Four Nuveen municipal closed-end funds today announced that each has priced a private offering of Variable Rate Demand Preferred (VRDP) shares placed with qualified institutional buyers, as defined pursuant to Rule 144A under the Securities Act of 1933. The following amounts of VRDP shares have been issued by each fund:
  • Nuveen New York Quality Income Municipal Fund, Inc. (NYSE: NUN): $161.7 Million
  • Nuveen Premier Insured Municipal Income Fund, Inc. (NYSE: NIF): $130.9 Million
  • Nuveen California Investment Quality Municipal Fund, Inc. (NYSE: NQC): $95.6 Million
  • Nuveen California Performance Plus Municipal Fund, Inc. (NYSE: NCP): $81.0 Million

The proceeds from each offering will be used to redeem at par all of the fund’s outstanding auction-rate preferred shares (ARPS). The funds’ Board of Trustees had previously approved each redemption, which total $469.2 million. Each refinancing is expected to lower the relative costs of leverage for the funds over time while also providing liquidity at par for the holders the funds’ ARPS.

VRDP shares include a liquidity feature that allows holders of VRDP to have their shares purchased by a liquidity provider in the event that sell orders have not been matched with purchase orders and successfully settled in a remarketing. The liquidity feature for this fund’s VRDP is being provided by Citibank, N.A. The VRDP shares comply with the requirements of IRS Notice 2008-55, as extended by IRS Notice 2010-03, and qualify as equity for income tax purposes. This affords VRDP share dividends the same tax treatment as the income on the fund’s underlying investments, notwithstanding VRDP terms that require the fund to redeem VRDP shares still owned by the liquidity provider if there are six months of continuous, unsuccessful remarketing.

VRDP dividends will be set weekly at a rate established by Citigroup Global Markets Inc. as remarketing agent, subject to a maximum rate which will increase over time in the event of an extended period of unsuccessful remarketing.