NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the ratings assigned to the following Variable Rate MuniTerm Preferred Shares (VMTP Shares) issued by Dreyfus Municipal Bond Infrastructure Fund, Inc. (NYSE: DMB), a closed-end fund managed by The Dreyfus Corporation (Dreyfus) and sub-advised by Standish Mellon Asset Management Company LLC (Standish):
--$75,000,000 of Series W-7 VMTP Shares with a term redemption date of July 27, 2018 at 'AAA'.
KEY RATING DRIVERS
The affirmation of the 'AAA' rating assigned to the VMTP Shares reflects:
--Sufficient asset coverage provided to the notes as calculated per Fitch's asset coverage tests and published rating criteria;
--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;
--The capabilities of Dreyfus and Standish as fund advisers.
FUND PROFILE
DMB is a non-diversified, closed-end management company. The fund's investment objective is to provide as high a level of current income exempt from regular federal income tax as is consistent with the preservation of capital. The fund seeks to achieve its investment objective through investment of at least 80% of assets in municipal bonds issued to finance infrastructure sectors and projects in the United States. Infrastructure sectors and projects in which the Fund may invest include transportation (toll roads), energy & utilities (wastewater treatment), social infrastructure (schools), and water & environmental (drinking water).
LEVERAGE
As of Aug. 31, 2014, DMB's total assets were approximately $360 million supporting $75 million of VMTP Shares and $37 million of floating-rate securities of tender option bonds. The fund's leverage ratio is approximately 31%.
ASSET COVERAGE
As of Aug. 31, 2014, DMB's asset coverage ratio, 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, were in excess of 100%. The fund's governing documents require that asset coverage for the VMTP Shares, as calculated in accordance with the Fitch OC tests, be maintained in excess of 100%.
As of the same date, the fund's 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 fund's governing documents (Preferred Asset Coverage Ratio).
Additionally, the fund has also covenanted to maintain the Effective Leverage Ratio for both VMTP Shares and floating-rate certificates of tender option bonds below 50% of total assets. The fund's Effective Leverage Ratio is currently below 50%.
STRUCTURAL PROTECTIONS
Should the asset coverage tests decline below their minimum threshold amounts, under the terms of the VMTP Shares the fund is required to cure the breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC Tests breaches), or by reducing leverage in a sufficient amount (for all test breaches) within a pre-specified time period of 60 calendar days.
THE ADVISERS
The fund is managed by Dreyfus and is sub-advised by Standish, a BNY Mellon Company. Standish is responsible for the implementation and execution of the investment strategy on a day-to-day basis. Standish is an SEC registered and regulated investment advisor with $164 billion in assets under management, $28 billion of which is municipal bond assets, including $12 billion in municipal mutual fund assets as of Sept. 30, 2014.
RATINGS SENSITIVITY
A material adverse deviation from Fitch guidelines for any key rating driver could cause the ratings to be lowered by Fitch. The ratings may also be sensitive to material changes in the credit quality or market risk profile of the fund.
For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.
Additional information is available at www.fitchratings.com.
The sources of information used to assess this rating were the public domain, Dreyfus and Standish.
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Applicable Criteria and Related Research:
--'Rating Closed-End Fund Debt and Preferred Stock' (Sept. 04, 2014);
--'Closed-End Fund Issuance of Debt and Preferred Stock (Oct. 15, 2014).
Applicable Criteria and Related Research:
Closed-End Fund Issuance of Debt and Preferred Stock
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=795288
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=913314
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