UPDATE: Bank of America Initiates Coverage on BlackRock Municipal Income Trust with Neutral Rating on Multiple Positive Factors

In a report published Monday, Bank of America analyst Elias Lanik initiated coverage on BlackRock Municipal Income Trust

with a Neutral rating. In the report, Lanik noted, “We rate BNY Neutral owing to what, in our opinion, is a stable dividend, an appropriate valuation level, and a balanced view of a portfolio that is slightly below average in duration and slightly above average in credit quality. Based on current earnings, BNY is under-earning its dividend level by about $0.03 and has roughly $0.15 in UNII. Accounting for the fact that 12% of the portfolio of the fund is callable over the next 12 months, we estimate that BNY is likely to burn through less than half of the $0.15 in UNII. This indicates to us a stable dividend for BNY over at least the next 12 months. BNY is currently trading at a premium of 2.1%, which is an appropriate valuation for the fund relative to peers, in our opinion, given an earnings yield of about 5.2%.” BlackRock Municipal Income Trust closed on Friday at $15.63.