SCHEDULE: PIMCO NY Muni Fund II: BAC Boosts Preferred Stake to 88.7%

Bank of America Corporation and its affiliate Banc of America Preferred Funding Corp increased their beneficial ownership in PIMCO New York Municipal Income Fund II to 88.7% following a corporate reorganization and share exchange.

Summary

• Bank of America Corporation (BAC) and Banc of America Preferred Funding Corp (BAPFC) now beneficially own 1,170 Remarketable Variable Rate MuniFund Term Preferred Shares (RVMTP Shares) of PIMCO New York Municipal Income Fund II.
• This represents 88.7% of the class of RVMTP Shares.
• The increase in ownership resulted from the reorganization of PIMCO New York Municipal Income Fund (PNF) and PIMCO New York Municipal Income Fund III (PYN) into PIMCO New York Municipal Income Fund II (the "Issuer") on August 1, 2025.
• As part of the reorganization, BAPFC exchanged its 410 RVMTP Shares of PNF and 260 RVMTP Shares of PYN for an equal number of RVMTP Shares of the Issuer.
• The RVMTP Merger Shares, totaling 670 shares (410 from PNF + 260 from PYN), combined with the existing 500 Original PNI Series 2054 RVMTP Shares, now comprise the 1,170 PNI Series 2054 RVMTP Shares held by the Investor.
• The RVMTP Shares, including the newly exchanged shares, are rated AA by Fitch.

Sentiment

Score: 6

Explanation: The filing is largely neutral as it reports a factual corporate reorganization and share exchange. The confirmation of an 'AA' rating by Fitch for the preferred shares is a positive indicator of credit quality, contributing slightly to a positive sentiment, but the core event is a structural change rather than a performance update.

Positives

• Consolidation of preferred shareholdings for Banc of America Preferred Funding Corp into a single PIMCO entity, potentially simplifying management and oversight.
• The reorganization maintains the investment grade rating of AA by Fitch for all RVMTP Shares, indicating continued strong credit quality.

Negatives

• No specific negatives are detailed in the filing regarding the reorganization or the company's financial performance. The filing is primarily a factual report of a corporate action.

Risks

• Failure to comply with reporting requirements (Sections 7.1(n) and 7.1(o)) or a Registration Rights Failure could result in additional fees payable by the Acquiring Fund to the Investor.
• Potential for material adverse effects on the Acquiring Fund's business, properties, or affairs, or its ability to perform obligations, from litigation, administrative proceedings, or business developments.
• Risk of non-compliance with the Effective Leverage Ratio or 1940 Act Asset Coverage requirements, which could trigger specific actions by the Acquiring Fund.
• Risk of not maintaining investment policies (e.g., 80% in investment grade securities, 90% in tax-exempt municipal securities), which requires prior written consent from the Investor or a 30-day cure period.

Future Outlook

The filing primarily details a completed corporate reorganization and share exchange. It includes forward-looking statements related to the Acquiring Fund's ongoing compliance with investment policies (e.g., maintaining at least 80% of total assets in investment-grade securities, at least 90% in tax-exempt municipal securities), maintenance of its regulated investment company status, and adherence to Effective Leverage Ratio and 1940 Act Asset Coverage requirements. It also outlines the Fund's commitment to maintaining a system of internal accounting controls and disclosure controls.

Management Comments

• The Acquiring Fund shall use commercially reasonable best efforts to engage at all times a Calculation and Paying Agent to perform the duties to be performed by the Calculation and Paying Agent specified herein and in the Statement.
• The Acquiring Fund will qualify as a regulated investment company within the meaning of Section 851 of the Code and the dividends made with respect to the RVMTP Shares will qualify as exempt interest dividends to the extent they are reported as such by the Acquiring Fund and permitted by Section 852(b)(5)(A) of the Code.
• The Acquiring Fund agrees that it will only acquire equity securities pursuant to this Section 1.D. that it reasonably expects at the time of acquisition to hold for a period not to exceed five (5) years from the date of acquisition.

