Fitch Ratings assigns an 'AA' rating to the following Variable-Rate Term
Preferred Shares (VRTP Shares) issued by Eaton Vance Floating-Rate
Income Plus Fund (NYSE: EFF), a closed-end fund advised by Eaton Vance
Management (Advisor):
--$36,000,000 of Series C-1 VRTP Shares, with a mandatory redemption
date of July 8, 2016.
The closing date for the VRTP Shares was July 10, 2013.
KEY RATING DRIVERS
--Expectations of very low credit risk and very strong capacity for
payment of dividends and liquidation preference at the end of the term
or upon mandatory redemption;
--Structural provisions of the VRTP Shares including the Asset Coverage
and Effective Leverage Ratio tests requiring the fund to maintain
minimum levels of asset coverage;
--Sufficient asset coverage provided to the VRTP Shares as calculated
per the fund's over-collateralization (OC) tests;
--Results of Fitch-performed stress tests meant to compare the fund's
minimum asset coverage tests to the stresses outlined in Fitch's
closed-end fund rating criteria reflecting changes to leverage amount
and portfolio composition;
--Legal and regulatory parameters that govern the fund's operations; and
--The capabilities of the Advisor as investment manager.
ASSET COVERAGE
At the time of the issuance, the fund's asset coverage ratio for the
newly issued VRTP Shares, as calculated in accordance with the
Investment Company Act of 1940 (1940 Act), exceeded 225%, which is the
minimum asset coverage required by transactional documents. Furthermore,
the fund's pro forma effective leverage ratio was below the 45% maximum
leverage ratio allowed by the fund's governing documents.
Should the asset coverage tests for the VRTP Shares decline below their
minimum threshold amounts and are not cured in a pre-specified
timeframe, the transactional documents require the fund to reposition
portfolio assets or reduce leverage in a sufficient amount to restore
compliance with the applicable test.
STRESS TESTS
Fitch performed various stress tests on the fund to assess the strength
of the structural protections of the VRTP Shares. The fund's asset
coverage and effective leverage tests were compared to the rating
stresses outlined in Fitch's closed-end fund rating criteria. These
tests included determining various 'worst case' scenarios where the
fund's leverage and portfolio composition migrated to the outer limits
of the fund's operating and investment guidelines. For example, current
portfolio composition was stressed by increasing the fund's issuer
concentration, while simultaneously migrating the portfolio to increased
2nd lien or covenant-lite loans. The results of the stress tests
indicate the structural protections of the VRTP Shares are in line with
Fitch's rating criteria at an 'AA' rating level. In certain remote
circumstances the asset coverage available to the VRTP Shares fell below
the 'AA' threshold, but in any case did not fall below 'BBB'.
FUND PROFILE
Eaton Vance Floating-Rate Income Plus Fund is a newly organized,
diversified, closed-end management investment company. The fund's
investment objective is providing total return, with an emphasis on
income. Under normal market conditions, the fund will invest at least
80% of its total assets in senior loans of domestic and foreign
borrowers that are denominated in U.S. dollars and foreign currencies.
On the VRTP Shares closing date, the fund's pro-forma total assets were
approximately $206 million. The fund's total leverage, including the
VRTP Shares, was approximately $77 million with a leverage ratio of 37%.
In addition to the VRTP Shares, the fund also draws on a committed
credit facility for leverage. The credit facility is secured by a
general senior first claim on the fund's assets. The VRTP Shares will be
subordinate to the credit facility and senior to the fund's outstanding
common shares.
THE ADVISOR
Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
investment adviser to the fund. As of March 31, 2013, Eaton Vance Corp.
and affiliates managed approximately $255 billion of assets, including
approximately $34 billion in floating-rate loan assets.
RATINGS SENSITIVITIES
The ratings may be sensitive to material changes in the credit quality
or market risk profile of the fund or the diversification of the
portfolio by issuer or sector. Material changes to the terms and
provisions of leverage senior to the VRTP Shares or changes to the
derivative strategy and usage may also impact the rating assigned to the
VRTP Shares. A material adverse deviation from Fitch guidelines for any
key rating driver could cause the ratings to be lowered by Fitch.
For additional information about Fitch closed-end fund ratings
guidelines, please review the criteria referenced below, which can be
found on Fitch's website.
To receive Fitch's forthcoming research on closed-end funds please go
to: http://forms.fitchratings.com/forms/FAMCEFOptinform
Additional information is available at 'www.fitchratings.com'.
The sources of information used to assess this rating were the public
domain and Eaton Vance.
Applicable Criteria and Related Research:
--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 15, 2012).
Applicable Criteria and Related Research:
Rating Closed-End Fund Debt and Preferred Stock
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686101
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=796035
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