Eaton Vance Municipal Bond Fund Announces Preliminary Results of Tender Offer

Rhea-AI Summary

Eaton Vance Municipal Bond Fund (EIM) has announced preliminary results of its cash tender offer that expired on January 10, 2025. The Fund offered to purchase up to 2,846,127 common shares, representing 5% of its outstanding common shares. The tender offer received 15,329,957 properly tendered shares at a purchase price of $10.7664 per share, which equals 98% of the Fund's NAV as of January 10, 2025.

Due to the tender offer being oversubscribed, with more shares tendered than offered for purchase, the Fund will implement a pro-rata allocation system for the properly tendered shares. Final results are expected to be announced around January 14, 2025. EQ Fund Solutions, serves as the information agent for the tender offer.

Positive

• Significant shareholder interest demonstrated by 5.4x oversubscription of tender offer
• Tender offer provides liquidity opportunity for shareholders at 98% of NAV

Negative

• Pro-rata allocation means shareholders will only be able to tender a fraction of their submitted shares
• Purchase price represents a 2% discount to NAV

Insights

Fixed Income Analyst

The tender offer results reveal significant investor interest, with shares tendered exceeding the purchase limit by approximately 5.4x (15,329,957 shares tendered vs. 2,846,127 shares offered). This substantial oversubscription indicates strong shareholder desire for liquidity at the $10.7664 per share price, which represents a 2% discount to NAV.

The pro-rata allocation mechanism means shareholders will only be able to sell approximately 18.6% of their tendered shares. This fulfillment rate could create near-term selling pressure as investors who sought larger exits may look to secondary market alternatives. The tender offer's pricing at a slight discount to NAV provides a temporary price floor, though market prices may fluctuate once the offer concludes.

For municipal bond fund investors, this high participation rate might signal broader concerns about rising interest rates and their impact on leveraged closed-end fund valuations. The willingness of shareholders to exit at a discount suggests some skepticism about near-term NAV stability in the municipal bond sector.

Market Structure Analyst

The mechanics of this tender offer warrant careful examination. With a market cap of $590,856,038, the Fund's 5% repurchase commitment amounts to approximately $29.5 million in value. The high oversubscription rate suggests significant pent-up selling interest, which could impact secondary market trading dynamics.

Pro-rata allocation in heavily oversubscribed tender offers typically leads to two market effects: First, arbitrageurs who acquired shares hoping to tender may unwind positions not accepted in the offer, potentially pressuring the share price. Second, the demonstrated appetite for exits at a 2% discount to NAV may reset market expectations about appropriate trading levels relative to NAV.

For similar closed-end funds trading at discounts, this tender offer's results provide a valuable benchmark for gauging potential shareholder response to liquidity events. The strong participation rate could encourage other fund boards to consider similar corporate actions to address persistent trading discounts.

BOSTON--(BUSINESS WIRE)-- Eaton Vance Municipal Bond Fund (NYSE American: EIM) (the “Fund”) announced today the preliminary results of the Fund’s cash tender offer for up to 5% of its outstanding common shares that expired at 5:00 p.m. Eastern Time on January 10, 2025 (the “Tender Offer”).

The table below shows the preliminary results for the Fund:

Common Shares Offered to Purchase Pursuant to the Tender Offer	Common Shares Properly Tendered	Purchase Price of Properly Tendered Common Shares*
2,846,127	15,329,957	$10.7664
* Equal to 98% of the Fund’s net asset value (“NAV”) per share as of the close of regular trading on the New York Stock Exchange on January 10, 2025 (the date the Tender Offer expired).

Under the terms and conditions of the Tender Offer, if the number of common shares properly tendered exceeds the number of common shares offered to purchase, the Fund will purchase common shares properly tendered on a pro-rata basis (disregarding fractional shares). Based on the preliminary results shown above, the Fund expects to purchase a pro-rata allocation of the common shares properly tendered.

The above-indicated results are based on preliminary information provided by Equiniti Trust Company, LLC, the depositary for the Tender Offer, are subject to adjustment and should not be regarded as final. The Fund currently expects to announce the final results of its Tender Offer on or about January 14, 2025.

The information agent for the Tender Offer is EQ Fund Solutions, LLC. Any questions with regard to the Tender Offer may be directed to the information agent toll-free at 1-877-732-3614.

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 consider carefully 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 1,400 investment professionals around the world and $1.6 trillion in assets under management or supervision as of September 30, 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 was made only by an offer to purchase, a related letter of transmittal and other documents filed with the U.S. Securities and Exchange Commission (“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. The Fund has also made 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 purchase price per share for EIM's tender offer?

The purchase price for EIM's tender offer is $10.7664 per share, which represents 98% of the Fund's NAV as of January 10, 2025.

How many shares were tendered in EIM's January 2025 tender offer?

15,329,957 shares were properly tendered in EIM's tender offer, significantly exceeding the 2,846,127 shares offered for purchase.

When will EIM announce the final results of its tender offer?

EIM expects to announce the final results of its tender offer on or about January 14, 2025.

How will EIM handle the oversubscribed tender offer?

Due to oversubscription, EIM will purchase shares on a pro-rata basis, meaning shareholders who tendered will only have a portion of their submitted shares purchased.