NEUBERGER BERMAN MUNICIPAL FUND ANNOUNCES INCREASE IN DISTRIBUTION RATE AND DECLARATION OF NEXT MONTHLY DISTRIBUTION

Rhea-AI Summary

Neuberger Berman Municipal Fund Inc. (NYSE American: NBH) has announced a significant 43.5% increase in its monthly distribution rate, raising it from $0.03774 to $0.05417 per share of common stock. This new rate translates to an annualized distribution of $0.65 per share, up from the previous $0.45288. Based on July 12, 2024 figures, this results in a distribution rate of approximately 5.91% of the Fund's market price and 5.38% of its net asset value.

The Fund's Board and Neuberger Berman aim to enhance stockholder value and narrow the discount between the Fund's market price and net asset value. They acknowledge that the higher distribution may include a combination of net investment income, capital gains, and return of capital. The next monthly distribution at the new rate is payable on August 15, 2024, with a record date and ex-date of July 31, 2024.

Positive

• 43.5% increase in monthly distribution rate
• New annualized distribution of $0.65 per share, up from $0.45288
• Distribution rate of 5.91% of market price and 5.38% of NAV
• Effort to enhance Fund's competitiveness and narrow market price discount

Negative

• Higher distribution may include return of capital, potentially reducing NAV and investor cost basis

Financial Analyst

The increase in the distribution rate for the Neuberger Berman Municipal Fund Inc. (NYSE American: NBH) signifies a positive move aimed at attracting more investors by offering a higher return. The new distribution rate of $0.05417 per share, up from $0.03774, translates to an annualized rate of $0.65 per share. This represents an attractive yield of 5.91% based on the market price as of July 12, 2024. A higher distribution rate can make the fund more competitive and appealing, narrowing the discount between its market price and net asset value (NAV).

However, investors need to be aware that this distribution includes not only net investment income but also realized capital gains and potentially a return of capital. While this strategy can enhance short-term attractiveness, it might not be sustainable long-term if the return of capital portion is substantial, as it could erode the fund's NAV over time. It's important for investors to monitor the sustainability of these distributions by checking the source of the payouts.

In summary, the increase is a strategic move to improve market competitiveness and attract more retail investors. Still, the inclusion of return of capital in distributions could be a warning sign for long-term sustainability. Retail investors should consider both the immediate benefits and potential long-term impacts on the fund's valuation.

Market Research Analyst

The announcement of an increased distribution rate for the Neuberger Berman Municipal Fund Inc. is a clear attempt to enhance its market position. By offering a higher yield, the fund aims to appeal to income-seeking investors, a segment that has shown considerable growth. The annualized distribution rate is now 5.91% based on market price, which is above average compared to similar municipal bond funds.

One of the primary objectives here is to narrow the discount between the fund's market price and its NAV. This discount is a common issue for closed-end funds but can be mitigated by making the fund more attractive via increased distributions. While this strategy can drive up demand and potentially increase the fund’s market price, it may not necessarily address underlying performance issues if the NAV continues to decline due to return of capital distributions.

Retail investors looking for tax-exempt income might find this fund more appealing, yet they should be cautious about the long-term impacts. Understanding the composition of the distribution is key. If a significant portion is a return of capital, it could indicate that the fund is not generating enough income through its investments, which might not be a sustainable strategy long-term.

NEW YORK, July 15, 2024 /PRNewswire/ -- Neuberger Berman Municipal Fund Inc. (NYSE American: NBH) (the "Fund") has announced an increase in its monthly distribution rate to $0.05417 per share of common stock from the prior monthly distribution rate of $0.03774 per share, representing an increase of approximately 43.5%. The Fund has also declared its next monthly distribution at the new rate, which is payable on August 15, 2024, has a record date of July 31, 2024, and has an ex-date of July 31, 2024. The Fund seeks to provide income that is exempt from regular federal income tax. Distributions of the Fund may be subject to the federal alternative minimum tax for some stockholders.

