SEC Company Response from Pioneer Floating Rate Trust (PHD) (CIK 0001305767) (PHD) — Mar 18, 2005
Pioneer Floating Rate Trust (PHD) (CIK 0001305767)
Date: March 18, 2005 · CIK: 0001305767 · Accession: 0000950135-05-001549
AI Filing Summary & Sentiment
File numbers found in text: 333-121930, 811-21654
Referenced dates: February 9, 2005
Letter
David C. Phelan March 18, 2005 60 STATE STREET BOSTON, MA 02109 VIA EDGAR +1 617 526 6372 +1 617 526 5000 fax Securities and Exchange Commission david.phelan@wilmerhale.com Judiciary Plaza 450 Fifth Street, N.W. Washington, DC 20549 Mail Stop 0505 Attention: Dominic Minore, Esq. Division of Investment Management
Re: Pioneer Floating Rate Trust (the "Fund") Registration Statement on Form N-2 Registration Numbers 333-121930; 811-21654
Dear Ladies and Gentlemen:
The following information was transmitted to you electronically on February 25, 2005, accompanied by a letter that contained draft responses to comments of the staff of the Commission transmitted by letter dated February 9, 2005 relating to the Fund's Registration Statement on Form N-2. The draft response letter was electronically filed on March 7, 2005.
If you have any questions or comments, please do not hesitate to contact me at (617) 526-6372, Julian Bobb, Esq. at (617) 526-6575 or Christina Lim, Esq. at (617) 526-6451, counsel to the Fund.
Best regards,
/s/ David C. Phelan
David C. Phelan
Show Raw Text
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
<PAGE>
WILMER CUTLER PICKERING
HALE AND DORR LLP
David C. Phelan
March 18, 2005
60 STATE STREET
BOSTON, MA 02109
VIA EDGAR +1 617 526 6372
+1 617 526 5000 fax
Securities and Exchange Commission david.phelan@wilmerhale.com
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Mail Stop 0505
Attention: Dominic Minore, Esq.
Division of Investment Management
Re: Pioneer Floating Rate Trust (the "Fund")
Registration Statement on Form N-2
Registration Numbers 333-121930; 811-21654
Dear Ladies and Gentlemen:
The following information was transmitted to you electronically on
February 25, 2005, accompanied by a letter that contained draft responses to
comments of the staff of the Commission transmitted by letter dated February 9,
2005 relating to the Fund's Registration Statement on Form N-2. The draft
response letter was electronically filed on March 7, 2005.
If you have any questions or comments, please do not hesitate to
contact me at (617) 526-6372, Julian Bobb, Esq. at (617) 526-6575 or
Christina Lim, Esq. at (617) 526-6451, counsel to the Fund.
Best regards,
/s/ David C. Phelan
David C. Phelan
Enclosures
cc: Christopher J. Kelley, Esq.
BALTIMORE BEIJING BERLIN BOSTON BRUSSELS LONDON
MUNICH NEW YORK NORTHERN VIRGINIA OXFORD WALTHAM WASHINGTON
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 2005
PROSPECTUS
(PIONEER LOGO)
$
PIONEER FLOATING RATE TRUST
AUCTION MARKET PREFERRED SHARES ("AMPS")
[ ] SHARES, SERIES M7
[ ] SHARES, SERIES W7
[ ] SHARES, SERIES TH7
LIQUIDATION PREFERENCE $25,000 PER SHARE
----------------------
Pioneer Floating Rate Trust (the "Fund") is offering [ ] Series M7
Auction Market Preferred Shares, [ ] Series W7 Auction Market Preferred
Shares, and [ ] Series TH7 Auction Market Preferred Shares. The shares
are referred to in this prospectus as "AMPS." The Fund is a recently organized,
non-diversified, closed-end management investment company. The AMPS do not have
a maturity date but are subject to mandatory redemption in certain
circumstances. Any series of AMPS may be redeemed, in whole or in part, at the
option of the Fund at any time, subject to certain circumstances. Dividends on
the AMPS will be cumulative from the date the shares are issued.
Investment Objectives. The Fund's primary investment objective is to
provide a high level of current income. As a secondary investment objective, the
Fund seeks preservation of capital to the extent consistent with its primary
investment objective. There can be no assurance that the Fund will achieve its
investment objectives.
Portfolio Contents. Under normal market conditions, the Fund seeks to
achieve its investment objectives by investing at least 80% of its assets (net
assets plus borrowings for investment purposes) in senior floating rate loans
("Senior Loans"). Senior Loans are made to corporations, partnerships and other
business entities that operate in various industries and geographical regions,
including non-U.S. borrowers. Senior Loans pay interest at rates that are
redetermined periodically on the basis of a floating base lending rate plus a
premium. The Fund also may invest in other floating and variable rate
instruments, including second lien loans, and in high yield corporate bonds. The
Fund may invest in Senior Loans and other securities of any credit quality,
including Senior Loans and other investments that are rated below investment
grade, or are unrated but are determined by the investment subadviser to be of
equivalent credit quality, commonly referred to as "junk bonds." The Fund may
invest all or any portion of its assets in securities of issuers that are in
default or that are in bankruptcy. The Fund does not have a policy of
maintaining a specific average credit quality of its portfolio or a minimum
portion of its portfolio that must be rated investment grade. The Fund may
invest up to 10% of its total assets in Senior Loans and other securities of
non-U.S. issuers, including emerging market issuers, and may engage in certain
hedging transactions.
(continued on following page)
INVESTING IN THE AMPS INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE OF THIS PROSPECTUS. THE MINIMUM PURCHASE
AMOUNT OF THE AMPS IS $25,000.
