October 18, 2017
Matthew A. Brunmeier
Ropes & Gray LLP
191 North Wacker Dr.
32nd Floor
Chicago, Illinois 60606-4302
Re: Calamos Long/Short Equity Income 2028 Term Trust
Registration Statement on Form N-2
File Nos. 333- 220591, 811-23295
Dear Mr. Brunmeier:
On September 22, 2017, you filed a registration statement on Form N-2
on behalf of the
Calamos Long/Short Equity Income 2028 Term Trust (the "Fund"). We have reviewed
the
registration statement and have provided our comments below. Where a comment is
made in
one location, it is applicable to all similar disclosure appearing elsewhere in
the registration
statement. All capitalized terms not otherwise defined herein have the meaning
given to them in
the registration statement.
PROSPECTUS
Outside Front Cover
1. Please confirm supplementally that the pricing table, as well as all
of the information
appearing thereunder up to the table of contents will be included as part of
the information
presented on the outside front cover page of the prospectus. See Item 1.j. of
Form N-2.
2. We note that the Fund will invest in convertible securities. If the
Fund expects to
invest in contingent convertible securities ("CoCos"), the Fund should consider
what, if any,
disclosure is appropriate. The type and location of disclosure will depend on,
among other
things, the extent to which the Fund invests in CoCos, and the characteristics
of the CoCos, (e.g.,
the credit quality, the conversion triggers). If CoCos will be a principal type
of investment, the
Fund should provide a description of them and should provide appropriate risk
disclosure. In
addition, please supplementally inform us whether, and what amount, the Fund
intends to invest
in CoCos.
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3. In the first paragraph in "Investment Objective," you state that
the Fund will invest in
"other floating rate securities." Please specify what those securities are.
4. The Fund discloses that it may engage in transactions involving
total return swaps
("TRS"). A TRS is a "senior security" for purposes of section 18 of the
Investment Company
Act of 1940 (the "ICA"). When a fund engages in TRS, the fund will need to "set
aside" (also
referred to as "segregate") an appropriate amount of liquid assets, as
determined by Commission
and staff guidance, to address section 18 concerns. (Setting aside assets for
this purpose is
sometimes referred to as "cover".) See generally Investment Company Act Rel.
No. 10666 (Apr.
18, 1979). See also additional guidance found at
https://www.sec.gov/divisions/investment/seniorsecurities-bibliography.htm.
Please note that
the Commission has issued a release proposing to update the regulation of fund
use of
derivatives (including "cover" obligations) for purposes of section 18 of the
ICA. See Use of
Derivatives by Registered Investment Companies and Business Development
Companies,
Investment Company Act Rel. No. 31933 (Dec. 11, 2015). Accordingly, please be
aware that the
Commission could issue a new rule and/or guidance relating to fund use of
derivatives, such as
TRS, and leverage, including cover requirements, which could impact the manner
in which the
Fund operates.
5. In "Term Structure," you state, "The Fund's investment objective and
policies are not
designed to seek to return to investors that purchase common shares in this
offering their initial
investment of $[20.00] per common share on the conversion date, and such
investors and
investors that purchase common shares after the completion of this offering may
receive more or
less than their original investment upon conversion." Please also explain how
"target term"
funds, such as the Fund, are different from "target date" funds.
6. In "Portfolio Contents," please explain convertible arbitrage in
plain English by
adding the sentence from page A-2, which states, "Convertible arbitrage
generally involves the
purchase of convertible bonds coupled with the short sale of the equity
securities underlying the
bonds in attempt to profit from the mispricing between the securities."
7. In the paragraph that cross-references "Risk Factors," please
explicitly add a cross-
reference to the prospectus discussion regarding the risks associated with
leverage. See Item
1.1.j. of Form N-2.
8. In "Leverage," please clarify that the Fund does not intend to issue
preferred shares
within one year from the effective date of the registration statement.
Otherwise, please state that
the Fund does intend to do so, and provide appropriate fee table disclosure
(e.g., estimated
dividend expense of preferred shares).
