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PREFERRED INC. OPPORTUNITY FUND $70 MIL MMKT CUM PFD 'AA+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 29 /PRNewswire/ -- Preferred Income Opportunity Fund Inc.'s (NYSE: PFO) 700 shares of money market cumulative preferred stock are rated `AA+' by Fitch. The rating on the $70.0 million auction rate issue is based on the fund's investment guidelines, the discount factors required to determine eligible asset coverage, and either the maintenance of 225 percent minimum asset to liability coverage or the application of more conservative discount factors in determining eligible asset coverage for the fund's preferred stock investments. The fund's investment advisor, Flaherty & Crumrine Inc., invests at least 65 percent of fund assets in either fixed-rate or adjustable-rate preferred stock, primarily concentrated in the utility and banking industries. As of May 31, 1993, approximately 98 percent of the fund's net assets were invested in preferred stock.
 This rating does not address the market liquidity for auction rate money market cumulative preferred shares nor does it address the ability to remarket these shares at auction either now or in the future.
 Flaherty & Crumrine Inc. pursues strategies it expects to result in the fund's income rising in response to significant increases in interest rates, while being relatively resistant to the impact of significant declines in rates. The fund is managed with a view to maximizing the portion of the fund's distributions eligible for the Dividends Received Deduction, a 70 percent dividend exclusion available to corporate investors that can be applied to certain eligible investments held for at least 46 days.
 Auction rate preferred stock dividend rates are determined through a periodic bidding process, or auction. Auctions normally occur at 49-day intervals, but can be less frequent under certain conditions. The winning bid rate, or lowest yield, will apply to all accepted bids if sufficient clearing bids exist. If there are not enough bids, a maximum rate will apply for the subsequent rate period. The maximum rate is typically a function of the 60-day `AA' composite commercial paper rate.
 Preferred Income Opportunity Fund is a closed-end fund traded on the New York Stock Exchange.
 -0- 6/29/93
 /CONTACT: Steven B. Schoen, 212-908-0615, or Mary E. Griffin, 212-908-0537, both of Fitch/
 (PFO)


CO: Preferred Income Opportunity Fund Inc. ST: IN: FIN SU: RTG

MP -- NY070 -- 6805 06/29/93 15:09 EDT
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Publication:PR Newswire
Date:Jun 29, 1993
Words:374
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