SABA Announces Reauthorization of Share Repurchase Program

Rhea-AI Summary

Saba Capital Income & Opportunities Fund II (NYSE: SABA) has announced the renewal of its share repurchase program. The Fund's Board of Trustees has authorized the repurchase of up to 10% of its total common shares for the fiscal year ending October 31, 2025. This program aims to increase the Fund's net asset value (NAV) and create value for shareholders by reducing the Fund's discount to NAV.

The Fund may repurchase shares through open market transactions, considering factors such as timing, quantity, discount level, performance, portfolio holdings, and market conditions. Repurchases will be made on national securities exchanges at prevailing market prices, subject to exchange requirements and federal securities laws. However, there is no guarantee that the market price of the Fund's shares will increase or that the program will enhance shareholder value.

Positive

• Authorization to repurchase up to 10% of total common shares
• Potential increase in net asset value (NAV)
• Possible reduction of the Fund's discount to NAV
• Flexibility in repurchase timing and quantity based on market conditions

Negative

• No assurance of share price increase or enhanced shareholder value
• Repurchase program may reduce available cash for investments
• Potential opportunity cost if better investment options arise

Insights

Financial Analyst

The reauthorization of SABA's share repurchase program is a strategic move that could potentially benefit shareholders. By allowing the repurchase of up to 10% of total common shares, the Fund aims to increase its Net Asset Value (NAV) and potentially reduce the discount to NAV at which shares trade. This action signals management's confidence in the Fund's intrinsic value and their commitment to enhancing shareholder value.

However, investors should note that the effectiveness of this program depends on various factors, including market conditions and the Fund's performance. While share repurchases can be positive, they don't guarantee an increase in share price or NAV. The Fund's diverse investment strategy, including high-yield securities and derivatives, carries inherent risks that could impact overall performance. Shareholders should closely monitor the Fund's execution of this program and its impact on NAV and market price.

Market Research Analyst

The renewal of SABA's share repurchase program is a common practice among closed-end funds to address trading discounts. However, its impact on reducing the Fund's discount to NAV may be Historical data shows that while repurchases can provide short-term support for share prices, they often fail to sustainably narrow discounts in the long term.

Investors should focus on the Fund's underlying performance and investment strategy. SABA's diverse portfolio, including investments in SPACs, reinsurance and private funds, offers unique exposure but also carries significant risks. The Fund's ability to generate high current income and capital appreciation in the current market environment will likely have a more substantial impact on shareholder value than the repurchase program alone. Potential investors should carefully consider these factors alongside the Fund's expense ratio and historical performance before making investment decisions.

Legal Expert

The reauthorization of SABA's share repurchase program raises important legal and regulatory considerations. While share repurchases are generally permissible, the Fund must adhere to strict SEC regulations governing such actions. Key legal points include:

• Compliance with Rule 10b-18 of the Securities Exchange Act, which provides a safe harbor from manipulation allegations.
• Adherence to disclosure requirements, ensuring timely and accurate reporting of repurchase activities.
• Maintaining compliance with the Investment Company Act of 1940, particularly regarding leverage limitations and asset coverage requirements.

Shareholders should be aware that while the program aims to benefit them, it also requires careful legal navigation to avoid regulatory pitfalls. The Fund's management must balance the potential benefits of repurchases with their fiduciary duty to act in the best interests of all shareholders.

NEW YORK--(BUSINESS WIRE)-- Saba Capital Income & Opportunities Fund II (NYSE: SABA) (the “Fund”), a registered closed-end management investment company listed on the New York Stock Exchange, today announced that its Board of Trustees has renewed its share repurchase authorization for the Fund to repurchase up to 10% of its total common shares for the fiscal year ending October 31, 2025.

The share repurchase program is intended to increase the Fund’s net asset value (“NAV”) to the benefit of all shareholders and help create further value for shareholders by reducing the Fund’s discount to NAV.

The Fund may repurchase shares through open market transactions, at the discretion of the Fund’s investment adviser. In exercising its discretion consistent with its portfolio management responsibilities, the investment adviser will take into account various factors, including, but not limited to, timing, the quantity of repurchases, the level of the discount, the Fund’s performance, portfolio holdings, dividend history and objectives, market conditions, cash on hand, the availability of other attractive investments, and whether the sale of certain portfolio securities would be undesirable because of liquidity concerns or because the sale might subject the Fund to adverse tax consequences. Any repurchases would be made on a national securities exchange at the prevailing market price, subject to exchange requirements, federal securities laws and rules that restrict repurchases.

There is no assurance that the market price of the Fund’s shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that the program will enhance shareholder value. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. Investors should consider the investment objective, risks and expenses carefully. You can obtain the Fund’s most recent periodic reports and filings by visiting https://www.sec.gov/edgar/browse/?CIK=828803&owner=exclude.

