Business & Finance
Business and Finance
Business and Finance
Wed, March 16, 2011
Tue, March 15, 2011 Fitch Affirms Preferred Share Ratings of New America High Income Fund at 'AAA'
NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings has affirmed the 'AAA' rating assigned to the following preferred shares issued by New America High Income Fund (NYSE: HYB), a closed-end fund managed by T. Rowe Price Associates, Inc. (T. Rowe Price):
--$85,425,000 of auction term preferred stock (ATPs), consisting of Series A, B, C and D, each with a liquidation preference of $25,000 per share.
The affirmation follows Fitch's annual review of the fund. The 'AAA' ratings are based on sufficient asset coverage provided to the ATPs by the fund's underlying portfolio of assets, the structural protections afforded by mandatory de-leveraging provisions in the event of asset coverage declines, the legal and regulatory parameters that govern the fund's operations and the capabilities of T. Rowe Price as advisor. Fitch's ratings assigned to the ATPs speak only to timely repayment of interest and principal in accordance with the governing documents and not to potential liquidity in the secondary market.
As of Feb. 25, 2011, the fund had assets of approximately $333 million and leverage of $89 million, or 27% of assets. Leverage consisted of approximately $4 million in current liabilities and $85 million of rated ATPs. As of the same date, the fund's asset coverage ratios, as calculated in accordance with the Fitch total and net overcollateralization tests (Fitch OC tests) per the 'AAA' rating guidelines outlined in Fitch's applicable criteria, were in excess of 100%, which is the minimum asset coverage amount deemed consistent with an 'AAA' rating. The fund's governing documents require that asset coverage for the ATPs, as calculated in accordance with the Fitch OC tests, be maintained in excess of 100%. As such, should the asset coverage decline below 100%, the governing documents require the fund to alter the composition of its portfolio toward assets with lower discount factors, or to reduce leverage in a sufficient amount to restore compliance within a 29 business day period.
Additionally, as of the same date, the fund's asset coverage ratios for total outstanding ATPs, as calculated in accordance with the fund's interpretation of the Investment Company Act of 1940, was in excess of 200%, which is also a minimum asset coverage required by the fund's governing documents.
As of Feb. 28, 2011, the portfolio consisted mainly of U.S. dollar denominated high-yield corporate securities. The fund was highly diversified by industry and issuer, and therefore, no additional overconcentration discount factors were applied in calculating the Fitch OC tests.
The fund is a diversified, closed-end management investment company, registered under the Investment Company Act of 1940, as amended. T. Rowe Price acts as the investment advisor to the fund. T. Rowe Price is headquartered in Baltimore, MD, but maintains offices in 12 countries, and employs nearly 5,000 associates. T. Rowe Price serves individual, financial intermediary and institutional clients. As of Dec. 31, 2010, T. Rowe Price had approximately $482 billion of assets under management. The New America High Income Fund, Inc. performs all other support functions for the fund.
The ratings may be sensitive to material changes in the credit quality or market risk profiles of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause the rating to be lowered by Fitch. For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.
Additional information is available at '[ www.fitchratings.com ]'.
The sources of information used to assess this rating were the public domain and Eaton Vance Management.
Applicable Criteria and Related Research:
--'Closed-End Fund Debt and Preferred Stock Rating Criteria' (Aug. 17, 2009);
--'Fitch Launches 'CEF Updates' for Closed-End Fund's (Nov. 8, 2010);
--'Closed-End Fund: Evolving Use of Leverage and Derivatives' (Sept. 27, 2010);
--'Closed-End Fund: Redemptions Provide Some Liquidity to Illiquid ARPS Market' (Aug. 31, 2010);
--'Closed-End Fund: Fitch Clarifies Criteria for Make-Whole Amounts and Other Prepayment Obligations' (March 18, 2010).
Applicable Criteria and Related Research:
Closed-End Fund Debt and Preferred Stock Rating Criteria
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=462492 ]
Closed-End Funds: Evolving Use of Leverage and Derivatives
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=559525 ]
Closed-End Funds: Fitch Clarifies Criteria for Make-Whole Amounts and Other Prepayment Obligations
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=504986 ]
Closed-End Funds: Redemptions Provide Some Liquidity to Illiquid ARPS Market
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=552106 ]
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: [ HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS ]. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '[ WWW.FITCHRATINGS.COM ]'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
