Merrill Lynch Investment Managers said Friday that its initial public offering of common shares in Diversified Income Strategies Portfolio Inc., a closed-end fund, had raised gross proceeds of about $254 million, assuming full exercise of the underwriters' overallotment option, which may not occur.
Diversified Income Strategies Fund, which commenced trading on the New York Stock Exchange Jan. 27, seeks to give investors high current income by investing primarily in a diversified portfolio of floating-rate debt securities or instruments, including floating- or variable-rate loans, bonds, preferred securities (including convertible preferred securities), notes, or other debt securities or instruments that pay a floating rate of interest.
It generally intends to invest a substantial portion of its assets in high-yield securities or instruments that are rated below investment grade, according to the Merrill Lynch unit in Plainsboro, N.J.
"As the U.S. economy continues to strengthen and interest rates rise, fixed-income investors face the potential of falling bond prices," Kevin McKenna, the head of fixed-income sales at the unit, said in a press release. But the fund is intended to protect investors against the effect of higher rates and to let them participate in the higher yields available in floating-rate securities, he said.
