Fitch Affirms Preferred Shares Issued by 47 BlackRock Closed-End Funds

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings affirms the 'AAA' long-term ratings assigned to all Variable Rate Demand Preferred Shares (VRDP Shares), Variable Rate Muni Term Preferred Shares (VMTP Shares), and Remarketable Variable Rate Muni Term Preferred Shares (RVMTP Shares) issued across 47 municipal closed-end funds (CEFs) managed by BlackRock Advisors, LLC.

Fitch also affirms the 'F1' short-term ratings assigned to the Series W-7 of remarketable VRDP Shares issued by each of Blackrock Virginia Municipal Bond Trust (NYSE-MKT: BHV)and Blackrock Maryland Municipal Bond Trust (NYSE-MKT: BZM). The affirmed short-term ratings reflect the short-term ratings of Citibank N.A. (Citibank, 'A+/F1'/Stable Outlook) as Liquidity Provider for the remarketable VRDP Shares of both funds.

A complete list of the funds and the associated ratings is included at the end of this release.

KEY RATING DRIVERS

The 'AAA' long-term ratings primarily reflect:

--Sufficient asset coverage provided to the preferred shares as calculated per the funds' over-collateralization (OC) 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 funds' operations.

The short-term ratings assigned to VRDP Shares primarily reflect:

--The credit strength of Citibank as the VRDP Shares' Liquidity Provider;

--The terms and conditions of the VRDP Shares purchase agreements and VRDP Shares fee agreements.

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

FUND PROFILES

Fitch rates approximately $6 billion of preferred shares issued by the 47 BlackRock CEFs, with more than $25 billion of total assets under management. The funds are closed-end funds regulated by the Investment Company Act of 1940 (the Act).

Each fund invests a significant portion of its total assets in municipal bond securities rated at least investment grade. The funds also invest a significant portion of their total net assets in securities whose income is exempt from federal income tax (for national funds) and both federal and state income tax (for single-state funds).

FUND LEVERAGE

As of April 15, 2016, the funds' effective leverage ratios ranged from 35% to 40%. The funds generally leverage with both tender option bonds (TOBs) and Fitch-rated preferred shares. The latter consist of VMTP Shares, VRDP Shares, Termed-out VRDP Shares (those in a Special Rate Period) and RVMTP Shares. Asset coverage and structural protections for the preferred shares are described below.

PREFERRED SHARE ASSET COVERAGE

Based on data reviewed as of April 2016, each Fund's asset coverage ratio for the preferred shares, as calculated in accordance with the 'AAA' Fitch total and net overcollateralization (OC) tests (Fitch OC Tests) outlined in Fitch's criteria, was in excess of 100%, which is the minimum threshold required under the terms of the preferred shares.

As of April 15, 2016, the Minimum Asset Coverage ratio for each Fund, as calculated in accordance with the Act, was in excess of 225%, which is the minimum asset coverage threshold required under the terms of the preferred shares.

As of April 15, 2016, the Effective Leverage Ratio for each Fund, calculated by including both preferred shares and TOBs, was below 45%, which is the maximum leverage threshold allowed under the terms of the preferred shares (for VRDP Shares, the threshold is 46% if the increase in the ratio is due solely to fluctuations in the market value of a fund's portfolio securities).

The impact of the TOBs leverage is captured under the Fitch OC Tests and the Effective Leverage Ratio but not under the Minimum Asset Coverage ratio as calculated in accordance with the Act.

STRUCTURAL PROTECTIONS

In the event of asset coverage declines, the preferred shares' governing documents require the funds to cure any breach by reducing leverage in a sufficient amount within a pre-specified time period. For Fitch OC Tests, a fund can also cure any breach within a pre-specified time period by altering the composition of the portfolio toward assets with lower discount factors.

Compliance with the Fitch OC threshold is tested every five business days for all BlackRock preferred shares rated by Fitch. Failure to cure a breach by the allotted cure date requires the redemption of sufficient preferred shares to restore the total and net OC ratios to 100%. The time allowed for the funds to restore compliance is consistent with Fitch's 60-business day criteria guideline.

Minimum Asset Coverage compliance is tested every five business days for the VMTP and RVMTP shares and monthly for the VRDP shares. Failure to cure a breach of the Minimum Asset Coverage requirement by the allotted cure date results in mandatory redemption of sufficient preferred shares to restore asset coverage to 225%.

For VMTP and RVMTP shares, the time allowed for the funds to restore compliance is consistent with Fitch's 60-business day criteria guideline. For VRDP Shares, although the exposure period exceeds Fitch's criteria guideline, Fitch does not deem this to be significant due to the presence in the governing documents of Fitch OC Tests, which are aligned with exposure period criteria guidelines.