Page A-5 Interest Rate Transactions
9. You state that the Fund will enter into credit default swaps. If the
Fund will write
credit default swaps, please confirm to the staff that the Fund will segregate
the full notional
amount of the credit default swap to cover such obligation. See generally
Investment Company
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Act Release No. 10666 (Apr. 18, 1979). See also additional guidance found at
https://www.sec.gov/divisions/investment/seniorsecurities-bibliography.htm.
Page A-6 Portfolio Mangers
10. "CIO" is not yet defined. Please define the term the first time it
appears.
Page A-8 Dividends and Distributions; Automatic Reinvestment
11. You state that the Fund's distributions may include a return of
capital. Please
describe the short term and long term tax implications for shareholders. Please
add to the cover
page of the prospectus a statement that the Fund's distributions may include a
return of capital,
and that it is a return of a portion of a shareholder's original investment in
the Fund.
Page A-10 Fund Risks
12. You state that the Fund will convert to an open-end fund structure
on the tenth
anniversary of the effective date of the registration statement. An investment
in an open-end
fund raises risks for investors that are different from an investment in a
closed-end fund. For this
reason, these risks should be discussed in the prospectus. For example, because
a shareholder of
an open-end investment company may present his or her shares for redemption at
any time, and
payment must be made within seven days of presentation at their net asset
value, conversion to
open-end status may require changes in the management of the Fund's portfolio
in order to meet
the liquidity requirements applicable to open-end funds. Because portfolio
securities may have
to be liquidated to meet redemptions, conversion could affect the Fund's
ability to meet its
investment objective or to use investment policies and techniques that are more
appropriate for a
fixed portfolio than one subject to constant demands for redemption and inflows
of cash. Please
also disclose whether the Fund contemplates charging sales or redemption fees
upon conversion
to an open-end fund and whether redemptions will be made in cash or securities.
If the Fund,
after conversion, intends to retain the option of meeting redemptions with
portfolio securities, the
costs and risks imposed on the redeeming shareholders of receiving such
securities should be
discussed.
Page A-19 Market Discount Risk
13. There is a word missing in the first sentence. Please revise
accordingly.
Page A-21 Summary of Fund Expenses
14. Please confirm that the line item for "Dividend Reinvestment and
Cash Purchase
Plan Fees" will include the transaction fees stated on page A-60 under
"Automatic Dividend
Reinvestment Plan."
15. In footnote 1 to the fee table, you state that the adviser has
agreed to pay the Fund's
organization expenses and offering costs (other than the sales load) that
exceed $ [ ] per share. Is
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the adviser entitled to receive reimbursement of organizational and offering
expenses? If so,
please disclose the terms and conditions of such reimbursement.
Page A-22 The Fund
16. The last two sentences are repetitive. Please revise.
Page A-23 The Fund's Long/Short Sleeve
17. The first paragraph mentions ADRs, issuers of all market
capitalizations, and
knowledge-based sectors as part of the Fund's principal investment strategies.
Please add such
disclosure to the summary prospectus.
Page A-27 Loan Participations and Assignments
18. Your principal risk disclosure does not describe the fact that
investments in bank
loans may not be securities and therefore may not have the protections afforded
by the federal
securities laws. Please explain supplementally whether you have considered
adding these risks as
principal risks of investing in the Fund. If you have determined that they are
not principal risks,
please explain to us the basis for that determination. Otherwise, please revise
your principal risks
disclosure to include these risks as principal risks of investing in the Fund.
Page A-28 Zero Coupon Securities
19. Will zero coupon securities be a significant portion of the Fund's
income? If yes,
please disclose that investors will be exposed to typical risks associated with
such income being
required to be included in taxable and accounting income prior to receipt of
cash, including the
following:
a. PIK loans may have unreliable valuations because their
continuing accruals
require continuing judgments about the collectability of the deferred
payments and the
value of any associated collateral.
b. An election to defer PIK interest payments by adding them to loan
principal
increases the Fund's gross assets, thus increasing the adviser's future
base management
fees
c. Market prices of zero-coupon or PIK securities are affected to a
greater extent by
interest rate changes and may be more volatile than securities that pay
interest
periodically and in cash. PIKs are usually less volatile than
zero-coupon bonds, but more
volatile than cash pay securities.
d. The deferral of PIK interest increases the loan-to-value ratio,
which is a measure
of the riskiness of a loan.
