PIMCO CEF October income sources

[keppelbay]

19a forms are out for the October distributions for some of the PIMCO CEFs.

These are interesting, in light of the most recent UNII reports:

PAXS was reported to be overearning its distro with coverage > 120% for the rolling 3 months. Yet, this months 19a reports 30+% of the Oct distro from non NII sources.

Similarly, 46% from non NII sources for PFN vs 85% coverage; 38% from non NII sources for PDI vs 82% coverage; and a whopping 63% from non NII sources for PDO vs 74% coverage.

This gives us an idea about how much of the distributable income is from non-GAAP NII sources. Whether this is useful or not, I don't now. At least PAXS has turned on the non-NII cash flow machine. Presumably the others can do so as needed, though PDO seems light on NII sources. 

I am inclined to think this indicates continued support for the current level of distributions for most of these funds.

[mnfish]

keppelbay,

The current PDI Total Expense Ratio (including interest expense) is 5.12%
Does anyone recall what it has been in the past? Say the last 2 years or so?

[keppelbay]

From PIMCO:

Management Fee 1.10%
Total Expense Ratio (excluding interest expense)* 1.92%
Total Expense Ratio (including interest expense)* 5.12%

from the annual report:
Management fees include fees payable to the Investment Manager for advisory services and for supervisory, administrative and other services. The Fund pays for the advisory, supervisory and administrative services it requires under what is essentially an all-in fee structure (the “unified management fee”). Pursuant to an investment management agreement, PIMCO is paid a Management Fee of 1.10% of the Fund’s average daily total managed assets. The Fund (and not PIMCO) will be responsible for certain fees and expenses which are, reflected in the table above, that are not covered by the unified management fee under the investment management agreement. Please see Note 9, Fees and Expenses in the Notes to Financial Statements for an explanation of the unified management fee.

You'll see that the bulk of the 5.12% is the cost of leverage. This figure will vary over time. The management fees have been constant, as far as I recall. If you want to be more certain of this, you can check older annual reports. I don't have ready access to those
mnfish,

[retiredat48]

keppelbay,...Hi. We have had discussions on possible PIMCO conversions of "swaps" in December, realizing some capital gains that can then go towards income, offsetting the NII shortfalls to date. My fingers are crossed,as I have been holding my positions!

R48

[keppelbay]

retiredat48,

thx. 

I was thinking that the coverage ratios indicated in UNII reports reflects actual cash flow, and not unrealized gains embedded in swaps. I don't imagine that they would/could report swap gains as distribution coverage until those gains have been realized. That might not be correct, but it seems logical. What do you think?

What struck me was how different the different CEFs are with respect to how much NII and non-NII coverage they report. They are clearly not simply interchangeable.

Like you, I remain optimistic.  The agressive buying over the past few days suggest that we aren't alone.

[retiredat48]

Nov 2, 2023 21:00:54 GMT keppelbay said:

retiredat48 ,

thx. 

I was thinking that the coverage ratios indicated in UNII reports reflects actual cash flow, and not unrealized gains embedded in swaps. I don't imagine that they would/could report swap gains as distribution coverage until those gains have been realized. That might not be correct, but it seems logical. What do you think?

R48:  That's what I mean.  Accounting does not permit showing cap gains as income until REALIZED.  Note how PIMCO CEFs all at once went to negative UNNI situations.  That may be where swaps got done.  PIMCO gave up current income to those who needed it (like borderline banks) to get higher cap gains down the road.

What struck me was how different the different CEFs are with respect to how much NII and non-NII coverage they report. They are clearly not simply interchangeable.

R48: What struck me was that in first year of operation, my memory is PAXS declared a bonus December special distribution.  Where did they get this  money from??  Perhaps swaps or other types of cap gains.

Like you, I remain optimistic.  The aggressive buying over the past few days suggest that we aren't alone.

[retiredat48]

keppelbay ,...BTW welcome here, and be advised that I follow your CEF holding decisions quite closely. Usually a job well done!

Consider this forum as a group of "like investors" who have known each other via years of posting, and simply discussing matters with known company.  We know everyone's biases and idiosyncrasies!

R48

[keppelbay]

retiredat48,
Thank you. I appreciate the intent of this forum and the constructive spirit that all of you folks bring to it.