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Press reports out today indicate the CNS is looking for 'new' financing for many of its closed end funds.

This is to replace the auction rate preferred (AMPS) debt they have used in the past. This financing provided for the leverage employed on many of the closed end funds they offer, and the favorable rates that this means of financing had provided allowed the leverage to add to the funds performance. The cost of financing was lower than the dividends that most of the holdings (mostly REIT assets) in the funds paid out, providing for a nice positive spread.

The AMPs market has been failing, causing much of this debt to rest at higher rates. CNS wants the lower rates, so is looking to move away from using the AMPs to provide for it. Maybe they can do this, maybe not - but they certainly have to try of begin deleveraging the funds (read each prospectus to see what they can and can't do).

I'm out of CNS at the end of last week - couldn't resist the prices on BAC and NLY, so CNS became my source of funds. Expect to own it again someday (soon even).

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