Pimco High Income Fund Posts Record Losses
The year of 2008 has ushered in its share of bad news for closed-end fund investors. The latest fund to join that bandwagon: Pacific Investment Management Company’s High Income Fund. The fund, which invests in corporate debt rated below investment grade, has plummeted in value recently, falling to $5.10 on Nov. 6 in mid-day trading from a high of nearly $15 in June 2007.
Now because the value of the securities in the Pimco High Income Fund’s portfolio has fallen below what is required by law, the fund says it plans to suspend the declaration of its next dividend payment to shareholders, which is scheduled for December. On Oct. 11, the fund postponed a payment of 12.1875 cents per share to shareholders because of adverse market conditions.
Allianz Global Investors Fund Management LLC serves as the investment manager of the Pimco High Income Fund.
On Oct. 17, 2008, Fitch Ratings, one of the three big credit-rating agencies, placed a negative ratings watch on the auction-rate preferred shares of three Pimco closed-end funds, including the Pimco High Income Fund. The other two Pimco funds were the Pimco Floating Rate Strategy Fund (PFN) and the PIMCO Floating Rate Income Fund (PFL).
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