Fitch Confirms VMTP Shares of Various Invesco Municipal Funds Following Reorganizations

CHICAGO--()--Fitch Ratings confirms the 'AAA' long-term ratings of Variable Rate Muni Term Preferred Shares (VMTP shares) issued by eight municipal closed-end funds (CEFs) managed by Invesco Advisers, Inc. (NYSE:IVZ) following the merger of five funds into two funds and the redomestication of all eight funds.

Fitch takes the following rating actions:

-- Invesco Van Kampen California Value Municipal Income Trust
(VCV) $188,300,000 of Series 2015/6-VCV VMTP Shares (post-merger), due June 1 2015, confirmed at 'AAA';

-- Invesco Van Kampen Trust For Investment Grade New York
Municipals (VTN) $90,400,000 of Series 2015/6-VTN Shares (post-merger), due June 1, 2015, confirmed at 'AAA';

-- Invesco California Municipal Income Trust (IIC)
$41,400,000 of Series 2015/6-IIC VMTP Shares, due June 1,
2015, confirmed at 'AAA', Paid In Full;

-- Invesco California Quality Municipal Securities (IQC)
$30,900,000 of Series 2015/6-IQC VMTP Shares, due June 1,
2015, confirmed at 'AAA', Paid In Full;

-- Invesco New York Quality Municipal Securities (IQN)
$76,800,000 of Series 2015/6-IQN Shares, due June 1,
2015, confirmed at 'AAA', Paid In Full;

-- Invesco Van Kampen Pennsylvania Value Municipal Income Trust
(VPV) $130,100,000 of Series 2015/6-VPV VMTP Shares, due June
1, 2015, confirmed at 'AAA';

-- Invesco Van Kampen Trust for Investment Grade Municipals
(VGM) $273,300,000 of Series 2015/6-VGM VMTP Shares, due June
1, 2015, confirmed at 'AAA';

-- Invesco Van Kampen Advantage Municipal Income Trust II
(VKI) $231,000,000 of Series 2015/6-VKI VMTP Shares, due June
1, 2015, confirmed at 'AAA'.

KEY RATING DRIVERS

The rating confirmations primarily reflect:
--Sufficient asset coverage provided to the VMTP shares as calculated per the funds' overcollateralization (OC) tests;
--The structural protections afforded by mandatory de-leveraging provisions in the event of asset coverage declines;
--The redomestication of all funds and the fund mergers of IIC and IQC into VCV, and IQN into VTN do not negatively impact asset coverage available to the rated preferred shares, nor the operating and investment parameters of the funds;
--The legal and regulatory parameters that govern the funds' operations;
--The capabilities of Invesco Advisers, Inc. as investment advisor.

FUND MERGERS
As approved by common and preferred shareholders of all three funds, IIC and IQC (the acquired funds) were merged with and into VCV on Aug. 27, 2012.

As approved by common and preferred shareholders of both funds, IQN (the acquired fund) was merged with and into VTN on Aug. 27, 2012.

Upon the closing of the VCV/IIC/IQC merger, holders of VMTP shares of the acquired funds received, in exchange for each VMTP share held immediately prior to the reorganization, one VMTP share of Series 2015/6-VCV VMTP Shares of VCV (the acquiring fund) having substantially identical terms. Following the acquisition VCV has $188,300,000 in VMTP Shares outstanding. The series of VMTP shares of the acquired funds are marked as paid in full by Fitch.

Upon the closing of the VTN/IQN merger, holders of VMTP shares of the acquired fund received, in exchange for each VMTP share held immediately prior to the reorganization, one VMTP share of Series 2015/6-VTN VMTP Shares of VTN (the acquiring fund) having substantially identical terms. Following the acquisition VTN has $90,400,000 in VMTP Shares outstanding. The series of VMTP shares of the acquired fund are marked as paid in full by Fitch.

