Correspondence 0001683863-23-008740 from Voya Enhanced Securitized Income Fund (CIK 0001995568)
Voya Enhanced Securitized Income Fund (CIK 0001995568)
Date: Dec. 28, 2023 · CIK: 0001995568 · Accession: 0001683863-23-008740
AI Filing Summary & Sentiment
File numbers found in text: 333-274872, 811-23903
Letter
VIA EDGAR Securities and Exchange Commission Division of Investment Management Re: Voya Enhanced Securitized Income Fund Initial Registration Statement on Form N-2 File Nos: 333-274872 and 811-23903
Dear Ms. Hahn:
On behalf of Voya Enhanced Securitized Income Fund (the "Fund"), we are writing to respond to comments of the staff (the "Staff") of the U.S. Securities and Exchange Commission (the "Commission") that you provided via e-mail on Wednesday November 15, 2023 in connection with the Fund's registration statement relating to the common shares of beneficial interest of the Fund, which was filed with the Commission on September 1, 2023 (SEC Accession No. 0001683863-23- 007048) (the "Registration Statement"). Capitalized terms not defined herein have the meaning given to them in the Registration Statement.
The following sets forth the Staff's comments and the Fund's responses thereto. We note that the responses set forth herein, as applicable, will be observed by the Fund but do not necessarily represent the position or policy of other funds advised Voya Investments, LLC ("Voya Investments" or the "Adviser") or sub-advised by Voya Investment Management Co. LLC ("Voya IM" or the "Sub- Adviser") or its affiliates. The below responses will be reflected, to the extent applicable, in the form of a pre-effective amendment to the Registration Statement.
General
1.Staff Comment: We note that the Registration Statement is missing information and exhibits (e.g., seed financial statements of the Fund) and contains bracketed disclosures (e.g., fee table and expense example). We may have comments on such portions when you complete them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment. Please plan accordingly.
Response: The Fund confirms that these items will be submitted in a subsequent amendment to the Registration Statement and acknowledges it is aware the Staff may have additional comments once it has reviewed these items.
2.Staff Comment: Where a comment is made regarding disclosure in one location, it is applicable to all similar disclosure appearing elsewhere in the Registration Statement. Please make all conforming changes.
Response: In cases where the Fund undertakes to revise disclosure in response to a comment from the Staff, the Fund will make conforming changes to similar disclosure appearing elsewhere in the Registration Statement to the extent applicable.
3.Staff Comment: Please advise us if you expect to submit any exemptive application(s) or no-action request(s) in connection with the Registration Statement.
Response: The Fund does not currently intend to submit an exemptive application or a no-action request in connection with the Registration Statement.
4.Staff Comment: We note that the Fund intends to issue three separate classes of shares: A, C and I. If the Fund has not yet received exemptive relief to offer multiple classes of shares, please revise the disclosure to clearly identify which share class will be available for purchase unless and until the Fund receives exemptive relief. Please also state each time the fund references the offer of multiple classes that it is uncertain when such exemptive relief will be granted, if at all.
Response: The Fund intends to rely on an exemptive order granted to ING Pilgrim Investments, LLC ("ING"), ING Pilgrim Senior Income Fund and ING Pilgrim Securities Inc. on March 27, 2001 (the "Order"). Under the Order, certain registered closed-end management investment companies are permitted to issue multiple classes of shares and to impose asset-based distribution fees and early withdrawal charges. The Order extends to any other registered closed-end management investment company that may be organized in the future for which ING, or any entity controlling, controlled by, or under common control with ING acts as principal underwriter or investment adviser and which operates as an interval fund pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). On February 26, 2002, ING changed its name from "ING Pilgrim Investments, LLC" to "ING Investments, LLC." On May 1, 2014, the adviser's name was further changed from "ING Investments, LLC" to "Voya Investments, LLC." Voya Investments, LLC is the adviser to the Fund and therefore the Fund may rely upon the Order. See In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-24881 (Feb. 28, 2001) (notice), Rel. No. IC-24916 (Mar. 27, 2001) (order).
