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09 Sep 2003
MOODY'S ASSIGNS Aaa RATINGS TO AUCTION MARKET PREFERRED SHARES ISSUED BY EVERGREEN MANAGED INCOME FUND, INC.
Approximately $400.0 Million of Debt Securities Affected.
New York, September 09, 2003 -- Moody's Investors Service assigned Aaa ratings to Auction Market Preferred
Shares (AMPS) issued by the Evergreen Managed Income Fund, Inc.(AMEX:
ERC), a closed-end fund listed on the American Stock Exchange
that commenced trading on June 27, 2003. The Fund issued
3,200 Series T28 Auction Market Preferred Shares, 3,200
Series Th28 Auction Market Preferred Shares, both of which pay dividends
on a 28-day cycle, as well as 3,200 Series M7 Auction
Market Preferred Shares, 3,200 Series W7 Auction Market Preferred
Shares and 3,200 Series F7 Auction Market Preferred Shares which
pay dividends on a 7-day cycle. The liquidation preference
of each series of shares is $25,000. Moody's Aaa ratings
reflect its assessment that the auction preferred shares issued from this
closed-end fund constitute top quality investments with good asset
protection and low risk of dividend impairment consistent with the expected
loss profile of other Aaa rated securities.
The Fund's investment objective is to seek a high level of current income
consistent with limiting its overall exposure to domestic interest rate
risk. The Fund allocates its assets among three separate investment
strategies. Under normal market conditions, the Fund allocates
approximately 50% of its total assets to an investment strategy
that focuses primarily on below investment grade (high yield) U.S.
debt securities, loans and preferred stocks; approximately
25% of its total assets to an investment strategy that focuses
primarily on foreign debt securities including obligations of foreign
governments or governmental entities, foreign corporations or supranational
agencies denominated in various currencies; and approximately 25%
of its total assets to an investment strategy that focuses primarily on
securities that have interest rates that re-set at periodic intervals
including mortgage-backed securities, asset-backed
securities and collateralized mortgage obligations issued or guaranteed
by the U.S. government, its agencies or instrumentalities.
The AMPS represent approximately 33 1/3% of the Fund's capital
immediately following their issuance. Moody's notes that under
current market conditions the new Fund, by issuing preferred obligations
and investing the net proceeds of such issuance in accordance with fund
investment policies, is enabled to increase earnings per common
share.
Moody's Aaa ratings assigned to the preferred shares represent an assessment
that the market value of the underlying assets of the portfolio is sufficient
to provide good asset protection and low risk of dividend impairment to
investors in the preferred stock. In addition to satisfying regulatory
requirements, Moody's rating guidelines require that closed-end
funds support preferred stock issues with eligible assets in amounts that
are sufficient to withstand a severe loss in value. To meet Aaa
preferred stock rating requirements, funds adhere to stricter coverage
and diversification standards, by seeking to reduce underlying obligor
concentrations. These rating agency guidelines supplement regulatory
requirements which mandate asset maintenance ratios of 200% to
cover the Fund's senior securities pursuant to Section 18 of the Investment
Company Act of 1940. To this end, assets are stress tested
to determine the adequacy of coverage ratios to sustain particular rating
levels.
The goal of the allocation decision by the Fund's investment advisor is
to effectively capture the diversification benefits provided by the low
return-correlation across the selected asset classes while sustaining
portfolio income generation through the interest rate cycle. An
actively managed high yield allocation is expected to provide some total
return upside with income while interest rates increase. Highly
rated adjustable rate mortgages represent a strategic income generating
asset allocation which, on a weighted portfolio basis, is
expected to elevate portfolio credit quality while decreasing basis risk.
The Fund's exposure to international fixed-income aims to provide
added diversification benefits to developed markets and add to portfolio's
risk adjusted return.
In further support of the Aaa ratings, Moody's believes that the
management oversight provided by Evergreen and its sub-adviser,
coupled with empirical price and return data of high yield, adjustable
rate mortgage backed and international fixed income securities reflect
a low correlation profile which should mitigate net asset value volatility
given portfolio investment guidelines. Asset coverage for the preferred
securities issued by the Fund is strong, and is expected to be stable
given the reduced correlation associated with the Fund's exposure to the
three principal asset classes.
Evergreen Investment Management Company, LLC is the Fund's investment
adviser. The firm through its predecessors has been managing mutual
funds and private accounts since 1932 and, as of March 31,
2003, with its affiliates, managed over $229 billion
in assets, including more than $97 billion in fixed income
assets. The Fund's sub-adviser, Evergreen International
Advisors, is responsible for the management of the international
fixed income segment of the Fund. This London-based international
unit, with over 30 years of experience investing international fixed
income, manages approximately $8 billion in assets.
Both firms are wholly-owned subsidiaries of Wachovia Corporation.
New York
Henry Shilling
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Martin Duffy
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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