Other Information and Certain Risk Factors: The Fund’s investment objective is to provide investors with high current income, with a secondary goal of capital appreciation. There can be no assurance that the Fund will meet its investment objective. The Fund seeks to achieve this objective by investing globally in debt and equity securities of public and private companies, which includes, among other things, investments in closed‐end funds, special purpose acquisition companies (“SPACs”), reinsurance, and public and private debt instruments. The Fund also may utilize derivatives including but not limited to total return swaps, credit default swaps, options (including but not limited to index options) and futures, in seeking to enhance returns and/or to reduce portfolio risk. In addition, on an opportunistic basis, the Fund may also invest up to 15% of its total assets in private funds that focus on debt, equity or other investments consistent with the Fund’s investment objective.

The value of the Fund’s investments in equity securities of public and private, listed and unlisted companies and equity derivatives generally varies with the performance of the issuer and movements in the equity markets more generally. As a result, the Fund may suffer losses if it invests in equity instruments of issuers whose performance diverges from the Fund’s investment manager’s expectations or if equity markets generally move in a single direction and the Fund has not hedged against such a general move. The Fund may invest in closed-end funds and SPACs, which are subject to additional risks and considerations. The performance of reinsurance-related securities and the reinsurance industry itself are tied to the occurrence of various triggering events, including but not limited to weather, natural disasters (hurricanes, earthquakes, etc.), non-natural large catastrophes and other specified events causing physical and/or economic loss. To the extent the Fund invests in reinsurance-related securities for which a triggering event occurs, losses associated with such event could result in losses to the Fund’s investment, and a series of major triggering events affecting a large portion of the reinsurance- related securities held by the Fund could result in substantial losses to the Fund’s investment. The Fund may invest in high yield securities, which are speculative in nature and are subject to additional risk factors such as increased possibility of default, illiquidity of the security, and changes in value based on changes in interest rates. Changes in short-term market interest rates may directly affect the yield on the Fund’s common shares. If such rates fall, the Fund’s yield may also fall. If interest rate spreads on bonds and loans owned by the Fund decline in general, the yield on the bonds and loans will likely fall and the value of such bonds and loans may decrease. When short-term market interest rates rise, because of the lag between changes in such short-term rates and the resetting of the floating rates on bonds and loans in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. Because of the limited secondary market for certain bonds and loans, the Fund’s ability to sell such securities in a timely fashion and/or at a favorable price may be limited. An increase in the demand for bonds and loans may adversely affect the rate of interest payable on new bonds and loans acquired by the Fund, and it may also increase the price of bonds and loans purchased by the Fund in the secondary market. A decrease in the demand for bonds and loans may adversely affect the price of bonds and loans in the Fund’s portfolio, which would cause the Fund’s net asset value to decrease. Investment in foreign borrowers involves special risks, including but not limited to potentially less rigorous accounting requirements, differing legal systems and potential political, social and economic adversity. The Fund may engage in currency exchange transactions to seek to hedge, as closely as practicable, all of the economic impact to the Fund arising from foreign currency fluctuations. Other risks include, but are not limited to, the use of derivatives, the potential lack of diversification in the Fund’s portfolio, and the fact that the Fund’s portfolio may be concentrated in a small group of industries or industry sectors from time to time. Investors should consult the Fund’s filings with the Securities and Exchange Commission as well as the materials on the Fund’s website for a more detailed discussion of these or other risk factors that affect the Fund.

About Saba Capital Income & Opportunities Fund II. Saba Capital Income & Opportunities Fund II is a publicly-traded registered closed-end management investment company. The Fund’s common shares trade on the New York Stock Exchange under the ticker symbol “SABA”. The Fund is managed by Saba Capital Management, L.P.

Forward-Looking Statements. This press release contains forward-looking statements subject to the inherent uncertainties in predicting future results and conditions. Any statements that are not statements of historical fact (including but not limited to statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements. These factors, including but not limited to the “Certain Risk Factors” noted above, are identified from time to time in the Fund’s filings with the Securities and Exchange Commission as well as the materials on the Fund’s website. The Fund undertakes no obligation to update such statements to reflect subsequent events, except as may be required by law.

For further information on Saba Capital Income & Opportunities Fund II, please visit our website at: www.sabacef.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240920050661/en/

800-468-9716

Source: Saba Capital Income & Opportunities Fund II

FAQ

What is the share repurchase program announced by SABA?

SABA has renewed its share repurchase program, authorizing the repurchase of up to 10% of its total common shares for the fiscal year ending October 31, 2025.

What is the purpose of SABA's share repurchase program?

The program aims to increase the Fund's net asset value (NAV) and create value for shareholders by reducing the Fund's discount to NAV.

How will SABA implement the share repurchase program?

SABA may repurchase shares through open market transactions at prevailing market prices, considering factors such as timing, quantity, discount level, and market conditions.

Is there a guarantee that SABA's share price will increase due to the repurchase program?

No, there is no assurance that the market price of SABA's shares will increase or that the program will enhance shareholder value.