ASSET COVERAGE FOR ACQUIRING FUNDS

As of Aug. 17, 2012, the acquiring funds' (VCV and VTN) asset coverage ratios, as calculated on pro forma post-merger basis and in accordance with the Fitch total and net OC tests per the 'AAA' rating guidelines outlined in Fitch's criteria, were in excess of 100%, which is the minimum threshold required under the VMTP Shares' transactional documents.

As of the same date, each fund's pro forma asset coverage ratio for the VMTP Shares, as calculated in accordance with the Investment Company Act of 1940, was in excess of the minimum asset coverage threshold of 225% required by the funds' governing documents (Preferred Shares Asset Coverage Test) and the funds' pro forma effective leverage ratios were below the 45% maximum leverage ratio allowed by the funds' governing documents (Effective Leverage Test).

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 test(s) breaching the required threshold(s).

FUND REDOMESTICATIONS

Common and preferred shareholders of all eight funds listed above recently approved the reorganization of the funds as Delaware statutory trusts. Each fund previously was a Massachusetts business trust, or Pennsylvania trust, in the case of VPV. According to Invesco, each fund's Plan of Redomestication provided for the fund to transfer all of its assets and liabilities to a newly formed Delaware statutory trust whose capital structure is substantially the same as the fund's prior structure, after which, fund shareholders now own shares of the Delaware statutory trust and the Massachusetts business trust has been liquidated and terminated.

The redomestications are only a change to each fund's legal form of organization and there will be no change to the fund's investments, management, fee levels, or federal income tax status as a result of the redomestication. Invesco further states that the redomestications serve to standardize the governing documents and certain agreements of the funds with each other and with other funds managed by Invesco. As such, Fitch does not view the redomestications as materially affecting asset coverage available to the preferred shares, nor materially altering the structural protections available to preferred shareholders of the funds not involved in the mergers.

THE FUNDS
The funds are closed-end management investment companies regulated by the Investment Company Act of 1940. The funds currently invest primarily in investment grade quality municipal bonds.

Invesco Advisers, Inc., an indirect, wholly owned subsidiary of Invesco, Ltd., is the funds' adviser, responsible for the funds' overall investment strategies and their implementation. Invesco Ltd. had approximately $672.8 billion of assets under management as of March 31, 2012.

RATINGS SENSITIVITY
The ratings assigned to the VMTP shares may be sensitive to material changes in the leverage composition, portfolio credit quality or market risk of the funds. A material adverse deviation from Fitch guidelines for any key rating driver could cause ratings to be lowered by Fitch.

For additional information about Fitch rating guidelines applicable to debt and preferred stock issued by closed-end funds, please review the criteria referenced below, which can be found on Fitch's web site at www.fitchratings.com.

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 and Invesco Advisers, Inc.

To opt-in to Fitch's forthcoming research on closed-end funds please go to:
http://forms.fitchratings.com/forms/FAMCEFOptinform

Applicable Criteria and Related Research:
--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 16, 2011);
--'Municipal CEFs Refinance Pre-Crisis ARPS' (May 3, 2012);
--'2012 Outlook: Closed-End Fund Leverage' (Dec. 19, 2011);
--'Closed-End Funds: Derivatives Under Review' (Nov. 16, 2011).

Applicable Criteria and Related Research:
Closed-End Funds: Derivatives Under Review (Increased Use and Limited Transparency Are Key Considerations)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656591
2012 Outlook: Closed-End Fund Leverage
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=660709
Municipal CEFs Refinance Pre-Crisis ARPS
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=677576
Rating Closed-End Fund Debt and Preferred Stock
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686101

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Contacts

Fitch Ratings
Primary Analyst:
Russ Thomas, +1-312-368-3189
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Greg Fayvilevich, +1-212-908-9151
Associate Director
or
Committee Chairperson:
Ian Rasmussen, +1-212-908-0232
Senior Director
or
Media Relations:
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst:
Russ Thomas, +1-312-368-3189
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Greg Fayvilevich, +1-212-908-9151
Associate Director
or
Committee Chairperson:
Ian Rasmussen, +1-212-908-0232
Senior Director
or
Media Relations:
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com