Fitch Affirms Preferred Share Ratings of 26 BlackRock Municipal Closed-End Funds

NEW YORK--()--Fitch Ratings affirms the 'AAA' ratings assigned to $2.3 billion in variable municipal term preferred shares (VMTP Shares) issued by 19 municipal closed-end funds (CEFs) and 'AAA/F1' ratings assigned to $365 million in variable rate demand preferred shares (VRDP Shares) issued by seven municipal CEFs, all managed by BlackRock Advisors, LLC as the funds' investment advisor. A complete list of rating actions follows at end of this press release.

The rating affirmation follows a period review of the credits. In the case of VRDP Shares' ratings, the review also reflects the replacement of the bank liquidity provider, now to be assumed by Barclays Bank PLC ('A/F1', Stable) over Morgan Stanley Bank, N.A. ('A/F1', Stable).

KEY RATING DRIVERS

The 'F1' short-term rating (assigned to VRDP Shares only) primarily reflects:

--The credit strength of the liquidity provider Barclays Bank, PLC;

--The terms and conditions of the purchase agreement (the purchase agreement).

The 'AAA' long-term rating (assigned to both VRDP Shares and VMTP Shares) primarily reflects:

--Sufficient asset coverage provided to the preferred shares as calculated per the fund's asset coverage tests;

--The structural protections afforded by mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines;

--The legal and regulatory parameters that govern the fund's operations.

Both the short- and long-term ratings also reflect the capabilities of BlackRock Advisors, LLC. as investment advisor.

TENDER AND REMARKETING (VRDP Shares only)

The VRDP Shares benefit from a feature giving investors the right to tender the securities with a seven-day notice for remarketing. The VRDP Shares are also subject to a mandatory tender for remarketing upon the occurrence of certain events, such as non-payment of dividends by the fund, announcement of a special rate period, among others. VRDP Shares that are unsuccessfully remarketed are purchased by the liquidity provider.

The VRDP Shares have a 30-year mandatory final maturity and pay an adjustable dividend rate set weekly by the remarketing agent (or any subsequent replacement). Barclays Capital Inc. has assumed the remarketing agent responsibilities over Morgan Stanley & Co. LLC, with substantially the same terms. Should any weekly remarketing be unsuccessful, the dividend rate will reset to a maximum rate as defined in the transactional documents.

The Bank of New York Mellon (rated 'AA-/F1+', Stable) serves as the tender and paying agent, and as such, provides remarketing results to the holders of VRDP Shares, tender and deliver non-clearing VRDP Shares from holders to the liquidity provider, and notifies the holders of VRDP Shares of a non-renewal or termination of the purchase agreement, among other duties.

PURCHASE OBLIGATION

The VRDP Shares are supported by a purchase agreement to ensure full and timely repayment of the liquidation preference amount plus any accumulated and unpaid dividends to holders upon occurrence of certain events. The purchase agreement requires the liquidity provider to purchase all VRDP Shares tendered for sale that were not successfully remarketed. The liquidity provider must also purchase all outstanding VRDP Shares if the fund has not obtained an alternate purchase agreement prior to the termination of the purchase agreement being replaced or following the downgrade of the liquidity provider's ratings below 'F2' (or equivalent).

The purchase of VRDP Shares pursuant to the purchase agreement is unconditional and irrevocable, and as such the short-term ratings assigned to the VRDP Shares are directly linked to the short-term creditworthiness of the liquidity provider. Although Barclays Bank PLC has assumed the liquidity provider responsibilities over Morgan Stanley Bank, N.A., the terms of the purchase agreement with Barclays Bank PLC are substantially the same as the terms of the purchase agreement with Morgan Stanley Bank, N.A., with no credit concerns noted. The purchase agreement with Barclays Bank PLC has a two-year term.

ASSET COVERAGE

As of end of August 2012, each fund's pro forma asset coverage ratio, as calculated in accordance with the Fitch total and net over-collateralization tests per the 'AAA' rating guidelines outlined in Fitch's criteria, was in excess of 100%, which is the minimum threshold required under the VRDP Shares' and VMTP Shares' transactional documents.

As of the same date, each fund's asset coverage ratio for the VRDP Shares and VMTP Shares, as calculated in accordance with the Investment Company Act of 1940, was in excess of the minimum asset coverage threshold of 225% as currently set by corresponding transactional documents.

Each fund has also covenanted to maintain an effective leverage ratio for both the preferred shares and floating-rate certificates of tender option bonds below 45% (or 46% if the increase in the ratio is due exclusively to asset market value volatility). Each fund's Effective Leverage Ratio is currently below 45%.

In the event of asset coverage decline, the VRDP Shares' and VMTP Shares' transactional documents require a fund to reduce leverage in order to restore compliance with the particular test(s) breaching the required threshold(s).

FUND PROFILES

The funds are closed-end management investment companies regulated by the Investment Company Act of 1940. The funds seek to provide shareholders with either high current income or current income exempt from federal income taxes, and additionally from state income taxes for single-state funds, by investing primarily in a portfolio of qualified municipal obligations. Under normal market conditions, the funds expect to invest primarily in assets that are rated at least 'BBB' by Fitch or equivalent.