Compliance with the Effective Leverage Ratio is tested daily for all preferred shares. For VMTP and RVMTP Shares, a breach of the Effective Leverage Ratio threshold requires the fund to redeem a sufficient number of preferred shares, and / or reduce the amount of TOBs the fund has outstanding in order to restore compliance. The time allowed for the funds to restore compliance is consistent with Fitch's 60-business day criteria guideline.

For VRDP Shares, a breach of the Effective Leverage Ratio is a breach of the fee agreement with the applicable Liquidity Provider. In the event of an Effective Leverage Ratio breach, Fitch expects the fund to redeem a sufficient number of preferred shares or reduce the amount of TOBs outstanding in order to restore compliance.

An Effective Leverage Ratio breach for remarketable VRDP Shares may result in mandatory tender of VRDP Shares for remarketing (see VRDP Purchase Obligation section below for additional details). In the case of an Effective Leverage Ratio breach for Termed-out VRDP Shares (those under a Special Rate Period), the Liquidity Provider has the option to institute actions to require the fund to remedy the breach pursuant to a covenant with the Liquidity Provider.

VRDP PURCHASE OBLIGATION

The short-term ratings assigned to the VRDP Shares that continue to undergo remarketing are directly linked to the short-term creditworthiness of the Liquidity Provider, which is Citibank for the remarketable VRDP Shares.

The VRDP Shares are supported by a purchase agreement to ensure full and timely repayment of all tendered VRDP Shares plus any accumulated and unpaid dividends. The purchase obligation under the purchase agreement is unconditional and irrevocable.

The VRDP Shares purchase agreement requires Citibank as 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 existing purchase agreement or following the downgrade of the Liquidity Provider's short-term rating below 'F2' (or equivalent).

Citibank's role as Liquidity Provider under the fee agreement relating to the purchase obligation has a scheduled termination date. Prior to the scheduled termination date, the fee agreement can be extended with Citibank, or a new Liquidity Provider may be selected. Any future changes to the terms of the fee agreements with Citibank or a prospective replacement that weakens the structural protections discussed above may have negative rating implications.

STRESS TESTS

Fitch performed various stress tests on the Funds to assess the strength of the structural protections available to the preferred shares compared to the stresses outlined in Fitch's CEF rating criteria. These tests included determining various 'worst case' scenarios where the Funds' leverage and portfolio composition migrated to the outer limits of the Funds' operating and investment guidelines.

Only under remote circumstances, such as increasing the Funds' issuer concentration while simultaneously migrating the portfolios to a mix of 80% long-term 'BBB' bonds and 20% high yield bonds, did the asset coverage available to the preferred shares fall below the 'AAA' long-term rating level, and instead passed at an 'AA' long-term rating level.

Given the highly unlikely nature of the stress scenarios, and the minimal rating impact, Fitch views the Funds' permitted investments, municipal issuer diversification framework and mandatory deleveraging mechanisms as consistent with an 'AAA' long-term rating.

Short-term ratings assigned to the remarketable VRDP Shares were not subject to the above stress tests as these are linked directly to Citibank as the Liquidity Provider.

THE ADVISOR

BlackRock Advisors, LLC, a subsidiary of BlackRock, Inc., is the investment advisor to the funds, responsible for the overall investment strategies and their implementation. BlackRock, Inc. and its affiliates had approximately $4.7 trillion of assets under management as of March 31, 2016.

RATING SENSITIVITIES

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

Certain terms relevant to key VRDP structural protections, including the minimum asset coverage and the effective leverage ratio are set forth in the fee agreements between the applicable funds and Liquidity Providers, and are renewed on a periodic basis. As noted above, any future changes to these terms that weaken the structural protections may have negative rating implications.

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 ratings of the VRDP Shares to 'F2,' absent other mitigants. A downgrade below 'F2', on the other hand, would not necessarily result in a further downgrade given the features in the preferred shares' governing documents that would trigger a mandatory tender of the VRDP Shares for remarketing or a purchase by the Liquidity Provider in the event of a failed remarketing.

The Funds have the ability to assume economic leverage through speculative derivative transactions which may not be captured by the Funds' Minimum Asset Coverage test or Effective Leverage Ratio. Any such economic leverage would be captured by the Fitch OC Tests.

The Funds do not currently engage in speculative derivative activities and Fitch's analysis assumes the Funds do not envision engaging in material amounts of such activity in the future. Any material speculative derivative exposures in the future could have potential negative rating implications if it adversely affects asset coverage available to rated securities.

