September 18, 2020
Joshua B. Deringer, Esq.
Faegre, Drinker Biddle & Reath LLP
One Logan Square, Ste. 2000
Philadelphia, PA 19103-6996
Re: Thornburg Income Builder Opportunities Trust
File Nos. 333-241035 and 811-23600
Dear Mr. Deringer:
On August 19, 2020, you filed a registration statement on Form N-2 for
Thornburg
Income Builder Opportunities Trust (the Fund ). Our comments are set forth
below. For
convenience, we generally organized our comments using the headings, defined
terms and page
numbers from the registration statement. Where a comment is made with respect
to the
disclosure in one location of the filing, it applies to all similar disclosure
found elsewhere.
PROSPECTUS
Cover Page
Global Equity Allocation (page ii)
1. This section states that the Fund will invest in equity
securities including
companies in developing countries. Please also disclose in
this paragraph, as well as
in the Principal Investment Strategy and Policies section
on page 1 of the
prospectus and throughout the prospectus that the Fund s
investments in non-U.S.-
domiciled issuers include emerging market issuers.
Global Debt Allocation (page ii)
2. The first sentence of this paragraph sets forth numerous types of
investments the
Fund will invest in as part of Global Debt Allocation. Please
review this disclosure
and confirm to us that it includes only the types of investments
in which the Fund will
Joshua B. Deringer, Esq.
September 18, 2020
Page 2
principally invest. Please move disclosure of non-principal
investments to another
location. See Item 8.2.b.(1) of Form N-2. See also Item 8.4 of Form
N-2 and
Instruction a. thereto.
3. This section states that the Fund seeks to achieve its investment
objective by
investing in U.S. and non-U.S. corporate entities. If
applicable, please also disclose
in this paragraph, as well as in the Principal Investment Strategy
and Policies
section on page 1 of the prospectus, and throughout the prospectus,
that the Fund s
investments in non-U.S.-domiciled issuers include emerging market
issuers.
4. With respect to the Fund s investment in convertible securities,
please disclose if
contingent convertible securities ( CoCos ) will be a principal
type of investment. If
yes, please include a description of CoCos and provide appropriate
risk disclosure.
5. With respect to the Fund s investment in asset-backed securities (
ABS ), please
specify the types of asset-backed issuers that the Fund will invest
(e.g., collateralized
debt obligations ( CDOs ) and collateralized loan obligations (
CLOs )). Please
disclose the risks associated with these types of investments,
including the heightened
risks associated with any lower rated tranches the Fund may hold. We
may have
additional comments based on your response.
6. With respect to the Fund s investment in mortgage-backed securities
( MBS ),
including commercial mortgage-backed securities ( CMBS ),
residential mortgage-
backed securities ( RMBS ), and collateralized mortgage
obligations ( CMOs ),
please specify any limitations thereon (e.g., non-agency or
below-investment grade
RMBS).
7. To the extent that the Fund s investments in ABS and MBS will be
primarily non-
investment grade, please discuss these investments in your discussion
of High Yield
investments and risks.
8. Please disclose if the Fund will invest in leveraged loans. Please
also include
disclosure that the Fund may enter into credit default swaps (CDS),
including selling
CDS. Also, please disclose the risks of selling CDS.
9. The last sentence in this paragraph states the Fund may invest in
whole consumer
loans. Please tell us if the Fund intends to originate loans, and if
so, we may have
additional comments. Please also tells us if the Fund intends to
purchase whole
consumer loans through online platforms, such as LendingClub or
Prosper.
10. Since the Fund will invest significantly in securities that may be
illiquid, e.g., CDOs,
CMOs, please discuss the liquidity of these investments. Also, please
disclose that a
significant portion of the Fund s portfolio contents may be
illiquid.
Joshua B. Deringer, Esq.
September 18, 2020
Page 3
Principal Investment Strategy and Policies
Option Overlay (page 3)
11. The last sentence in this paragraph states that, (T)he Adviser may
actively manage
the option overlay based on market-level macroeconomic and equity
allocation
insights and will vary the terms of the option overlay, including the
notional value of
the options written, contract type and term, and the moneyness of
each option.
Expand the disclosure to explain in plain English the option overlay
strategy,
specifically providing explanations for market-level macroeconomic
and equity
allocation insights and moneyness of each option.
Investment Philosophy and Process (page 4)
12. The eighth paragraph in this section states that the equity
portfolio will be aimed at
achieving risk-adjusted returns that focus on meeting our income
mandate. Please
include disclosure describing what is meant by the term income
mandate.
Risk Considerations (page 12)
13. Please include in the principal strategy section that the Fund will
be investing in
business development companies (BDCs) and real estate investments,
including
REITs.
Summary of Trust Expenses (page 15)
14. The prospectus states that the Fund may invest in securities of other
open- or closed-
end investment companies, including exchange-traded funds ( ETFs
) and BDCs.
Please confirm that the expenses of investing in ETFs and BDCs will
be included in
the AFFE line item of the fee table.
