PIMCO CEF Distribution Cuts

[Fearchar]

A few days ago, PIMCO cut the monthly distribution from the PTY, PFL and PFN funds.

The market distribution rates of some PIMCO CEFs are now as follows:

PHK 8.53%
PTY 8.57%
PCI 9.45%
PDI 9.42%
PFL 9.08%
PCM 8.40%
PGP 7.32%

A few weeks ago, before the cut, PTY was trading at a 7.30% distribution rate.
PTY and PHK are very similar being into high yields, so it actually makes sense for them to trade at the same rate.
However, notice that they are trading at a lower rate than PCI/PDI, which are mortgage based.
PGP, based on equities is trading at the lowest distribution rate.

The market appears to be priced for near perfection.
ICE BofAML HY spread is only 3.16%, about as low as it can go.
5 year TIPs are -1.69%, also about as low as it can go.
Baa bonds are going for 3.21%.
The spread between forward S&P500 earnings and Baa is 1.5%; low end of it's range.

So, while these cuts may have surprised some, there are no great buys among these funds either.
Although I've owned some of these funds in the past, I have no current position, but
will continue to monitor.

[richardsok]

Thank you, Fear. We've been discussing Pimco CEFs on these boards since Moses was in short pants and most posters would generally agree with your assessment.

I for one would be happy for an opportunity to return to a few of these funds, but it would take a big change in coverage ratios or a deep price plunge to make them attractive again.

I no longer follow these CEFs, but if you do, I'm sure many here would welcome any meaningful news about them down the line.

[nobhead]

Fearchar , Think distribution rate (compared to market value)is lower now since the cut for the following:

PTY 7.83%
PFL 8.22%
PFN 8.49%

I did not check the others.

I have too much in several of the Pimco bond CEF's. My biggest holding is PTY. Been a good run but hard fall in last week.

Edit: Welcome to the Big Bang Board. Did not realize you were a new member.

Nob

[bf22]

Sept 4, 2021 16:00:39 GMT nobhead said:

Fearchar , Think distribution rate (compared to market value)is lower now since the cut for the following:

PTY 7.83%
PFL 8.22%
PFN 8.49%

I did not check the others.

I have too much in several of the Pimco bond CEF's. My biggest holding is PTY. Been a good run but hard fall in last week.

Edit: Welcome to the Big Bang Board. Did not realize you were a new member.

Nob

The price for some of these came down on Friday.

Now:

PTY 8.57%
PFL 9.08%

PFN  9.43% 

 

I'm still holding some Pimco CEFs, but most of my CEFs are currently somewhere else (KIO, NZF, UTG).