Eaton Vance Municipal Bond Fund Announces Commencement of Tender Offer

Rhea-AI Summary

Eaton Vance Municipal Bond Fund (NYSE American: EIM) has announced a cash tender offer to buy up to 20% of its outstanding common shares. The purchase price will be 98% of the net asset value (NAV) per share, determined at the close of regular NYSE trading on the expiration date, set for July 9, 2024, at 5:00 p.m. ET. The tender offer may be extended, and if oversubscribed, shares will be purchased on a pro-rata basis.

The Fund may hold an increased cash position during the offer period, which could impact its investment strategy and objectives. Shareholders can access detailed information on the SEC’s website or by contacting the Fund's information agent.

Positive

• The tender offer provides liquidity for shareholders wishing to sell their shares.
• The purchase price is set at 98% of NAV, potentially offering a premium over market price.
• The offer could reduce the number of outstanding shares, possibly increasing the NAV per remaining share.

Negative

• The Fund will hold a larger cash position during the offer period, potentially affecting investment performance.
• There is no assurance that all tendered shares will be purchased if the offer is oversubscribed.
• Selling portfolio instruments to raise cash may disrupt the Fund’s investment strategy.
• Possible negative impact on the Fund’s NAV if the cash tender offer is extended or altered.

Insights

Financial Analyst

The announcement of a cash tender offer by Eaton Vance Municipal Bond Fund is a notable event for shareholders. The Fund’s plan to purchase up to 20 of its outstanding common shares at a price of 98 of NAV per share can be seen as a strategic move to provide liquidity and enhance shareholder value. However, investors should be aware that this might lead to a temporary change in the Fund's asset allocation, with a larger cash position potentially impacting its ability to meet its investment objectives.

Short-term Implications: In the short term, the tender offer could provide an opportunity for shareholders to liquidate their positions at a relatively attractive price. The tender offer price being set at 98 of NAV means shareholders have a narrow discount to NAV, which might be favorable compared to market price dynamics.

Long-term Implications: Long-term investors should consider the potential impact on the Fund’s investment strategy. Holding a larger amount of cash could temporarily reduce the Fund’s returns, especially in a rising interest rate environment where municipal bonds might perform differently. Additionally, the pro-rata purchase method means not all shares tendered may be accepted, creating uncertainty.

Investors should closely monitor subsequent communications and the Fund's NAV fluctuations during this period to make informed decisions.

Market Research Analyst

The tender offer initiative by Eaton Vance Municipal Bond Fund reflects a broader trend in the market where funds seek to optimize shareholder value and provide liquidity avenues. The Fund's strategy to purchase up to 20 of its shares aligns with current market practices aimed at managing shareholder expectations and enhancing market perception.

Market Dynamics: From a market perspective, such tender offers can signal management's confidence in the Fund’s underlying value. It also reflects a proactive approach to manage potential discounts to NAV that are common in closed-end funds. However, the timing and execution of the tender offer are crucial, especially in a fluctuating economic environment where municipal bonds might face variable performance.

Investor Sentiment: This move is likely to be viewed positively by the market as it demonstrates a commitment to shareholder returns. However, investors should be mindful of the pro-rata acceptance, which might limit the ability to sell all desired shares. The tender offer’s impact on the Fund’s liquidity and subsequent investment strategy will be critical factors to watch.

Overall, this tender offer is a strategic maneuver typical of closed-end funds seeking to manage their share price relative to NAV and can be particularly appealing to retail investors looking for liquidity.

BOSTON--(BUSINESS WIRE)-- Eaton Vance Municipal Bond Fund (NYSE American: EIM) (the “Fund”) announced today the commencement of a cash tender offer (the “Tender Offer”).

As previously announced, the Fund will purchase for cash up to 20% of its outstanding common shares at a price per share equal to 98% of its net asset value (“NAV”) per share, determined as of the close of regular trading on the NYSE on the day the Tender Offer expires. The Tender Offer will expire on July 9, 2024 at 5:00 p.m. Eastern Time or on such later date to which the offer is extended. If the number of common shares tendered exceeds the maximum amount of a Tender Offer, the Fund will purchase shares from tendering shareholders on a pro-rata basis (disregarding fractional shares). Accordingly, there is no assurance that the Fund will purchase all of a shareholder's tendered common shares in connection with the Tender Offer. The Fund may determine not to accept shares tendered in the Tender Offer under various circumstances, as set forth in the offering materials.