5.Staff Comment: Please tell us if you have presented or will present any "test the waters" materials to potential investors in connection with this offering. If so, please provide us with copies of such materials.
Response: The Fund has not and does not intend to present any "test the waters" materials to potential investors in connection with this offering.
6.Staff Comment: Please confirm that the Fund does not intend to issue preferred or debt securities within a year from the effective date of the Registration Statement.
Response: The Fund does not intend to issue preferred stock or debt securities within a year from the effective date of the Registration Statement.
Accounting Comments General
7.Staff Comment: Please explain to us how the fund intends to account for any organization and offering costs expected to be incurred, including references to any applicable guidance under U.S. GAAP.
Response: In accordance with ASC 720-15-25-1, organizational costs will be charged to expenses as incurred. Organization costs consist of costs incurred to establish the Fund and enable it legally to do business. Offering costs are accounted for as deferred costs until operations begin in accordance with ASC 946-20-25-6. Offering costs are accounted for as deferred costs until operations begin. Offering costs will be amortized by the Fund over the 12-month period beginning on the closing date of the initial offering. Under the Fund's expense limitation agreement, the Adviser is contractually obligated to limit certain expenses of the Fund, including non-recurring offering and organizational expenses. The obligation is subject to possible recoupment by the Adviser within 36 months of the waiver or reimbursement, to the extent such recoupment does not cause the Fund's operating expense ratio to exceed the lesser of (i) the expense limitation in effect at the time of the waiver, and (ii) the expense limitation in effect at the time of such repayment.
8.Staff Comment: Please explain to us whether the fund intends to enter into any warehousing transaction or fund acquisition.
Response: The Fund does not currently intend to directly enter into any warehousing transaction or fund acquisition.
Fee Table
9.Staff Comment: To the extent that the fund intends to invest in the shares of one or more acquired funds, please include an Acquired Fund Fees and Expenses caption to the fee table to reflect the costs expected to be incurred indirectly by the fund through such investments. Please see Form N-2, Item 3, General Instruction 10.
Response: Although the Fund may invest in other investment companies, including exchange-traded funds ("ETFs"), the related fees and expenses for such investments are not expected to exceed one basis point of the Fund's average net assets. In reliance on Item 3, General Instruction 10 of Form N-
2, the Fund will include these fees and expenses under the subcaption "Other Expenses."
10.Staff Comment: We note that the Fund's management fee is calculated on "total managed assets," including borrowings. Please restate the management fee rate in the fee table as a percentage of net assets, including the effects of leverage, that would be attributable to common shares.
Response: The Fund confirms that the fee table will be restated in a future pre-effective amendment to the Fund's registration statement to reflect the management fee rate as a percentage of net assets, including the effects of leverage, that would be attributable to common shares.
Seed Financial Statements
11.Staff Comment: Please explain to us whether the seed capital financial statements will include a seed statement of operations. If no seed statement of operations is expected to be included, please explain the basis for omitting such financial statement.
Response: The Fund confirms that the seed financial statement will include a seed statement of operations.
Legal Comments Cover Page
12.Staff Comment: Please revise the formatting of the cover page to enhance readability (e.g. please use appropriately size font).
Response: The Fund has made the requested change as reflected at Exhibit A.
13.Staff Comment: Please revise the cover page to disclose that the Fund is an interval fund that will make periodic repurchase offers for its securities, subject to certain conditions. The cover page should also specify the anticipated frequency of such offers; the intervals between deadlines for repurchase requests, pricing and repayment and the anticipated timing of the fund's initial repurchase offer. Please include a cross reference to those sections of the prospectus that discuss the Fund's repurchase policies and the attendant risks. See Guide 10 to Form N-2.
Response: The Fund has updated the disclosure in substantially the form as requested as reflected at Exhibit A.
14.Staff Comment: Please include on the cover page customary risk disclosures provided by closed-end fund registrants whose shares will not be listed on an exchange, including the following (as applicable to the Fund)
•The Fund shares will not be listed on an exchange and it is not anticipated that a secondary market will develop. Thus, an investment in the Company may not be suitable for investors who may need the money they invest in a specified timeframe.
