Eaton Vance Obtains Private $580M for 3 Closed-End Funds

After failing to redeem $580 million of the shares of three of its tax-free closed-end funds, Eaton Vance has successfully obtained private financing for the preferred shares in question.

Eaton is the second fund outfit to announce failures in the auction market for preferred shares. Earlier this month, BlackRock said it was having the same problem in tax-free muni closed-end funds it runs.

This makes it the second time, now, a fund company has been forced to redeem shares of a tax-free fund. The total number of shares in question, 23,200, will be sold at $25,000 a share, plus dividends, and represent a large portion of the funds outstanding auction preferred shares.

The three funds are the Eaton Vance Insured California Municipal Bond Fund, Eaton Vance Insured Municipal Bond Fund and the Eaton Vance Municipal Bond Fund, which are redeeming 55%, 63% and 65% of their auction preferred shares, respectively.

Eaton Vance manages 29 closed-end funds, with $5 billion in APS, as of Dec. 31. The firm is holding a conference call on Friday, April 25 at 11 a.m. to discuss the tender-option sale, which will be handled through funds of tender option bonds (TOBs) via a special-purpose trust. The trust, in turn, will issue two classes: floater certificates and residual certificates.

Those interested in Friday’s conference call should dial: 1-888-562-3356, access code 44823127. Participants can submit questions to: CEFQuestions@eatonvance.com. Beginning at 1 p.m. on Friday, April 25, a recording of the call will be available at: 1-800-642-1687.