The Fund may sell portfolio instruments during the pendency of its Tender Offer to raise cash for the purchase of common shares. Thus, it is likely that during the pendency of the Tender Offer, and possibly for a short time thereafter, the Fund will hold a greater than normal percentage of its net assets in cash and cash equivalents. This larger cash position may interfere with the Fund’s ability to meet its investment objectives and invest consistent with its investment strategy.

The Tender Offer is being made on the terms and subject to the conditions set forth in the Fund’s tender offer statement on Schedule TO (including an offer to purchase, a related letter of transmittal and other offer documents) that has been filed with the Securities and Exchange Commission (the “SEC”). All of these documents contain important information about the Tender Offer. Shareholders of the Fund should read the documents carefully as they contain important information about the Tender Offer. Shareholders of the Fund can obtain a free copy of the documents at the SEC’s website at www.sec.gov or from the Fund by calling EQ Fund Solutions, LLC, the Fund’s information agent for the tender offer, at (877) 732-3614.

This press release is not a recommendation, an offer to purchase, or a solicitation of an offer to sell shares of the Fund and is not a prospectus, circular or representation intended for use in the purchase or sale of Fund shares.

About the Fund

Except for sales of shares pursuant to a tender offer, common shares of the Fund are available for purchase or sale only through secondary market trading at their current market price. Shares of closed-end funds (such as the Fund) often trade at a discount from their NAV. The market price of Fund shares may vary from NAV based on factors affecting the supply and demand for shares, such as Fund distribution rates relative to similar investments, investors’ expectations for future distribution changes, the clarity of the Fund’s investment strategy and future return expectations, and investors’ confidence in the underlying markets in which the Fund invests. Fund shares are subject to investment risk, including possible loss of principal invested. Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. The Fund is not a complete investment program and you may lose money investing in the Fund. An investment in the Fund may not be appropriate for all investors. Before investing in the Fund, prospective investors should carefully consider the Fund’s investment objective, strategies, risks, charges and expenses.

Eaton Vance is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley.

About Morgan Stanley Investment Management

Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,300 investment professionals around the world and $1.5 trillion in assets under management or supervision as of March 31, 2024. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. For further information about Morgan Stanley Investment Management, please visit www.morganstanley.com/im.

About Morgan Stanley

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For more information about Morgan Stanley, please visit www.morganstanley.com.

Important Notice

This announcement is not a recommendation, an offer to purchase or a solicitation of an offer to sell shares of the Fund. The Tender Offer will be made only by an offer to purchase, a related letter of transmittal and other documents filed with the SEC as exhibits to a tender offer statement on Schedule TO, with all such documents available on the SEC’s website at www.sec.gov. For the Tender Offer, the Fund will also make available to shareholders without charge the offer to purchase and the letter of transmittal. Shareholders should read these documents carefully, as they contain important information about the Tender Offer.

This press release is for informational purposes only and is not intended to, and does not, constitute an offer to purchase or sell shares of the Fund. Additional information about the Fund, including performance and portfolio characteristic information, is available at eatonvance.com.

Statements in this press release that are not historical facts are “forward-looking statements” as defined by the U.S. securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors which are, in some cases, beyond the Fund’s control and could cause actual results to differ materially from those set forth in the forward-looking statements. All forward-looking statements are as of the date of this release only; the Fund undertakes no obligation to update or review any forward-looking statements.

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Investor Contact: (800) 262-1122

Source: Eaton Vance Municipal Bond Fund

FAQ

What is the Eaton Vance Municipal Bond Fund tender offer?

The tender offer is a cash purchase of up to 20% of the Fund's outstanding common shares at 98% of NAV, expiring on July 9, 2024.

When does the Eaton Vance Municipal Bond Fund tender offer expire?

The tender offer expires on July 9, 2024, at 5:00 p.m. ET, but it may be extended.

What is the purchase price for the Eaton Vance Municipal Bond Fund tender offer?

The purchase price is 98% of the Fund's net asset value (NAV) per share.

Will all shares tendered in the Eaton Vance Municipal Bond Fund offer be purchased?

If the offer is oversubscribed, shares will be purchased on a pro-rata basis, so not all tendered shares may be bought.

How will the Eaton Vance Municipal Bond Fund raise cash for the tender offer?

The Fund may sell portfolio instruments during the tender offer period to raise the necessary cash.