NEW YORK--(BUSINESS WIRE)--Allianz Global Investors (AllianzGI), one of the world’s leading active investment managers, announced today that the AllianzGI Convertible & Income 2024 Target Term Fund (the “Fund”) has completed its initial public offering. The Fund raised $165,000,000 in its common share offering (before deduction of the sales load and offering expenses), excluding any exercise of the underwriters’ option to purchase additional common shares. The Fund has commenced trading on the New York Stock Exchange under the ticker symbol “CBH.”
The Fund is a diversified, limited-term, closed-end fund whose investment objectives are to provide a high level of income and to return at least $9.835 per common share (the original net asset value per common share before deducting offering costs of $0.02 per share) (the “Original NAV”) on or about its currently scheduled termination date of September 1, 2024. The Fund has a limited term feature, pursuant to which it intends, on or about September 1, 2024, to cease its investment operations, liquidate its portfolio (to the extent possible), retire or redeem any outstanding leverage facilities and distribute all its liquidated assets to its then record shareholders, unless the term is extended by the Fund’s Board of Trustees (for up to six months) and absent Trustee and shareholder approval to amend the limited term.
“We believe that today’s current interest rate environment presents special challenges for some income-oriented investors,” said Douglas Forsyth, CIO US Income & Growth Strategies with Allianz Global Investors. “The AllianzGI Convertible & Income 2024 Target Term Fund dynamically allocates among convertible securities, high yield securities and senior secured loans, potentially allowing clients to receive high current income while participating in the upside movement of the equity markets, with potential downside protection.”
Under normal market conditions, the Fund seeks to achieve its investment objectives by investing in a diversified portfolio of convertible securities and income-producing debt instruments, primarily of U.S. issuers. The Fund will normally invest at least 80% of its managed assets in a diversified portfolio of convertible securities and income-producing debt instruments. It is anticipated that the Fund’s income-producing debt instruments will include high-yield securities (sometimes referred to as “high yield” or “junk” securities) (securities that are rated below investment grade or determined to be of comparable quality by the Fund’s investment manager) and senior secured loans.
If the underwriters were to exercise their option to purchase additional common shares in full, which may not occur, the Fund would raise a total of $188,500,000 (before deduction of the sales load and offering expenses). The underwriters may exercise all or a part of their option to purchase additional common shares up to 45 days after the initial public offering. Assuming the use of leverage of approximately 28% of the Fund’s managed assets and depending upon the amount of the underwriters’ option to purchase additional common shares that is exercised, the Fund’s managed assets may range from approximately $225 million to approximately $255 million.
The Fund intends to pay a regular monthly income distribution to holders of common shares. Its initial monthly distribution is expected to be declared approximately 30 to 45 days after the completion of this offering and paid approximately 45 to 60 days after the completion of this offering, depending on market conditions.
Allianz Global Investors U.S. LLC (“AllianzGI U.S.”) serves as the investment manager of the Fund. AllianzGI U.S. is a wholly owned indirect subsidiary of Allianz Asset Management of America L.P. (“AAMA”) and of Allianz SE, a publicly traded European insurance and financial services company.
Wells Fargo Securities, BofA Merrill Lynch, Morgan Stanley and UBS Investment Bank were the co-lead underwriters in connection with the offering.
The Fund’s daily New York Stock Exchange closing prices, NAV per share, as well as other information, including updated portfolio statistics and performance will be available at us.allianzgi.com or by calling the Fund’s shareholder servicing agent at 1 800 254 5197.
About Allianz Global Investors
Allianz Global Investors is a diversified active investment manager with a strong parent company and a culture of risk management. With 25 offices worldwide, we provide global investment and research capabilities with consultative local delivery. We have more than $524 billion in AUM for individuals, families and institutions worldwide and employ over 600 investment professionals.
