KTF Preferred Shares Keep AA Rating During Liquidation
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Fitch Ratings affirmed its AA long-term rating on September 23, 2026, for DWS Municipal Income Trust’s ﹩190 million of Series 2020-1 Variable Rate MuniFund Term Preferred Shares.
Fitch cited sufficient asset coverage, mandatory deleveraging protections, the fund’s legal structure, and the capabilities of DWS Investment Management Americas. It calculated KTF’s effective leverage at about 38% as of August 31 and said the portfolio could withstand a 38% market-value decline before breaching its total overcollateralization test.
Why it matters
The affirmation is supporting evidence for KTF’s financing position during its planned liquidation. The fund told the SEC on September 14 that it expects to redeem all 3,800 Series 2020-1 preferred shares on October 14 as part of the liquidation. The notice also cautioned that market conditions or other factors could delay the redemption.
The AA rating applies to the preferred shares, not to KTF’s common shares or its final liquidating value. Common shareholders still face portfolio-price, liquidity, tax, and timing uncertainty as assets are converted to cash. The next concrete checkpoints are completion of the preferred redemption and the fund’s final liquidating distribution, which is expected in November.
Sources
This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.