Fitch Rates VMTP Shares Issued by Delaware Investments National Municipal Income Fund 'AAA'

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings assigns an 'AAA' rating to the following securities issued by Delaware Investments National Municipal Income Fund (VFL), a municipal closed-end fund managed by Delaware Management Company (DMC), a series of Delaware Management Business Trust:

--$30,000,000 of Variable Rate MuniFund Term Preferred Shares (VMTP Shares), series 2017, with a liquidation preference of $100,000 per share, due April 1, 2017.

KEY RATING DRIVERS
The 'AAA' rating is based on asset coverage provided to the VMTP Shares by the fund's portfolio, structural protections afforded by mandatory deleveraging provisions in the event of asset coverage declines, the legal and regulatory parameters that govern the fund's operations and the capabilities of DMC as investment advisor.

LEVERAGE
The fund will use the net proceeds from the sale of the VMTP Shares to increase the fund's leverage. The VMTP Shares are variable-rate preferred stock with a five-year term, and were privately placed.

As of Jan. 30, 2012, the fund's total managed assets were approximately $63.8 million. At that time, the Fund did not have any outstanding preferred shares. In the event the fund had outstanding preferred shares in the amount of the series 2017 VMTP shares, then the pro forma managed assets would have been $93.8 million, including the $30 million attributable to the series 2017 VMTP shares.

ASSET COVERAGE
Also as of Jan. 30, 2012, the fund's pro forma asset coverage ratio for total outstanding preferred shares, as calculated in accordance with the Investment Company Act of 1940, was approximately 312%, which is in excess of the minimum asset coverage of 225% required by the fund's governing documents (Preferred Asset Coverage Test).

As of the same date, the fund's pro forma effective leverage ratio was 32%, which is below the maximum leverage ratio of 45% (or 46% if the increase in the ratio is due exclusively to asset market value volatility) allowed by the fund's governing documents (Effective Leverage Test).

Should the Preferred Asset Coverage Test decline below its threshold amount or the Effective Leverage Test increase above its threshold amount, the governing documents' mandatory redemption provisions will require the fund to reduce the leverage in a sufficient amount to restore compliance with the applicable overcollateralization test(s).

STRESS TESTS
Fitch performed various stress tests on the fund to assess the strength of the structural protections available to the VMTP Shares compared to the rating stresses outlined in Fitch's closed-end fund rating criteria. These tests included determining various 'worst case' scenarios where the fund's leverage and portfolio composition migrated to the outer limits of its operating and investment guidelines.

Only under remote circumstances, such as increasing the fund's issuer concentration, while simultaneously migrating the portfolio to 80% 'BBB', 10+ years to maturity bonds and 20% high yield bonds, did the asset coverage available to the VMTP Shares fall below the 'AAA' threshold, and instead passed at an 'AA' rating level.

Given the highly unlikely nature of these stress scenarios, combined with their minimal rating impact, Fitch views the fund's permitted investments, municipal issuer diversification framework and mandatory deleveraging mechanisms as consistent with an 'AAA' rating.

THE FUND
The fund is a closed-end management investment company regulated by the Investment Company Act of 1940. The fund seeks to provide current income exempt from regular federal income tax , consistent with the preservation of capital. The fund currently invests primarily in investment grade quality municipal bonds.

DMC, a subsidiary of Macquarie Group Limited (rated 'A-/F2' by Fitch), is the fund's investment advisor, responsible for the fund's overall investment strategy and its implementation. DMC and its affiliates had more than $165 billion of assets under management as of Dec. 31, 2011.

RATING 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 fund, as described above. 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 DMC.

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

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

Applicable Criteria and Related Research:
Rating Closed-End Fund Debt and Preferred Stock
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648840
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

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