At Allianz Global Investors, we follow a two-word philosophy: Understand. Act. It describes how we look at the world and how we behave. We aim to stand out as the investment partner our clients trust by listening closely to understand their challenges, then acting decisively to provide them with solutions that meet their needs.
Data as of March 31, 2017 (excluding AUM of entities held for sale); investment professionals as of December 31, 2016.
The Fund is a newly organized, diversified, limited-term, registered, closed-end management investment company with no operating history. Shares of closed-end investment companies, such as the Fund, usually trade on a national stock exchange, and these shares frequently trade at a significant discount from their NAV, which may increase risk of loss for investors.
Because of the risks associated with investing in high-yield securities and other risks associated with the Fund’s principal investment strategies, including, without limitation, the risk that the Fund may not return the Original NAV upon termination, limited-term risk and risks associated with the use of leverage, an investment in the Fund involves a high degree of risk and should be considered speculative. Investors should consider their investment goals, time horizons and risk tolerance before investing in the Fund. An investment in the Fund is not appropriate for all investors, and the Fund is not intended to be a complete investment program. Investors should consider the Fund’s investment objective, risks, fees and expenses carefully before investing, which are disclosed in the prospectus.
The Fund’s objective to return the Original NAV is not an express or implied guarantee obligation of the Fund, the Fund’s investment manager or any other entity, and an investor may receive less than the Original NAV upon termination of the Fund. Because the assets of the Fund will be liquidated in connection with its termination, the Fund may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable, or at a time when a particular security is in default or bankruptcy, or otherwise in severe distress, which may cause the Fund to lose money. In seeking to return the Original NAV on or about its termination date, the Fund intends to utilize various portfolio and cash flow management techniques, including setting aside a limited portion of its net investment income, possibly retaining all or a portion of its gains and limiting the longest expected maturity of any holding, other than floating-rate senior secured loans, to no later than March 1, 2025. As a result, the average maturity of the Fund’s holdings is generally expected to shorten as the Fund approaches its termination date, which may reduce interest rate risk over time, but may also reduce returns and net income amounts available for distribution to common shareholders.
Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar quality. The market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline. Investments in debt securities typically decline in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower rated and unrated securities present a greater risk of loss to principal and interest than higher rated securities. Instruments of below investment grade quality are regarded as having predominantly speculative characteristics with respect to capacity to pay interest and to repay principal, and are commonly referred to as “high yield” securities or “junk bonds.” Secured loans provide lenders with an interest in underlying collateral that is intended to reduce the risk of loss in bankruptcy or bankruptcy-like scenarios. However, there can be no assurance the liquidation of such collateral would satisfy an issuer’s obligation to the Fund in the event of issuer default or that such collateral could be readily liquidated under such circumstances.
The prospectus, which contains this and other information about the Fund, should be read carefully before investing. There can be no assurance that the Fund will achieve its investment objective or be able to structure its investment portfolio as anticipated.
This document is not an offer to sell securities and is not a solicitation of an offer to buy securities, nor will there be any sales of securities in any jurisdiction where the offer or sale is not permitted.
An investment in the Fund involves risk, including loss of principal. Past performance is no guarantee of future results.
This material may include statements that constitute “forward-looking statements” under the U.S. securities laws. Forward-looking statements include, among other things, projections, estimates and information about possible or future results related to the Fund, market or regulatory developments. The views expressed herein are for informational purposes only and are not guarantees of future performance or economic results and involve certain risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially from the views expressed herein. The views expressed herein are subject to change at any time based upon economic, market, or other conditions and the Fund undertakes no obligation to update the views expressed herein. While we have gathered this information from sources believed to be reliable, the Fund cannot guarantee the accuracy of the information provided. The views expressed herein do not constitute a recommendation by AllianzGI U.S. to buy, sell or hold any security. The views expressed herein (including any forward-looking statement) may not be relied upon as investment advice or as an indication of the Fund’s trading intent. Information included herein is not an indication of the Fund’s future portfolio composition or the extent to which the Fund may utilize leverage.