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e. Even if the accounting conditions for income accrual are met,
the borrower could
still default when the Fund's actual payment is due at the maturity of
the loan.
f. Original issue discount creates risk of non-refundable cash
payments to the
adviser based on non-cash accruals that may never be realized.
g. Because original issue discount will be included in the Fund's
"investment
company taxable income" for the year of the accrual, the Fund may be
required to make
distributions to shareholders to satisfy the annual distribution
requirement applicable to
registered investment companies, even where the Fund has not received
any
corresponding cash amount. As a result, the Fund may have difficulty
meeting the annual
distribution requirement necessary to maintain favorable tax treatment.
If the Fund is not
able to obtain cash from other sources, and chooses not to make a
qualifying share
distribution, it may become subject to corporate-level income tax.
Page A-29 Conflicts of Interest
20. If the Fund will pay brokerage commissions to any broker that is
an (1) affiliated
person of the Registrant, (2) affiliated person of such person, or (3)
affiliated person of an
affiliated person of the Fund, its investment adviser, or its principal
underwriter, please make a
statement to that effect. See Item 9.1.g. of Form N-2. Language on page S-33
suggests that
such disclosure in the prospectus is necessary.
Page A-47 Investment Management Agreement
21. If organization expenses of the Fund are to be paid out of its
assets, please describe
how the expenses will be amortized and the period over which the amortization
will occur. See
Item 9.1.f. of Form N-2.
Page A-47 Portfolio Managers
22. Please state each portfolio manager's length of service regarding
the Fund. See Item
9.1.c. of Form N-2.
STATEMENT OF ADDITIONAL INFORMATION
Page S-19-20 Investment Restrictions
23. Please describe any fundamental policy with respect to short sales,
purchases on
margin, and the writing of put and call options. See Item 17.2.b. of Form N-2.
24. Please disclose that, with regard to the Fund's investments in bank
loans and loan
participations, if the bank loan or loan participation does not shift to the
Fund the direct debtor-
creditor relationship with the borrower, both the institution selling the loan
and the ultimate
borrower will be considered issuers for purposes of the Fund's fundamental
concentration policy.
See Pilgrim Prime Rate Trust, SEC Staff No-Action Letter (pub. avail. June 29,
1989).
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Page S-31 Portfolio Managers
25. You state that "[t]he LTI program at Calamos is currently under
revision following
the privatization of the firm in February 2017." If the revision is complete,
please revise the
disclosure accordingly.
Page S-46 Additional Information Concerning the Agreement and Declaration of
Trust
26. Please supplementally explain the purpose of this section and how it
is consistent
with the ICA. The language in this section appears to allow the Fund to treat
shareholders of the
same security differently.
* * * * * *
If you intend to omit certain information, in reliance on Rule 430A of
Regulation C under
the Securities Act, from the prospectus included in the registration statement
at the time of
effectiveness, please identify the omitted information to us, preferably before
filing the final pre-
effective amendment. Please advise us if you have submitted or expect to submit
an exemptive
application or no-action request in connection with your registration
statement.
Please respond to this letter in the form of a pre-effective amendment
for the Fund.
Please respond to all comment letters in a letter filed in the form of EDGAR
correspondence.
Where no changes will be made in response to a comment, please so state in your
letter and
explain the basis for your position. We may have further comments after
reviewing your
responses.
We note that portions of the filing are incomplete. We may have
additional comments on
such portions when you complete them in a pre-effective amendment, on
disclosures made in
response to this letter, on information provided supplementally, or on exhibits
added in any pre-
effective amendment.
We remind you that the Fund and its management are responsible for the
accuracy and
adequacy of their disclosures, notwithstanding any review, comments, action or
absence of
action by the staff.
Should you have any questions regarding this letter, please contact me
at (202) 551-5166.
Sincerely,
/s/ Lisa N. Larkin
Senior Counsel
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