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Explorer ○○○

Pimco article on SA

4 Replies
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Contributor ○○○

Re: Pimco article on SA

Thanks, Mary.

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Explorer ○○

Re: Pimco article on SA

Thanks Mary

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Contributor ○○○

Re: Pimco article on SA


@marymary wrote:

Alpha Gen Capital has a new article out this morning with his observations of Pimco cefs.  It's a good read.

https://seekingalpha.com/article/4333818-pimco-cef-update-2008-redux?utm_medium=email&utm_source=see...


As with anything this complicated, I would urge caution taking ANYTHING at face value.  Specifically, I saw the opinion that distributions shouldn't be cut, but I don't see any explanation as to why the PCI NAV dropped 32% over the last month!  In fact, the article says that it's unlikely that the funds will have to de-lever!  I believe the drop in fund NAVs represents the net effect of deleveraging that has already occurred this month.

If so, the NAV should settle into the $15 range and stay there, until the fund can leverage up again.  If so, Pimco should be able to 'project' the remaining 9 months distributions, and adjust accordingly.  That would come out next month.

At any rate, we'll, obviously, see.  I, for one, sold out my PCI last week.  I won't consider going back in until I see the NAV turn around and start going up.

 

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Explorer ○○

Re: Pimco article on SA

Not that distributions "shouldn't be cut" but that they are "unlikely" to be cut.  I put an explanation of why the NAV is down - look at non-agency MBS.  IOFIX was given as an example.  Money flowing out of that fund (among others) is driving down the price of non-agencies.   This affects all holders of non-agencies despite the fact that they may not be selling.  PCI and PDI are half non-agencies and half HY global debt.  Both are down big right now.  Add in a bit of gearing and you have the reason for the NAV being down so much.   

Delevering would not drop the NAV by 30%.

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