FUND ADVISOR

BlackRock Advisors, LLC, a subsidiary of BlackRock, Inc., is the advisor to the funds, responsible for the overall investment strategies and their implementation. BlackRock, Inc. and its affiliates had approximately $3.673 trillion of assets under management as of Sept. 30, 2012.

RATINGS SENSITIVITY

The ratings assigned to the VRDP Shares and VMTP Shares may be sensitive to material changes in the leverage composition, portfolio credit quality, portfolio diversification or market risk of the fund, as described above. A material adverse deviation from Fitch guidelines for any key rating driver could cause ratings to be lowered by Fitch.

The short-term ratings assigned to the VRDP Shares may also be sensitive to changes in the financial condition of the liquidity provider. A downgrade of the liquidity provider to 'F2' would result in a downgrade of the short-term rating of the VRDP Shares to 'F2,' absent other mitigants. However a downgrade of the liquidity provider below 'F2' would not necessarily result in a further corresponding downgrade given the acceleration features in the transaction documents for the VRDP

Shares that would result in a mandatory tender of the VRDP Shares for purchase by the liquidity provider.

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'.

LIST OF RATING ACTIONS

Fitch affirms the following VMTP Shares at 'AAA':

--$171,300,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due April 1, 2015, issued by BlackRock California Municipal Income Trust (NYSE:BFZ);

--$59,100,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due April 1, 2015, issued by BlackRock New Jersey Municipal Income Trust (NYSE:BNJ);

--$94,500,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due April 1, 2015, issued by BlackRock New York Municipal Income Trust (NYSE:BNY);

--$254,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due April 1, 2015, issued by BlackRock MuniHoldings California Quality Fund, Inc. (NYSE:MUC);

--$125,900,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by The BlackRock Investment Quality Municipal Trust, Inc. (NYSE:BKN);

--$79,900,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock Municipal Bond Trust (NYSE:BBK), rated 'AAA';

--$42,200,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock Municipal Income Investment Quality Trust (NYSE:BAF), rated 'AAA';

--$137,200,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock Municipal Income Quality Trust (NYSE-AMEX:BYM), rated 'AAA';

--$270,800,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock Municipal Income Trust (NYSE:BFK), rated 'AAA';

--$151,300,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock Municipal Income Trust II (NYSE:BLE), rated 'AAA';

--$55,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniHoldings Fund II, Inc. (NYSE:MUH), rated 'AAA';

--$83,700,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniHoldings Fund, Inc. (NYSE:MHD), rated 'AAA';

--$131,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniHoldings Quality Fund II, Inc. (NYSE:MUE), rated 'AAA';

--$87,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniHoldings Quality Fund, Inc. (NYSE:MUS), rated 'AAA';

--$140,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniVest Fund II, Inc. (NYSE:MVT), rated 'AAA';

--$243,800,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniVest Fund, Inc. (NYSE-AMEX:MVF), rated 'AAA';

--$56,500,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniYield Investment Quality Fund (NYSE:MFT), rated 'AAA';

--$116,500,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by BlackRock MuniYield Quality Fund II, Inc. (NYSE:MQT), rated 'AAA';

--$42,900,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2015, issued by The BlackRock Strategic Municipal Trust (NYSE:BSD), rated 'AAA'.

Fitch affirms the following VRDP Shares at 'AAA/F1':

BlackRock Municipal Income Investment Trust (NYSE: BBF)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share;

BlackRock New York Municipal Income Trust II (NYSE-AMEX: BFY)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share;

BlackRock Municipal Bond Investment Trust (NYSE: BIE)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share;

BlackRock New York Municipal Bond Trust (NYSE: BQH)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share;

BlackRock New York Municipal Income Quality Trust (NYSE: BSE)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share;

BlackRock Muni New York Intermediate Duration Fund, Inc. (NYSE: MNE)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share;

BlackRock MuniYield Quality Fund, Inc. (NYSE: MQY)

--VRDP Shares, series W-7, due Oct 2041, with a liquidation preference of $100,000 per share.

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 BlackRock Advisors, LLC.

Applicable Criteria and Related Research:

--'Municipal Closed-End Funds Diversify Funding and Moderate Rollover Risk' (Oct. 11, 2012);

--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 16, 2012);

--'Municipal CEFs Refinance Pre-Crisis ARPS' (May 3, 2012);

--'Primer: CEF Variable-Rate Demand Preferred Shares' (Oct. 27, 2011).

Applicable Criteria and Related Research:

Municipal Closed-End Funds Diversify Funding and Moderate Rollover Risk

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=691173

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686101

Municipal CEFs Refinance Pre-Crisis ARPS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=677576

Primer: CEF Variable-Rate Demand Preferred Shares (Closed-End Fund VRDPs Target Short-Term, Money Market Investors)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=654295

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Contacts

Fitch Ratings
Primary Analyst:
Yuriy Layvand, CFA, +1-212-908-9191
Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Gwen Fink-Stone, +1-212-908-9128
Associate Director
or
Committee Chairperson:
Ralph Aurora, +1-212-908-0528
Senior Director
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst:
Yuriy Layvand, CFA, +1-212-908-9191
Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Gwen Fink-Stone, +1-212-908-9128
Associate Director
or
Committee Chairperson:
Ralph Aurora, +1-212-908-0528
Senior Director
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com