The new monthly distribution rate of $0.05417 per share represents an annualized distribution per share of $0.65 versus the prior annualized amount of $0.45288 and results in a distribution rate of approximately 5.91% of the Fund's market price and 5.38% of its net asset value, as of July 12, 2024.

Neuberger Berman Investment Advisers LLC ("Neuberger Berman"), the Fund's investment manager, and the Fund's Board of Directors, including its Board committees (together, the "Board"), continue to be focused on delivering value to stockholders of the Fund. The distribution rate increase announced today is an effort to enhance the Fund's competitiveness in the secondary market and increase demand for the Fund's common stock in the secondary market, which may narrow the discount between the market price of the Fund's common stock and its net asset value per share. The Fund's Board has determined that—like many other closed-end funds—it is in the best interests of the Fund and its current stockholders to pay a higher distribution rate, even if that distribution represents a combination of net investment income, capital gains and return of capital. Neuberger Berman and the Board will continue to consider other strategies or transactions that may enhance stockholder value and mitigate the discount that the Fund's common stock trades relative to its net asset value.

The distribution announced today, as well as future distributions, may consist of net investment income, realized capital gains, and return of capital.  In the event the Fund distributes more than its net investment income during any yearly period, such distributions may also include realized gains and/or a return of capital. To the extent that a distribution includes a return of capital, the NAV per share may decline and an investor's cost basis of their shares will be reduced. In compliance with Section 19 of the Investment Company Act of 1940, as amended, a notice would be provided for any distribution that does not consist solely of net investment income. The notice would be for informational purposes and not for tax reporting purposes, and would disclose, among other things, estimated portions of the distribution, if any, consisting of net investment income, capital gains and return of capital. The final determination of the source and tax characteristics of all distributions paid in 2024 will be made after the end of the year.

About Neuberger Berman

Neuberger Berman is an employee-owned, private, independent investment manager founded in 1939 with over 2,800 employees in 26 countries. The firm manages $481 billion of equities, fixed income, private equity, real estate and hedge fund portfolios for global institutions, advisors and individuals. Neuberger Berman's investment philosophy is founded on active management, fundamental research and engaged ownership. The PRI identified the firm as part of the Leader's Group, a designation awarded to fewer than 1% of investment firms for excellence in environmental, social and governance practices. Neuberger Berman has been named by Pensions & Investments as the #1 or #2 Best Place to Work in Money Management for each of the last ten years (firms with more than 1,000 employees). Visit www.nb.com for more information. Data as of June 30, 2024. 

Statements made in this release that look forward in time involve risks and uncertainties. Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in the Fund's performance, a general downturn in the economy, competition from other closed end investment companies, changes in government policy or regulation, inability of the Fund's investment adviser to attract or retain key employees, inability of the Fund to implement its investment strategy, inability of the Fund to manage rapid expansion and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations.

Contact: 
Neuberger Berman Investment Advisers LLC
Investor Information
(877) 461-1899

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SOURCE Neuberger Berman

FAQ

What is the new monthly distribution rate for Neuberger Berman Municipal Fund (NBH)?

The new monthly distribution rate for Neuberger Berman Municipal Fund (NBH) is $0.05417 per share of common stock, effective July 15, 2024.

By what percentage did NBH increase its distribution rate?

NBH increased its distribution rate by approximately 43.5%, from $0.03774 to $0.05417 per share.

When is the next distribution payable for NBH after the rate increase?

The next distribution for NBH at the new rate is payable on August 15, 2024, with a record date and ex-date of July 31, 2024.

What is the new annualized distribution per share for NBH?

The new annualized distribution per share for NBH is $0.65, up from the previous $0.45288.

What is the distribution rate of NBH as a percentage of its market price and NAV?

As of July 12, 2024, NBH's distribution rate is approximately 5.91% of its market price and 5.38% of its net asset value.