Basel III to Affect Taxable Closed- End Funds
Jun. 18, 2013 - Fitch Ratings -
Basel III Expected to Increase Borrowing Costs: Basel III banking capital requirements are expected to result in increased borrowing costs and, potentially, diminished availability of bankprovided credit with migration of lending toward less regulated segments of the financial system (e.g. shadow banking). Regulation of the repo market is also impacting availability of repo funding nontraditional collateral. This has implications for closed-end funds (CEFs), especially taxable CEFs, as they are heavily reliant on repos and bank lines of credit as providers of leverage.