TEXT-Fitch affirms AllianzGI Convertible & Income Fund II preferred shares rating

Thu Feb 28, 2013 4:43pm EST

Feb 28 - Fitch Ratings has affirmed the 'AAA' ratings assigned to the
following auction rate preferred shares (ARPS) issued by AllianzGI Convertible &
Income Fund II NYSE: NCZ), a closed-end fund managed by Allianz Global
Investors U.S. LLC (AGIUS):

--$274,000,000 of ARPS consisting of Series A, B, C, D and E, each with a
liquidation preference of $25,000 per share.

KEY RATING DRIVERS
The affirmation follows Fitch's annual review of the fund. The 'AAA' ratings are
based on the following:

--Sufficient asset coverage provided to the ARPS by the fund's underlying
portfolio of assets;
--The structural protections afforded by mandatory cure and de-leveraging
provisions in the event of asset coverage declines;
--The legal and regulatory parameters that govern the fund's operations; and
--The capabilities of AGIUS as the fund's sub-adviser.

FUND PROFILES
As of Jan. 31, 2013, the portfolio consisted mainly of high-yield corporate and
straight convertible securities with U.S. domicile issuers. A small allocation
was to synthetic convertible securities referencing U.S. domicile issuers.

The fund was highly diversified by industry and issuer. The fund is a
diversified, closed-end management investment company, registered under the
Investment Company Act of 1940, as amended.

LEVERAGE
As of Jan. 31, 2013 the fund had total assets of approximately $800 million,
current liabilities of $6 million and leverage of $274 million, or 35% of total
net assets. Assets consisted of $780.5 million in cash-purchased securities and
$19.5 million in synthetic convertible securities. Leverage consisted entirely
of rated ARPS.

ASSET COVERAGE
At the time of the rating affirmation, the fund's asset coverage ratio for rated
ARPS, as calculated in accordance with the Fitch total and net
overcollateralization tests (Fitch OC Tests) per the 'AAA' rating guidelines
outlined in Fitch's applicable criteria was in excess of 100%. This is the
minimum asset coverage guideline required by the fund's governing documents and
evaluated as such by Fitch.

Also at the time of the rating affirmation, the fund's asset coverage ratio for
rated ARPS, as calculated in accordance with the Investment Company Act of 1940
(1940 Act), was in excess of 200%, which is the minimum asset coverage required
by the 1940 Act and the fund's governing documents.

Should the asset coverage tests decline below their minimum threshold amounts
(as tested on the last business day of each week), the governing documents
require the fund to alter the composition of its portfolio toward assets with
lower discount factors (for Fitch OC Tests), or to reduce leverage in a
sufficient amount (for both the Fitch OC Tests and the 1940 Act test) to restore
compliance within a pre-specified period (a maximum of 38 business days for the
Fitch OC Tests and a longer period for the 1940 Act test).

THE ADVISOR
AGIUS acts as the sub-adviser to the fund. As of Dec. 31, 2012, AGIUS had $53.4
billion in assets under management. Allianz Global Investors Fund Management,
LLC (AGIFM) acts as the investment manager to the fund. AGIUS and AGIFM are
indirect, wholly owned subsidiary of Allianz Asset Management of America, L.P.

RATING SENSITIVITY
The ratings may be sensitive to material changes in the credit quality or market
risk profiles of the fund. A material adverse deviation from Fitch guidelines
for any key rating driver could cause the rating 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 web
site.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

The sources of information used to assess this rating were the public domain,
AGIUS and AGIFM.

Applicable Criteria and Related Research:
--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 15, 2012);
--'Fitch: Taxable CEFs Rely on Select Few Banks for Funding' (Jan. 11, 2013);
--'2013 Outlook: Closed-End Funds' (Dec. 14, 2012);
--'Taxable Closed-End Funds Reliant on Short-Term Debt Reap Low-Cost Funding at
the Expense of Rollover Risk' (Sept. 25, 2012).

Applicable Criteria and Related Research
Rating Closed-End Fund Debt and Preferred Stock
2013 Outlook: Closed-End Funds
Taxable Closed-End Funds Reliant on Short-Term Debt Reap Low-Cost Funding at the
Expense of Rollover Risk
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