Fitch Affirms Eaton Vance Loan Funds' Term Preferred Shares at 'AA'

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings affirmed the 'AA' ratings to the following Variable-Rate Term Preferred Shares (VRTP Shares) issued by Eaton Vance Floating-Rate Income Trust EFT and Eaton Vance Floating-Rate Income Plus Fund EFF, closed-end funds advised by Eaton Vance Management (Advisor):

--EFT, $80,000,000 of Series C-1 VRTP Shares, with a mandatory redemption date of Dec. 18, 2015;

--EFF, $36,000,000 of Series C-1 VRTP Shares, with a mandatory redemption date of July 8, 2016.

KEY RATING DRIVERS

--Structural provisions of the VRTP Shares including the Asset Coverage and Effective Leverage Ratio tests requiring the funds to maintain minimum levels of asset coverage;

--Sufficient asset coverage provided to the VRTP Shares as calculated per the funds' over-collateralization (OC) tests;

--Results of Fitch-performed stress tests meant to compare the funds' minimum asset coverage tests to the stresses outlined in Fitch's closed-end fund rating criteria reflecting changes to leverage amount and portfolio composition;

--Legal and regulatory parameters that govern the funds' operations; and

--The capabilities of the Advisor as investment advisor.

FUND PROFILES

EFT is a diversified, closed-end management investment company registered under the Investment Company Act of 1940 (the 1940 Act), as amended, and commenced operations in June 2004. The fund has the investment objective of providing a high level of current income, with a secondary objective of seeking capital preservation to the extent consistent with its primary goal of high current income. Under normal market conditions, the fund will invest at least 80% of assets in senior loans. The fund may also invest in second-lien loans and high-yield bonds.

EFF is a diversified, closed-end management investment company. The fund's investment objective is providing total return, with an emphasis on income. Under normal market conditions, the fund will invest at least 80% of its total assets in senior loans of domestic and foreign borrowers that are denominated in U.S. dollars and foreign currencies.

The funds may purchase senior loans that are fully or partially unfunded and the commitments of which the funds are obligated to fulfill at the borrower's discretion. Fitch reviewed the size of the funds' unfunded loan commitments and found them to be less than 1% of total assets. The funds also invests may invest in foreign currency denominated securities. The funds currently utilizes forward foreign currency exchange contracts to hedge the potential exchange rate risk associated with such investments.

LEVERAGE

As of Jan. 31, 2014, the EFT had total assets of approximately $1 billion and leverage of $380 million or 38% of assets. Leverage consisted of approximately $300 million from a bank credit facility and $80 million of rated VRTP Shares.

As of the same date, EFF had total assets of approximately $228 million and leverage of $90 million or 39% of assets. Leverage consisted of $54 million from a bank credit facility and $36 million of rated VRTP Shares.

ASSET COVERAGE

The funds' asset coverage ratios for the VRTP Shares, as calculated in accordance with the 1940 Act, were in excess of the minimum asset coverage threshold of 225% currently set by the terms of the preferred shares (Minimum Asset Coverage test).

The funds' governing documents also require the funds to maintain Effective Leverage Ratios (the calculation of which includes both preferred shares and forms of senior leverage) below 45% (or 46% if the increase in the ratio is due exclusively to asset market value volatility). The funds' Effective Leverage Ratios are currently below 45%.

In the event of asset coverage declines, the funds' governing documents will require the funds to reduce leverage in order to restore compliance with the asset coverage test breaching the required threshold.

STRUCTURAL PROTECTIONS

Compliance with the asset coverage and effective leverage ratio requirements are tested daily. Failure to cure an asset coverage breach by the Asset Coverage Cure Date results in an Asset Coverage Mandatory Redemption. Failure to cure an Effective Leverage Ratio breach by the Effective Leverage Ratio Cure Date results in an Effective Leverage Ratio Mandatory Redemption.

In the event of an asset coverage breach, subsequent to the Asset Coverage Cure Date each fund shall redeem a sufficient number of Preferred Shares to restore asset coverage compliance. The exposure period to market risk for the preferred shares in the event of a mandatory redemption due to an asset coverage breach is 28 days, consistent with Fitch's 60-day criteria guideline.

In the event of an effective leverage ratio breach, subsequent to the Effective Leverage Ratio Cure Date each fund shall (a) deposit sufficient funds with the Redemption and Paying Agent for the redemption of a sufficient number of Preferred Shares to restore effective leverage ratio compliance, or (b) engage in trades of portfolio assets that would satisfy the effective leverage ratio requirement. The exposure period to market risk for the preferred shares in the event of a mandatory redemption due to an effective leverage ratio breach is no longer than 28 days, consistent with Fitch's 60-day criteria guideline.

STRESS TESTS

Fitch performed various stress tests on the funds to assess the strength of the structural protections of the VRTP Shares. The funds' asset coverage and effective leverage tests were compared to the rating stresses outlined in Fitch's closed-end fund rating criteria. These tests included determining various 'worst case' scenarios where the funds' leverage and portfolio composition migrated to the outer limits of the funds' operating and investment guidelines.

For example, current portfolio composition was stressed by increasing the funds' issuer concentration, while simultaneously migrating the portfolio to loans of lower credit quality. The results of the stress tests indicate the structural protections of the VRTP Shares are in line with Fitch's rating criteria at an 'AA' rating level. In certain remote circumstances the asset coverage available to the VRTP Shares fell below the 'AA' threshold, but in any case did not fall below 'BBB'.

THE ADVISOR

Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the investment adviser to the funds. As of Dec. 31, 2014, Eaton Vance Corp. and affiliates managed approximately $296 billion of assets.

RATINGS SENSITIVITIES

The ratings may be sensitive to material changes in the credit quality or market risk profile of the funds or the diversification of the portfolio by issuer or sector. Certain terms relevant to key VRTP Shares structural protections, including the Minimum Asset Coverage Test and the Effective Leverage Ratio are set forth in the purchase agreements. Any future changes to these terms that weaken the structural protections may have negative rating implications. Material changes to the terms and provisions of leverage senior to the VRTP Shares or changes to derivative strategy and usage may also impact the rating assigned to the VRTP Shares. A material adverse deviation from Fitch guidelines for any key rating driver could cause the ratings to be lowered by Fitch.

For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.

To receive Fitch's forthcoming research on closed-end funds please go to:

http://forms.fitchratings.com/forms/FAMCEFOptinform

Additional information is available at 'www.fitchratings.com'.

The sources of information used to assess this rating were the public domain and Eaton Vance.

Applicable Criteria and Related Research:

--'Ragting Closed-End Fund Debt and Preferred Stock' (Aug. 14, 2013).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=765528

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=980438

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