15. Please include a footnote to the fee table stating that Other
Expenses are based on
estimated amounts for the current fiscal year as required by
Instruction 6 to Item 3 of
Form N-2.
Use of Proceeds (Page 17)
16. This section states that the Adviser anticipates that the investment
of the net proceeds
will be made in accordance with the Trust s investment objective
and policies within
[ ] months after completion of this offering. Please disclose how
long it will take the
Fund to invest all or substantially all the proceeds from the
offering in accordance
with its investment objective. If the Fund expects the investment
period to exceed
three months, please disclose the reasons for the expected delay. See
Item 7.2 of
Form N-2 and see also Guide 1 to Form N-2.
Joshua B. Deringer, Esq.
September 18, 2020
Page 4
Principal Investment Strategy (page 17)
17. The third paragraph in this section says that the Managed Assets will
be allocated
dynamically. Please explain, in plain English, what is meant by
allocated
dynamically.
Foreign and Emerging Market Investments (page 20-21)
18. The sixth paragraph in this section states that the Fund may invest a
significant
portion of its assets in a specific geographic region. Please
explain to us whether
the Fund expects to focus on a particular country or geographic
region and, if so,
please disclose the specific country or geographic region, and
provide corresponding
risks.
19. The tenth paragraph in this section states that the Fund will invest
in foreign securities
which take the form of sponsored and unsponsored ADRs, GDRs, EDR. If
depositary
receipts are a principal investment of the Fund, disclose so in the
Prospectus
Summary along with associated risks. Please also disclose the
differences between
sponsored and unsponsored depositary receipts.
Derivatives (page 29)
20. Please include risk disclosure relating to the options overlay
strategy described in the
principal investment strategy section.
21. Please disclose in the registration statement whether derivatives
will be counted
towards the satisfaction of the Fund s 80% policy of investing in
income producing
securities. If yes, please also disclose that derivatives will be
valued for purposes of
the 80% policy based on market value, not notional value.
Portfolio Management (page 68)
22. The disclosure in this section identifies three individuals as having
responsibility for
day-to-day implementation of the Fund s investment strategy. Please
clarify the roles
that the portfolio managers play in managing the Fund s portfolio.
For example,
please disclose whether one individual serves as a lead portfolio
manager or whether
all three portfolio managers are jointly and primarily responsible
for the day-to-day
management of the Fund s portfolio. See Instruction to Item 9 c. of
Form N-2.
STATEMENT OF ADDITIONAL INFORMATION
Board of Trustees and Officers (page 43)
23. We note that much of the information required by this section has
been left blank.
Please ensure that the Fund s pre-effective amendment provides all
of the information
Joshua B. Deringer, Esq.
September 18, 2020
Page 5
required by Item 18 of Form N-2 for each Trustee, including the
specific experience,
qualifications, attributes, or skills that led to the conclusion that
the person should
serve as a Trustee of the Fund. See Item 18.17 of Form N-2.
PART C
Signatures
24. Please ensure that the pre-effective amendment to the registration
statement includes
the signatures of the Fund s principal financial officer and the
majority of its Board of
Directors. See Section 6 of the Securities Act of 1933 (the
Securities Act ).
GENERAL COMMENTS
25. Please confirm in your response letter that FINRA has reviewed the
proposed
underwriting terms and arrangements for the transactions described in
the registration
statement, including the amount of compensation to be allowed or paid
to the
underwriters and any other arrangements among the Fund, the
underwriters, and other
broker dealers participating in the distribution, and that FINRA has
issued a statement
expressing no objections to the compensation and other arrangements.
26. Please advise us whether you have presented or will present any
test the waters
materials to potential investors in connection with this offering. If
so, please provide
us with copies of such materials.
27. We note that many portions of your filing are incomplete or will be
updated by
amendment. We may have additional comments on such portions when you
complete
them in pre-effective amendments, on disclosures made in response to
this letter, on
information supplied supplementally, or on exhibits added in any
pre-effective
amendment.
28. If you intend to omit certain information from the form of prospectus
included with
the registration statement that is declared effective in reliance on
Rule 430A under the
Securities Act, please identify the omitted information to us
supplementally,
preferably before filing the pre-effective amendment.
29. Please advise us if you have submitted or expect to submit any
exemptive
applications or no-action requests in connection with your
registration statement.
30. Response to this letter should be in the form of a pre-effective
amendment filed
pursuant to Rule 472 under the Securities Act. Where no change will
be made in the
filing in response to a comment, please indicate this fact in a
supplemental letter and
briefly state the basis for your position.
*******
Joshua B. Deringer, Esq.
September 18, 2020
Page 6
In closing, 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 prior to filing a pre-effective
amendment, please feel free
to contact me at 202-551-6478.
Sincerely,
/s/ Ashley
Vroman-Lee
Ashley
Vroman-Lee
Senior
Counsel
cc: Michael J. Spratt, Assistant Director
Michael J. Shaffer, Branch Chief