstanding auction-rate preferred shares, according to a company statement. The preferred shares are expected to be redeemed at the next dividend-payable date — on or after May 12. The replacement financing is being provided through a tender option bond program that will enable the funds to refinance auction-rate preferred shares without hurting common shareholders, according to Eaton Vance. This month, BlackRock Advisors LLC, a Wilmington, Del.-based unit of BlackRock Inc. of New York, announced that it has similar plans in place to redeem preferred shares issued by its tax-free closed-end muni funds, but it has not yet identified the funds that will be affected.