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I AGREE
10 Nov 2014
New York, November 10, 2014 -- Moody's Investors Service, Inc. ("Moody's")
has assigned Aa2 long-term ratings to the new MuniFund Term Preferred
(MTP) shares and new Variable Rate Demand Preferred (VRDP) shares issued
by the Nuveen New Jersey Dividend Advantage Municipal Fund (Ticker:
NXJ). Moody's also assigned P-1 short-term
ratings to the VRDP shares. The new preferred shares have been
issued in connection with the merger into NXJ of Nuveen New Jersey Investment
Quality Municipal Fund, Inc. (Ticker: NQJ), Nuveen
New Jersey Premium Income Municipal Fund, Inc. (Ticker:
NNJ), and Nuveen New Jersey Dividend Advantage Municipal Fund 2
(Ticker: NUJ) (together, the "Merged Funds"). In addition,
Moody's affirmed the Aa2 long-term rating and P-1 short-term
rating of NXJ's outstanding VRDP shares.
Pursuant to the terms of the reorganizations, NXJ has issued the
new preferred shares in exchange for the outstanding preferred shares
of the three Merged Funds. Subsequently, the ratings of the
preferred shares (Series 2 VRDP shares for NQJ, Series 2 VRDP shares
for NNJ, and MTP for NUJ) of the three Merged Funds have been withdrawn.
NXJ's newly issued VRDP and MTP shares retain the same dividend
rate, mandatory term redemption and liquidation preference as the
VRDP and MTP shares of each respective Merged Fund.
The Aa2 long-term ratings of the MTP and VRDP shares are based
on NXJ's pro-forma adjusted leverage, portfolio profile
and fixed charge coverage, as calculated by Moody's, combined
with an assessment of the preferred shares' relative priority of claim.
The following is a list of the rating actions in connection with NXJ:
- 450 Series 1 VRDP Shares, aggregate liquidation preference
of $45.0 million -- Aa2 / P-1 affirmed
- 1,443 Series 2 VRDP Shares, aggregate liquidation
preference of $144.3 million -- Aa2 / P-1 assigned
- 886 Series 3 VRDP Shares, aggregate liquidation preference
of $88.6 million -- Aa2 / P-1 assigned
- 3,505,000 MTP Shares 2.00% Series 2015,
aggregate liquidation preference of $35.05 million -
Aa2 assigned
RATINGS RATIONALE
The long-term Aa2 ratings, affirmed and assigned to the VRDP
and MTP shares, are based on the following key rating factors derived
from a pro-forma NXJ portfolio, as of October 29, 2014,
with gross assets of approximately $1,092.5 million
and 38% leverage consisting of MTP shares, VRDP shares,
and tender option bonds (TOBs):
Adjusted Leverage
The fund's pro-forma risk adjusted asset coverage ratio,
at 150%, is strong and the risk of an Investment Company
of 1940 Act (1940 Act) breach is low at over 4.7 times, as
calculated by Moody's based on the portfolio's historic volatility and
leverage. The results are consistent with a score of Aaa for these
factors.
Portfolio Profile
The fund's portfolio profile, which captures the credit quality
and liquidity of the fund's holdings, reflect the strong credit
quality of municipal holdings that are invested in New Jersey (A1,
negative) across various general obligations, tax obligations,
revenue bonds, pre-refunded bonds as well as other security
types. The pro-forma portfolio has a weighted average credit
quality of A2.
The portfolio profile assessment is offset by weaker liquidity metrics
generally for municipal funds. In the case of NXJ, a New
Jersey state-specific fund where its single-state focus
concentration could be exacerbated in any future municipal market downturn,
further downward adjustments are taken to reflect this risk.
Fixed Charge Coverage
The fixed charge coverage ratio of the pro-forma portfolio is calculated
at 9.1 times when calculated on a trailing one-year basis.
This demonstrates the capacity on the part of NXJ to meet periodic dividend
payments from recurring earnings.
Relative Priority of Claim
In addition to assessing the key rating factors described above,
Moody's considers the priority of claim of a fund's specific security
types and any other qualitative factors relevant to the fund's credit
profile. In the case of preferred securities, which is the
instrument class associated with these ratings, a one- notch
downward adjustment from the senior rating profile suggested by the key
factors is made to reflect the subordinate position of investors holding
preferred stock relative to those holding senior unsecured debt obligations.
Nuveen Fund Advisors, LLC is the investment adviser for the funds,
responsible for determining each fund's overall investment strategy.
Nuveen Investments, Inc. and its affiliates had approximately
$231 billion of assets under management as of June 30, 2014.
The principal methodology used in this rating was "Moody's Methodology
for Rating Securities Issued by U.S. Closed-End Funds"
published in May 2013. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
James Chen
Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Yaron Ernst
MD - Managed Investments
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns Aa2 long-term ratings to preferred shares issued by Nuveen New Jersey Dividend Advantage Municipal Fund, post merger
No Related Data.
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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
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