Fitch Affirms Calamos Strategic Total Return Fund's Preferred Shares at 'AAA'

2008-05-16 23:58:53 -

- Fitch affirms the rating assigned to the auction rate cumulative preferred shares series M, TU, W, TH, F, A and B issued by the Calamos Strategic Total Return Fund (NYSE: CSQ) in the total amount of $200,000,000 at 'AAA'. The rating affirmation follows partial redemption of the preferred shares in the total amount of $880,000,000 or approximately 81% of the ARPS. The 'AAA' rating denotes expectations of very low credit risk.

The fund intends to change its primary method of leverage from preferred shares to a combination of debt and preferred shares. A proportionate amount of each series preferred shares is expected to be redeemed at the next dividend payable date, respectively, starting May 5, 2008.

Calamos Strategic Total Return Fund is a diversified, closed-end investment management company, which commenced investment operations in March 2004. The fund invests primarily in common and preferred stocks, convertible securities and income producing securities. The fund intends to invest at least 50% of its managed assets in equity securities and may invest up to 35% of its managed assets in securities of foreign issuers in both developed and emerging markets. The fund's assets are dynamically allocated among multiple asset classes, seeking to obtain an appropriate balance of risk and reward through all market cycles. As of January 31, 2008, the fund's total invested portfolio was approximately $3.6 billion.

The affirmed rating is based on the strength of the Fund's underlying portfolio that provides preferred stock liquidation coverage as well as the quality and experience of the fund's investment manager. At the time of the rating, the Fund's pro-forma ARPS coverage ratios that take the above named redemption into effect, calculated in accordance with the requirements of the 1940 Act as amended and the Fitch coverage ratio satisfied regulatory requirements mandating an asset coverage ratio of at least 200% as well as Fitch's minimum coverage ratio requirements of at least 100%.

The fund is managed by Calamos Advisors LLC. As of April 30, 2008, it managed approximately $43.7 billion in assets of individuals and institutions. Calamos Advisors is a wholly-owned subsidiary of Calamos Holdings, LLC and an indirect subsidiary of Calamos Asset Management, Inc., a publicly traded holding company.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, New York
Viktoria Baklanova, CFA, 212-908-9162
Yuriy Layvand, CPA, 212-908-9191
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