Industry Context

This filing reflects a common strategy in the closed-end fund industry: consolidation of smaller funds into a larger, existing fund. Such reorganizations aim to achieve economies of scale, reduce operational costs, and potentially enhance liquidity for shareholders. For PIMCO, it streamlines its New York municipal income fund offerings. For Bank of America, as a significant preferred shareholder, it consolidates its investment in a more efficient structure. The continued AA rating by Fitch for the preferred shares indicates stability in the credit quality of the underlying assets and the fund's structure, which is crucial in the municipal bond market.

Comparison to Industry Standards

• The maintenance of an "AA" rating by Fitch for the RVMTP Shares is a strong indicator of credit quality, aligning with high-grade fixed income standards. This rating suggests a very low expectation of default risk, comparable to highly-rated municipal bonds or corporate debt.
• The fund's investment policy to hold at least 90% of its total assets in municipal securities that pay interest exempt from regular federal income tax is standard for municipal income funds, catering to investors seeking tax-advantaged income.
• The policy of investing at least 80% of total assets in investment-grade securities (Baa3/BBBor higher) is a common benchmark for conservative fixed-income funds, aiming to minimize credit risk.
• The fund's structure, including the use of Remarketable Variable Rate MuniFund Term Preferred Shares, is a common leverage strategy for closed-end funds to enhance income for common shareholders, while providing preferred shareholders with a stable, often tax-advantaged, income stream.

Corporate Governance

Legal Proceedings

• Bank of America Corporation and certain affiliates (including BofA Securities, Inc. and Bank of America, N.A.) have been involved in civil proceedings and regulatory actions concerning business conduct, with some resulting in findings of federal or state securities law violations, as reported in BofA Securities Form BD.

Related Party Transactions

• The core transaction involves Banc of America Preferred Funding Corporation (an affiliate of Bank of America Corporation) exchanging preferred shares from two PIMCO funds (PIMCO New York Municipal Income Fund and PIMCO New York Municipal Income Fund III) for preferred shares in a consolidated PIMCO fund (PIMCO New York Municipal Income Fund II) as part of a corporate reorganization. This constitutes a transaction between related entities (PIMCO funds and Bank of America entities as significant shareholders).

Stakeholder Impact

• Preferred Shareholders (Bank of America entities): Consolidation of holdings in a single fund, potentially simplifying administration and oversight. Continued receipt of dividends from the RVMTP Shares.
• Common Shareholders of PIMCO New York Municipal Income Fund II: The reorganization aims for operational efficiencies, which could indirectly benefit common shareholders through potentially lower expense ratios or improved fund performance, though not explicitly stated in this filing.
• Shareholders of PNF and PYN: Their funds were reorganized into PIMCO New York Municipal Income Fund II, implying a change in their investment vehicle.

Next Steps

• The Acquiring Fund will continue to provide regular portfolio holdings reports and calculations of Effective Leverage Ratio, 1940 Act Asset Coverage, and Additional Asset Coverage to the Investor.
• The Acquiring Fund will use commercially reasonable best efforts to comply with reasonable due diligence requests from the Investor for proposed sales of RVMTP Shares.
• The Acquiring Fund will promptly enter into an agreement of the type specified in Section 12(d)(1)(E)(iii) of the 1940 Act upon request from the Investor or any permitted transferee.

Key Dates

Recommendation

This filing is primarily a procedural update regarding a corporate reorganization and share exchange, not a performance report or a new strategic initiative that would fundamentally alter the investment thesis for PIMCO New York Municipal Income Fund II. The confirmation of the 'AA' rating for the preferred shares is positive for credit quality, but the information does not provide a basis for a strong buy or sell recommendation. For investors holding the preferred shares, the status quo is largely maintained in a consolidated structure. For common shareholders, the impact is indirect and not detailed enough in this filing to warrant a change in recommendation.

Keywords

PIMCO, Bank of America, SEC filing, Schedule 13D, beneficial ownership, preferred shares, municipal bonds, closed-end fund, corporate reorganization, share exchange, RVMTP, investment fund