•The amount of distributions that the Fund may pay, if any, is uncertain.
•The Fund may pay distributions in significant part from sources that may not be available in the future and that are unrelated to the Fund's performance, such as from offering proceeds, borrowings, and amounts from the Fund's affiliates that are subject to repayment by investors.
•An investor will pay a sales load of up to [_]% and offering expenses of up to [_]% on the amounts it invests. If you pay the maximum aggregate [__]% for sales load and offering expenses, you must experience a total return on your net investment of [__]% in order to recover these expenses.
•Below-investment-grade instruments ("junk" bonds), non-agency mortgage-backed securities, securities which are at risk of default as to the repayment of principal and/or interest at the time of acquisition by the fund or are rated in the lower rating categories or are unrated in which the Fund will invest may be difficult to value and may be illiquid. (Please include a cross reference to sections in the registration statement discussing applicable risks).
Response: The Fund has added the applicable portions of the above disclosure to its cover page, in substantially the form as requested as reflected at Exhibit A.
15.Staff Comment: Please clarify the disclosure on the cover page that states that the Fund "may or may not list its shares." In this regard, we note that disclosure on page 10, stating that "no market for Shares is expected to exist."
Response: The Fund has made the requested change as reflected at Exhibit A.
16.Staff Comment: Please disclose that the Fund will be investing in securitized credit instruments, as defined by the Registration Statement, and that such instruments may be of any maturity, duration or credit quality, and that such investments may be rated below investment grade ("junk bonds").
Response: The Fund has made the requested change as reflected at Exhibit A.
17.Staff Comment: Please include a cross-reference to the prospectus discussion regarding the risks associated with a leveraged capital structure. See Item 1.1.j of Form N-2 and Guidelines to Form N- 2, Guide 6.
Response: The Fund has made the requested change as reflected at Exhibit A.
Prospectus Summary
Principal Investment Strategies, p. 1-4
18.Staff Comment: We note that "securitized credit instruments" are defined by the Fund to include "whole loans, participation in loans, including commercial and residential loans and other instruments representing cash flows from various assets such as loans, leases and various warehouse facilities." Please explain in your response how the inclusion of such types of investments would be consistent with the plain English meaning or established industry usage of the term "securitized credit." Please revise the disclosed definition of "securitized credit instruments" accordingly.
Response: The Fund has revised its disclosure to state as marked below:
Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in securitized credit instruments".
Securitized credit instruments include, but are not limited to: commercial
mortgage-backed securities ("CMBS"); asset-backed securities ("ABS"); collateralized loan obligations ("CLOs"); agency and non-agency residential mortgage-backed securities ("RMBS"); collateralized mortgage obligations ("CMOs"); whole loans and participations in whole loans, including commercial and residential mortgage loans and other securitized investments representing interests in cashflows from various assets, such as loans, leases and warehouse facilities. The Fund may invest in securitized credit instruments directly or indirectly, for example, by investing in derivatives or synthetic instruments with underlying assets that have similar economic characteristics to the securitized credit instruments in which the Fund may make direct investments. The Fund may also invest in whole loans and participations in whole loans, including commercial and residential mortgage loans.
19.Staff Comment: We note that in addition to the stated policy to invest at least 80% of its net assets (plus borrowings for investment purposes) in securitized credit, the disclosures in the section state that the Fund "may" invest in a variety of other investments, including ETFs, various types of derivatives and synthetic instruments. Please review the disclosures and confirm whether the Fund, in accordance with its principal investment strategies, intends to invest in all categories of investments that are referenced. If any of the listed investments are not principal investment strategies, please revise the disclosure accordingly.
Response: The Fund has revised its principal investment strategies to remove references to investments in ETFs, currency related derivatives, currency forwards and currency swaps, as the Fund does not intend to invest in these as a principal investment strategy.
