ALLIANCEBERNSTEIN NATIONAL MUNICIPAL INCOME FUND, INC. ANNOUNCES COMPLETION OF FULL REDEMPTION OF 2019 VARIABLE RATE MUNIFUND TERM PREFERRED SHARES AND ISSUANCE OF NEW VARIABLE RATE DEMAND PREFERRED SHARES AS SUBSTITUTE LEVERAGE

Rhea-AI Summary

AllianceBernstein National Municipal Income Fund (NYSE: AFB) announced the successful pricing and placement of $100 million in Variable Rate Demand Preferred Shares (2024 VRDPS), exempt from registration under the Securities Act of 1933. The proceeds, combined with funds from tender option bond trusts, were used to redeem all outstanding 2019 Variable Rate MuniFund Term Preferred Shares (2019 VMTPS) at $25,000 per share, plus accumulated but unpaid dividends. The total payout for the redemption was $143.85 million. This move replaces a significant portion of the leverage previously held through the 2019 VMTPS with the new 2024 VRDPS.

Positive

• Successfully raised $100 million through issuance of 2024 VRDPS.
• Redeemed all outstanding 2019 VMTPS, improving leverage structure.
• Redemption price of $25,000 per share plus accumulated dividends demonstrates financial strength.
• Combination of 2024 VRDPS issuance and tender option bond trusts effectively managed to cover the $143.85 million redemption.

Negative

• Redemption of 2019 VMTPS required a substantial payout of $143.85 million.
• Leverage shift may imply risks associated with new 2024 VRDPS.

Insights

Financial Analyst

The announcement from AllianceBernstein National Municipal Income Fund, Inc. (the "Fund") concerning the redemption of 2019 Variable Rate MuniFund Term Preferred Shares ("2019 VMTPS") and issuance of new Variable Rate Demand Preferred Shares ("2024 VRDPS") is noteworthy for investors. By refinancing its leverage strategy, the Fund is demonstrating an effort to manage its cost of capital more efficiently.

The redemption of $143.85 million worth of 2019 VMTPS using the proceeds from $100 million in newly issued 2024 VRDPS and TOB trusts indicates a deliberate move to optimize its financial structure. This could potentially lower the Fund's interest costs if the new VRDPS carries a lower rate than the previous VMTPS. Additionally, the use of TOB trusts suggests an effort to further diversify leverage and potentially create more favorable financing conditions.

Investors should note the potential benefits of this strategy. If executed well, the move could result in reduced borrowing costs, which might positively impact the Fund’s net earnings and, consequently, the dividends distributed to shareholders. It’s important to monitor the terms and costs associated with the new VRDPS to understand the full financial implications.

In the short term, this restructuring could incur certain costs, but in the long term, it might lead to more stable and possibly enhanced returns for investors.

NEW YORK, June 6, 2024 /PRNewswire/ -- AllianceBernstein National Municipal Income Fund, Inc. (the "Fund"; NYSE: AFB), a registered closed-end investment company, announced today that it successfully priced and placed $100 million in Variable Rate Demand Preferred Shares ("2024 VRDPS") pursuant to an offering exempt from registration under the Securities Act of 1933. The Fund has issued $100 million in aggregate liquidation preference of 2024 VRDPS. The Fund used the proceeds of the 2024 VRDPS issuance, in conjunction with proceeds from the creation of tender option bond ("TOB") trusts by the Fund, to simultaneously redeem all of its currently outstanding 2019 Variable Rate MuniFund Term Preferred Shares ("2019 VMTPS") at a redemption price of $25,000 per share, plus accumulated but unpaid dividends. The aggregate amount paid by the Fund in connection with the redemption of the 2019 VMTPS was $143.85 million. The issuance permitted the Fund to replace a substantial portion of the leverage previously obtained through the 2019 VMTPS with the 2024 VRDPS.

This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities.

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SOURCE AllianceBernstein National Municipal Income Fund, Inc.

FAQ

What did AllianceBernstein National Municipal Income Fund (AFB) announce on June 6, 2024?

AFB announced the completion of the full redemption of its 2019 Variable Rate MuniFund Term Preferred Shares and the issuance of new 2024 Variable Rate Demand Preferred Shares.

How much money was raised through the issuance of 2024 VRDPS by AFB?

AFB raised $100 million through the issuance of 2024 Variable Rate Demand Preferred Shares.

What was the redemption price for the 2019 VMTPS by AFB?

The redemption price for the 2019 VMTPS was $25,000 per share plus accumulated but unpaid dividends.

How much did AFB pay in total to redeem the 2019 VMTPS?

AFB paid a total of $143.85 million to redeem the 2019 VMTPS.

What did AFB use the proceeds from the 2024 VRDPS issuance for?

AFB used the proceeds from the 2024 VRDPS issuance, along with funds from tender option bond trusts, to redeem the 2019 VMTPS.