----------------------
<Table>
<Caption>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public offering price (1)................................... $25,000 $
Sales load.................................................. $250 $
Estimated offering expenses................................. $ $
Proceeds, after expenses, to the Fund....................... $ $
</Table>
(1) Plus accumulated dividends, if any, from the date the AMPS are
issued.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The underwriters are offering the AMPS subject to various conditions. The
AMPS will be ready for delivery, in book-entry form only, through the facilities
of The Depository Trust Company on or about , 2005.
----------------------
MERRILL LYNCH & CO.
----------------------
The date of this prospectus is , 2005.
<PAGE>
rate transactions such as swaps, caps, floors or collars or credit transactions
and credit default swaps. The Fund also may purchase derivative instruments that
combine features of these instruments. The Fund generally seeks to use these
instruments and transactions as a portfolio management or hedging technique that
seeks to protect against possible adverse changes in the market value of Senior
Loans or other securities held in or to be purchased for the Fund's portfolio,
to facilitate the sale of certain securities for investment purposes, manage the
effective interest rate exposure of the Fund, manage the effective maturity or
duration of the Fund's portfolio or establish positions in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities.
USE OF LEVERAGE BY THE
FUND........................
The Fund expects to utilize financial leverage on an
ongoing basis for investment purposes, such as
through the issuance of the AMPS. After completion of
the offering of the AMPS, the Fund anticipates its
total leverage from the issuance of AMPS will be
approximately 33 1/3% of the Fund's total assets.
This amount may change but the Fund will not incur
additional leverage if the total leverage would
exceed 50% of the Fund's total assets. Although the
Fund may in the future offer other preferred shares
or incur indebtedness, which would further leverage
the Fund, the Fund does not currently intend to offer
preferred shares other than the AMPS offered hereby
or to incur indebtedness, other than short-term
credits in connection with the settlements of
portfolio transactions. The Fund may also invest in
derivative instruments, each of which may amplify the
effects of leverage in the Fund's portfolio since the
value of the derivative instruments may be more
volatile than the Senior Loans in which the Fund
primarily invests.
The Fund generally will not utilize leverage if the
Adviser anticipates that leverage would result in a
lower return to holders of the common shares over
time. Use of financial leverage creates an
opportunity for increased income for the holders of
the common shares but, at the same time, creates the
possibility for greater loss (including the
likelihood of greater volatility of net asset value
and market price of the common shares and of
dividends), and there can be no assurance that a
leveraging strategy will be successful during any
period in which it is employed. Because the fees paid
to the Adviser will be calculated on the basis of the
Fund's managed assets, the fees will be higher when
leverage (including the AMPS) is utilized, giving the
Adviser an incentive to utilize leverage.
SPECIAL RISK
CONSIDERATIONS..............
The following is a summary of the principal risks of
investing in the AMPS. You should read the fuller
discussion in this prospectus under "Risk Factors"
beginning on page [ ].
Risks of Investing in AMPS. The primary risks of
investing in AMPS are:
- If an auction fails you may not be able to sell
some or all of your shares.
12
<PAGE>
- Because of the nature of the market for AMPS, you
may receive less than the price you paid for your
AMPS if you sell them outside of the auction,
especially when market interest rates are rising.
- A rating agency could, at any time, downgrade or
withdraw its rating assigned to the AMPS without
prior notice to the Fund or shareholders. Any
downgrading or withdrawal of rating could affect
the liquidity of the AMPS in an auction.
- The Fund may be forced to redeem AMPS to meet
regulatory or rating agency requirements or may
voluntarily redeem your shares in certain
circumstances.
- In certain circumstances, the Fund may not earn
sufficient income from its investments to pay
dividends on the AMPS.
- If interest rates rise, the value of the Fund's
investment portfolio will decline, reducing the
asset coverage for AMPS.
Leverage Risk. The Fund's leveraged capital
structure creates special risks not associated with
unleveraged funds having a similar investment
objective and policies. These include the possibility
of higher volatility of the net asset value of the
Fund and the value of assets serving as asset
coverage for the AMPS.
Interest Rate Risk. The AMPS pay dividends based on
shorter-term interest rates. The Fund may invest the
proceeds from the issuance of the AMPS in Senior
Loans which pay interest based upon rates that float
with changes in interest rates, similar to short-term
rates. The interest rates on Senior Loans are
typically, although not always, higher than
shorter-term interest rates of securities with a
AAA/Aaa credit rating, which is the credit rating the
Fund anticipates receiving from Moody's and Fitch on
the AMPS. Shorter-term rates, including the floating
rates paid on the Fund's portfolio of Senior Loans,
can be expected to fluctuate. [If shorter-term
interest rates rise, dividend rates on the AMPS may
also rise since the auction setting the dividends on
AMPS will compete for investors with other short-term
instruments.] This rise in dividends rates could
result in the amount of dividends to be paid to
holders of AMPS exceeding the income from the Senior
Loans purchased by the Fund with the proceeds from
the sale of the AMPS. Similarly, the anticipated
differential on the rate anticipated to be paid on
the AMPS and the Fund's portfolio of Senior Loans
would decline or be eliminated if, in the future, the
rating agencies lower the rating assigned to the
AMPS. Because income from the Fund's entire
investment portfolio (not just the portion of the
portfolio purchased with the proceeds of the AMPS
offering) is available to pay dividends on the AMPS,
however, dividend rates on the AMPS would need to
exceed the rate of return on the Fund's investment
portfolio by a wide margin before the Fund's ability
to pay dividends on the AMPS would be jeopardized.
13
<PAGE>
Auction Risk. The dividend rate for the AMPS
normally is set through an auction process. In the
auction, holders of AMPS may indicate the dividend