Nuveen Launches 4 Closed-End Muni Funds (NCB, NJV, NYV, NPN)

Nuveen Investments has completed the initial public offering of four new state-specific closed-end funds for municipal bind investors. The funds will begin trading on the NYSE Amex today and the total funds raised came to about $135 million in proceeds.  These funds are broken down as follows:

• Nuveen California Municipal Value Fund 2 (NCB) for $50 million,
• Nuveen New Jersey Municipal Value Fund (NJV) for $25.1 million,
• Nuveen New York Municipal Value Fund 2 (NYV) for $40.4 million,
• Nuveen Pennsylvania Municipal Value Fund (NPN) for $19 million.

The new funds will consist primarily of investment-grade municipal bonds, and seek to provide attractive monthly income exempt from federal income taxes with no leverage from preferred shares.

Nuveen Asset Management is the fund’s adviser and is responsible for determining the fund’s overall investment strategy; and the lead manager of the common share underwriting syndicate was Merrill Lynch, Pierce, Fenner & Smith Incorporated (now Bank of America).

This is an interesting time to sell muni-bond funds because the discourse in the financial markets increased the cost of funds for local governments and other municipalities.  That has in turn brought up the dividend possibilities for new investors.  The higher tax rates coming down the pipe from the federal income taxes and the losses seen in equities may make these funds attractive to many newer investors besides retirees and millionaires who are looking for tax-free income.

JON C. OGG