20.Staff Comment: With respect to investments in ETFs, please confirm that the Fund will look thro
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filename1.htm
Voya Enhanced Securitized Income Fund
ROPES & GRAY LLP
PRUDENTIAL TOWER
800 BOYLSTON STREET
BOSTON, MA 02199-3600
WWW.ROPESGRAY.COM
December 28, 2023
VIA EDGAR
Ms. Jaea F. Hahn, Esq.
Securities and Exchange Commission
Division of Investment Management
100 F Street, NE
Washington, D.C. 20549
Kathleen Nichols
T +1 617 854 2418
kathleen.nichols@ropesgray.com
Re:
Voya Enhanced Securitized Income Fund
Initial Registration Statement on Form N-2
File Nos: 333-274872 and 811-23903
Dear Ms. Hahn:
On behalf of Voya Enhanced Securitized Income Fund (the "Fund"), we are writing to respond to comments of the staff (the "Staff") of the U.S. Securities and Exchange Commission (the "Commission") that you provided via e-mail on Wednesday November 15, 2023 in connection with the Fund's registration statement relating to the common shares of beneficial interest of the Fund, which was filed with the Commission on September 1, 2023 (SEC Accession No. 0001683863-23- 007048) (the "Registration Statement"). Capitalized terms not defined herein have the meaning given to them in the Registration Statement.
The following sets forth the Staff's comments and the Fund's responses thereto. We note that the responses set forth herein, as applicable, will be observed by the Fund but do not necessarily represent the position or policy of other funds advised Voya Investments, LLC ("Voya Investments" or the "Adviser") or sub-advised by Voya Investment Management Co. LLC ("Voya IM" or the "Sub- Adviser") or its affiliates. The below responses will be reflected, to the extent applicable, in the form of a pre-effective amendment to the Registration Statement.
General
1.Staff Comment: We note that the Registration Statement is missing information and exhibits (e.g., seed financial statements of the Fund) and contains bracketed disclosures (e.g., fee table and expense example). We may have comments on such portions when you complete them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment. Please plan accordingly.
Response: The Fund confirms that these items will be submitted in a subsequent amendment to the Registration Statement and acknowledges it is aware the Staff may have additional comments once it has reviewed these items.
2.Staff Comment: Where a comment is made regarding disclosure in one location, it is applicable to all similar disclosure appearing elsewhere in the Registration Statement. Please make all conforming changes.
Response: In cases where the Fund undertakes to revise disclosure in response to a comment from the Staff, the Fund will make conforming changes to similar disclosure appearing elsewhere in the Registration Statement to the extent applicable.
3.Staff Comment: Please advise us if you expect to submit any exemptive application(s) or no-action request(s) in connection with the Registration Statement.
Response: The Fund does not currently intend to submit an exemptive application or a no-action request in connection with the Registration Statement.
4.Staff Comment: We note that the Fund intends to issue three separate classes of shares: A, C and I. If the Fund has not yet received exemptive relief to offer multiple classes of shares, please revise the disclosure to clearly identify which share class will be available for purchase unless and until the Fund receives exemptive relief. Please also state each time the fund references the offer of multiple classes that it is uncertain when such exemptive relief will be granted, if at all.
Response: The Fund intends to rely on an exemptive order granted to ING Pilgrim Investments, LLC ("ING"), ING Pilgrim Senior Income Fund and ING Pilgrim Securities Inc. on March 27, 2001 (the "Order"). Under the Order, certain registered closed-end management investment companies are permitted to issue multiple classes of shares and to impose asset-based distribution fees and early withdrawal charges. The Order extends to any other registered closed-end management investment company that may be organized in the future for which ING, or any entity controlling, controlled by, or under common control with ING acts as principal underwriter or investment adviser and which operates as an interval fund pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). On February 26, 2002, ING changed its name from "ING Pilgrim Investments, LLC" to "ING Investments, LLC." On May 1, 2014, the adviser's name was further changed from "ING Investments, LLC" to "Voya Investments, LLC." Voya Investments, LLC is the adviser to the Fund and therefore the Fund may rely upon the Order. See In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-24881 (Feb. 28, 2001) (notice), Rel. No. IC-24916 (Mar. 27, 2001) (order).
