First Trust/Highland Capital Floating Rate Income Fund II Suspension of Monthly Distributions



    TSX Symbol FHM.UN

    TORONTO, May 21 /CNW/ - First Trust/Highland Capital Floating Rate Income
Fund II (the "Fund") announces the suspension of monthly distributions
effective immediately.
    FT (NSI) Management Co., the manager of the Fund (the "Manager"), has
concluded that it is necessary to suspend monthly distributions as a result of
a decline in the Fund's cash flow available for distribution. Several factors
have negatively impacted the Fund's cash flow including a reduction in the
Fund's total assets, the effect of lower interest rates and a strengthening
Canadian dollar vis a vis the U.S. currency on the performance of the First
Trust/Highland Capital Senior Loan Trust (the "Senior Loan Trust") and a
higher management expense ratio of the Fund and Senior Loan Trust. The Fund
gains exposure to the Senior Loan Trust through one or more forward
agreements.
    As previously reported, the Fund's total assets have decreased
significantly during the past twelve months. The decline can be attributed to
the annual redemption of units in the second quarter of 2008, the termination
of the leverage facility of the Senior Loan Trust effective July 31, 2008 and
a decline in the market prices of the loan portfolio of the Senior Loan Trust.
Despite the decline in total assets, the credit quality of the Senior Loan
Trust loan portfolio has improved since December 31, 2008 as a result of
improved credit ratings and a default scenario that is little changed since
that date. The weighted average credit rating of the Senior Loan Trust loan
portfolio as of December 31, 2008 was B1/B2 and as of May 15, 2009 was
Ba2/Ba3. Although the two loan positions in default at December 31, 2008
remain in default, no additional loans are in default as of May 15, 2009. The
portion of the loan portfolio in default represents only 1.1% of the Senior
Loan Trust's total net asset value at May 15, 2009.
    The Manager will continue to monitor the Fund's cash flow in order to
determine the amount of distributions, if any, in a particular calendar month.





For further information:

For further information: First Defined Portfolio Management Co., (416)
865-8065 or 1-877-622-5552

Organization Profile

FIRST TRUST/HIGHLAND CAPITAL FLOATING RATE INCOME FUND II

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890