Leverage Summary / Asset Coverage Ratios
TTP: Tortoise Pipeline & Energy Fund, Inc.
As of 4/21/2017
1Includes non-use fees on the credit facility and excludes agent fees and amortization of debt issuance costs.
*Floating Rate (3-month LIBOR + 1.05%).
Mandatory Redeemable Preferred
Asset Coverage Ratios
TTP is required to have an asset coverage of 300% with respect to senior securities (debt) and 225% with respect to preferred stock (including debt & preferred) at the time of a common stock distribution declaration and as of the end of each month.
Basic Maintenance Covenant Requirements
Basic maintenance covenants must be passed at the time of a common stock distribution declaration and as of the end of each week.
Leverage in the form of senior notes, preferred stock and a revolving bank credit facility is utilized within TTP to acquire additional portfolio investments consistent with its investment philosophy. The terms of the leverage are governed by regulatory and contractual asset coverage requirements that arise from the use of leverage.
Leverage costs consist of: (1) interest expense on the senior notes and bank credit facility, including fees for unused portions of the bank credit facility and (2) distributions to preferred stockholders. In addition, TTP pays annual rating agency fees and fees and expenses associated with the issuance of leverage are capitalized and amortized over the term of the leverage.
TTP has a long-term target level of leverage of 25% of total assets. Temporary increases to up to 30% of total assets may be permitted, provided that such leverage is consistent with the limits set forth in the 1940 Act and rating agency guidelines and that such leverage is expected to be reduced over time in an orderly fashion to reach the long-term target. The leverage ratio is impacted by increases or decreases in investment values, issuance of equity and/or the sale of securities when proceeds are used to reduce leverage.