5.Staff Comment: Please tell us if you have presented or will present any "test the waters" materials to potential investors in connection with this offering. If so, please provide us with copies of such materials.
Response: The Fund has not and does not intend to present any "test the waters" materials to potential investors in connection with this offering.
6.Staff Comment: Please confirm that the Fund does not intend to issue preferred or debt securities within a year from the effective date of the Registration Statement.
Response: The Fund does not intend to issue preferred stock or debt securities within a year from the effective date of the Registration Statement.
Accounting Comments General
7.Staff Comment: Please explain to us how the fund intends to account for any organization and offering costs expected to be incurred, including references to any applicable guidance under U.S. GAAP.
Response: In accordance with ASC 720-15-25-1, organizational costs will be charged to expenses as incurred. Organization costs consist of costs incurred to establish the Fund and enable it legally to do business. Offering costs are accounted for as deferred costs until operations begin in accordance with ASC 946-20-25-6. Offering costs are accounted for as deferred costs until operations begin. Offering costs will be amortized by the Fund over the 12-month period beginning on the closing date of the initial offering. Under the Fund's expense limitation agreement, the Adviser is contractually obligated to limit certain expenses of the Fund, including non-recurring offering and organizational expenses. The obligation is subject to possible recoupment by the Adviser within 36 months of the waiver or reimbursement, to the extent such recoupment does not cause the Fund's operating expense ratio to exceed the lesser of (i) the expense limitation in effect at the time of the waiver, and (ii) the expense limitation in effect at the time of such repayment.
8.Staff Comment: Please explain to us whether the fund intends to enter into any warehousing transaction or fund acquisition.
Response: The Fund does not currently intend to directly enter into any warehousing transaction or fund acquisition.
Fee Table
9.Staff Comment: To the extent that the fund intends to invest in the shares of one or more acquired funds, please include an Acquired Fund Fees and Expenses caption to the fee table to reflect the costs expected to be incurred indirectly by the fund through such investments. Please see Form N-2, Item 3, General Instruction 10.
Response: Although the Fund may invest in other investment companies, including exchange-traded funds ("ETFs"), the related fees and expenses for such investments are not expected to exceed one basis point of the Fund's average net assets. In reliance on Item 3, General Instruction 10 of Form N-
2, the Fund will include these fees and expenses under the subcaption "Other Expenses."
10.Staff Comment: We note that the Fund's management fee is calculated on "total managed assets," including borrowings. Please restate the management fee rate in the fee table as a percentage of net assets, including the effects of leverage, that would be attributable to common shares.
Response: The Fund confirms that the fee table will be restated in a future pre-effective amendment to the Fund's registration statement to reflect the management fee rate as a percentage of net assets, including the effects of leverage, that would be attributable to common shares.
Seed Financial Statements
11.Staff Comment: Please explain to us whether the seed capital financial statements will include a seed statement of operations. If no seed statement of operations is expected to be included, please explain the basis for omitting such financial statement.
Response: The Fund confirms that the seed financial statement will include a seed statement of operations.
Legal Comments Cover Page
12.Staff Comment: Please revise the formatting of the cover page to enhance readability (e.g. please use appropriately size font).
Response: The Fund has made the requested change as reflected at Exhibit A.
13.Staff Comment: Please revise the cover page to disclose that the Fund is an interval fund that will make periodic repurchase offers for its securities, subject to certain conditions. The cover page should also specify the anticipated frequency of such offers; the intervals between deadlines for repurchase requests, pricing and repayment and the anticipated timing of the fund's initial repurchase offer. Please include a cross reference to those sections of the prospectus that discuss the Fund's repurchase policies and the attendant risks. See Guide 10 to Form N-2.
Response: The Fund has updated the disclosure in substantially the form as requested as reflected at Exhibit A.
14.Staff Comment: Please include on the cover page customary risk disclosures provided by closed-end fund registrants whose shares will not be listed on an exchange, including the following (as applicable to the Fund)
•The Fund shares will not be listed on an exchange and it is not anticipated that a secondary market will develop. Thus, an investment in the Company may not be suitable for investors who may need the money they invest in a specified timeframe.
