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Message Boards Settings PIMCO California Municipal Income Fund III (PZC) - Quote Info
Re: $45.5 million Treasury Swap     25-Jan-09 07:54 pm    
Re: "Is this very bad bet the source that ultimately caused the Dec. 2008 withholding of dividends due to the preferred stock's collateral coverage going under 200%?"

I think the primary factor was the significant decline in Municipal bond prices last fall. Leveraged funds experienced a greater decline in NAV than unleveraged funds. However, the loss on the Treasury Short position undoubtedly added to the decline in the value of the portfolio.

PCK had a similar loss from a Treasury short position. One of the reports showed a -$66.4M Short position increasing to -$77.8M in value which would have represented a loss of $11.4M.

I believe PIMCO suspended dividends on six leveraged Municipal bond funds as a result of the Preferred share asset coverage falling below 200%. The funds required a partial deleveraging before dividends could again be paid.

The next issue is whether earlier dividend levels can be maintained which would seem unlikely.
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KAWill


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  Subject Author Rating Time of Post (ET)  
 
Based on an email response from PZC's manager, the -$45...
loanaranger... (1 Rating) 16-Dec-08 12:04 pm  
 
I thought the underlying debt were auction rate se...
fourme@sbcg... (1 Rating) 16-Dec-08 03:53 pm  
 
At 9/30/08 the fund had $185 million in prefe...
loanaranger... (1 Rating) 18-Dec-08 12:07 pm  
 
It looks as though PIMCO has eliminated the Treasu...
KAWill (1 Rating) 24-Jan-09 05:01 pm  
 
Re: $45.5 million Treasury Swap
KAWill Not rated 25-Jan-09 07:54 pm  
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PIMCO California Municipal Income Fund III (PZC)

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