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17 Mar 2011
New York, March 17, 2011 -- Moody's Investors Service has assigned a rating of Aaa to $51.6
million in MuniFund Term Preferred Shares (MTP) Series 2014 to be issued
by Nuveen New Jersey Dividend Advantage Municipal Fund (NYSE: NXJ),
a closed-end fund listed on the New York Stock Exchange.
The MTP shares are subject to a term redemption on April 1, 2014.
Proceeds from the offering will be used to redeem all currently outstanding
Municipal Auction Rate Cumulative Preferred Shares (ARPS) that had been
issued by the fund.
The rating reflects the fund's strong capacity to meet its dividend
payment obligations, over-collateralization levels of its
preferred shares and adherence to conservative asset coverage maintenance
provisions. "In addition to Nuveen's effective portfolio management
practices, it has in place deleveraging requirements in the event
of coverage ratio breaches," said Moody's Senior Vice President
Nuveen New Jersey Dividend Advantage Municipal Fund, with total
net assets of $134.6 million, invests, under
normal circumstances, in municipal securities and other related
investments the income of which is exempt from both regular federal income
taxes and New Jersey income taxes.
Once issued, the leverage of the fund, assuming overallotments,
is expected to increase slightly but still remain inside the range consistent
with Moody's Aaa ratings for state-specific municipal bond funds.
On a pro-forma basis, leverage is projected at about 38%
when exposure to tender option bonds is included. On the same pro-forma
basis, but excluding tender option bonds, leverage is projected
to be approximately 36%.
The MTP shares issued by the fund, which pay dividends at a fixed
rate, are subject to a term redemption on April 1, 2014.
Further, there are mandatory redemption provisions that are triggered
if the fund fails to maintain an asset coverage ratio of 225% as
defined in the terms of the MTP shares (which is more conservative than
the 200% asset coverage ratio pursuant to the Investment Company
Act of 1940) or an effective leverage ratio of 45% as defined in
the terms of the MTP shares and including preferred shares and tender
option bonds. This is in addition to the Moody's coverage ratio
and guidelines that are also applicable.
To mitigate the risk of a short-fall at maturity, the fund
is also required to segregate securities starting five months prior to
redemption, with a value equal to at least 110% of the redemption
On a pro-forma basis the fund is projected to achieve a Moody's
coverage ratio 272%, based on factors consistent with a rating
of Aaa. This is well in excess of Moody's 100% coverage
ratio applicable to this fund.
Also, the rating on the outstanding ARPS issued by the fund is affirmed.
These consists of 1,757 ARPS in the amount of $43,925,000.
The shares will be defeased by the proceeds from the MTP shares and then
redeemed after a required 30-day notice period has elapsed.
The most recent rating action affecting obligations issued by the fund
occurred at the time of the assignment of ratings to the ARPS on or about
Nuveen Fund Advisors, Inc. is the fund's investment adviser,
responsible for determining the fund's' overall investment strategy.
Nuveen Investments and its affiliates had approximately $197 billion
of assets under management as of December 31, 2010, of which
over a third was in municipal securities.
Moody's uses a market value type approach to rate the obligations issued
by closed-end funds. Under this form of analysis,
a fund's assets serve as collateral and provide an asset coverage cushion
that protects investors against a sudden and severe decline in the value
of the portfolio assets for a given exposure period and target rating
level. The asset coverage cushion accounts for the sum of a fund's
liabilities, including the face amount of preferred stock outstanding
or other debt instruments, accumulated and projected interest and
dividend payments and certain fund expenses that must be fully covered
by the discounted value of eligible securities. In addition,
the analysis extends to the fund's intrinsic ability to generate income
to cover dividend payments.
Other inputs in the determination of the rating are: a) quantitative
assessment of total leverage, the fund's capital structure,
amount and nature of the collateral, including credit quality of
investments, diversification guidelines, and exposure period,
and b) our qualitative assessment of the various funds' structural and
organizational considerations, governing documents combined with
requirements to perform in accordance with such documents, and monitoring
practices, portfolio management, and other relevant investment
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information, confidential and proprietary Moody's Analytics'
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of assigning
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
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The date on which some Credit Ratings were first released goes back to
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and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
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Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Senior Vice President
Managed Funds Group
Moody's Investors Service
Senior Vice President
Managed Funds Group
Moody's Investors Service
Moody's Investors Service
Moody's Assigns Aaa rating to MuniFund Term Preferred Shares issued by Nuveen New Jersey Dividend Advantage Municipal Fund
250 Greenwich Street
New York, NY 10007
No Related Data.
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