•The amount of distributions that the Fund may pay, if any, is uncertain.
•The Fund may pay distributions in significant part from sources that may not be available in the future and that are unrelated to the Fund's performance, such as from offering proceeds, borrowings, and amounts from the Fund's affiliates that are subject to repayment by investors.
•An investor will pay a sales load of up to [_]% and offering expenses of up to [_]% on the amounts it invests. If you pay the maximum aggregate [__]% for sales load and offering expenses, you must experience a total return on your net investment of [__]% in order to recover these expenses.
•Below-investment-grade instruments ("junk" bonds), non-agency mortgage-backed securities, securities which are at risk of default as to the repayment of principal and/or interest at the time of acquisition by the fund or are rated in the lower rating categories or are unrated in which the Fund will invest may be difficult to value and may be illiquid. (Please include a cross reference to sections in the registration statement discussing applicable risks).
Response: The Fund has added the applicable portions of the above disclosure to its cover page, in substantially the form as requested as reflected at Exhibit A.
15.Staff Comment: Please clarify the disclosure on the cover page that states that the Fund "may or may not list its shares." In this regard, we note that disclosure on page 10, stating that "no market for Shares is expected to exist."
Response: The Fund has made the requested change as reflected at Exhibit A.
16.Staff Comment: Please disclose that the Fund will be investing in securitized credit instruments, as defined by the Registration Statement, and that such instruments may be of any maturity, duration or credit quality, and that such investments may be rated below investment grade ("junk bonds").
Response: The Fund has made the requested change as reflected at Exhibit A.
17.Staff Comment: Please include a cross-reference to the prospectus discussion regarding the risks associated with a leveraged capital structure. See Item 1.1.j of Form N-2 and Guidelines to Form N- 2, Guide 6.
Response: The Fund has made the requested change as reflected at Exhibit A.
Prospectus Summary
Principal Investment Strategies, p. 1-4
18.Staff Comment: We note that "securitized credit instruments" are defined by the Fund to include "whole loans, participation in loans, including commercial and residential loans and other instruments representing cash flows from various assets such as loans, leases and various warehouse facilities." Please explain in your response how the inclusion of such types of investments would be consistent with the plain English meaning or established industry usage of the term "securitized credit." Please revise the disclosed definition of "securitized credit instruments" accordingly.
Response: The Fund has revised its disclosure to state as marked below:
Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in securitized credit instruments".
Securitized credit instruments include, but are not limited to: commercial
mortgage-backed securities ("CMBS"); asset-backed securities ("ABS"); collateralized loan obligations ("CLOs"); agency and non-agency residential mortgage-backed securities ("RMBS"); collateralized mortgage obligations ("CMOs"); whole loans and participations in whole loans, including commercial and residential mortgage loans and other securitized investments representing interests in cashflows from various assets, such as loans, leases and warehouse facilities. The Fund may invest in securitized credit instruments directly or indirectly, for example, by investing in derivatives or synthetic instruments with underlying assets that have similar economic characteristics to the securitized credit instruments in which the Fund may make direct investments. The Fund may also invest in whole loans and participations in whole loans, including commercial and residential mortgage loans.
19.Staff Comment: We note that in addition to the stated policy to invest at least 80% of its net assets (plus borrowings for investment purposes) in securitized credit, the disclosures in the section state that the Fund "may" invest in a variety of other investments, including ETFs, various types of derivatives and synthetic instruments. Please review the disclosures and confirm whether the Fund, in accordance with its principal investment strategies, intends to invest in all categories of investments that are referenced. If any of the listed investments are not principal investment strategies, please revise the disclosure accordingly.
Response: The Fund has revised its principal investment strategies to remove references to investments in ETFs, currency related derivatives, currency forwards and currency swaps, as the Fund does not intend to invest in these as a principal investment strategy.
20.Staff Comment: With respect to investments in ETFs, please confirm that the Fund will look thro