RVMTP AFFIRMATION

Fitch affirms the following RVMTP rating at 'AAA':

BlackRock Municipal 2030 Target Term Trust BTT

--$750,000,000 of Series W-7 RVMTP Shares, with a liquidation preference of $5,000,000 per share, due Dec. 31, 2030.

VMTP AFFIRMATIONS

Fitch affirms the following VMTP ratings at 'AAA':

BlackRock MuniHoldings Fund, Inc. MHD

--$83,700,000 of Series W-7 VMTP Shares with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Muni Intermediate Duration Fund, Inc. MUI

--$287,100,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock California Municipal Income Trust BFZ

--$171,300,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due March 30, 2019.

BlackRock New Jersey Municipal Income Trust BNJ

--$59,100,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due March 30, 2019.

BlackRock New York Municipal Income Trust BNY

--$94,500,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due March 30, 2019.

BlackRock MuniHoldings California Quality Fund, Inc. MUC

--$254,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due March 30, 2019.

BlackRock Investment Quality Municipal Trust, Inc. BKN

--$125,900,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Municipal Bond Trust BBK

--$79,900,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Municipal Income Investment Quality Trust BAF

--$42,200,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Municipal Income Quality Trust BYM

--$137,200,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Municipal Income Trust BFK

--$270,800,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Municipal Income Trust II (NYSE-MKT: BLE)

--$151,300,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniHoldings Fund II, Inc. MUH

--$55,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniHoldings Quality Fund II, Inc. MUE

--$131,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniHoldings Quality Fund, Inc. MUS

--$87,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniVest Fund II, Inc. MVT

--$140,000,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniVest Fund, Inc. (NYSE-MKT: MVF)

--$243,800,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniYield Investment Quality Fund MFT

--$56,500,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock MuniYield Quality Fund II, Inc. MQT

--$116,500,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

BlackRock Strategic Municipal Trust BSD

--$42,900,000 of Series W-7 VMTP Shares, with a liquidation preference of $100,000 per share, due Jan. 2, 2019.

REMARKETABLE VRDP AFFIRMATIONS:

Fitch affirms the following VRDP ratings at 'AAA/F1' (Citibank as Liquidity Provider):

Blackrock Virginia Municipal Bond Trust (NYSE-MKT: BHV)

--VRDP Shares, $11,600,000 of Series W-7, due July 2042;

Blackrock Maryland Municipal Bond Trust (NYSE-MKT: BZM)

--VRDP Shares, $16,000,000 of Series W-7, due July 2042.

TERMED-OUT VRDP AFFIRMATIONS

Fitch affirms the following VRDP ratings at 'AAA':

BlackRock Municipal Income Investment Trust BBF

--VRDP Shares, $34,200,000 of Series W-7, due Oct. 2041;

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

--VRDP Shares, $44,400,000 of Series W-7, due Oct. 2041;

BlackRock Municipal Bond Investment Trust BIE

--VRDP Shares, $17,800,000 of Series W-7, due Oct. 2041;

BlackRock New York Municipal Bond Trust BQH

--VRDP Shares, $22,100,000 of Series W-7, due Oct. 2041;

BlackRock New York Municipal Income Quality Trust BSE

--VRDP Shares, $40,500,000 of Series W-7, due Oct. 2041;

BlackRock Muni New York Intermediate Duration Fund, Inc. MNE

--VRDP Shares, $29,600,000 of Series W-7, due Oct. 2041;

BlackRock MuniYield Quality Fund, Inc. MQY

--VRDP Shares, $176,600,000 of Series W-7, due Oct. 2041;

BlackRock Massachusetts Tax-Exempt Trust (NYSE-MKT: MHE)

--VRDP Shares, $18,500,000 of Series W-7, due July 2042;

Blackrock New Jersey Municipal Bond Trust (NYSE-MKT: BLJ)

--VRDP Shares, $18,700,000 of Series W-7, due July 2042;

BlackRock MuniHoldings New Jersey Quality Fund, Inc. MUJ

--VRDP Shares, $237,100,000 of Series W-7, due July 2041;

BlackRock MuniHoldings New York Quality Fund, Inc. MHN

--VRDP Shares, $243,600,000 of Series W-7, due July 2041;

BlackRock MuniHoldings Investment Quality Fund MFL

--VRDP Shares, $274,600,000 of Series W-7, due July 2041;

BlackRock MuniYield Fund, Inc. MYD

--VRDP Shares, $251,400,000 of Series W-7, due July 2041;

BlackRock MuniYield California Quality Fund, Inc. MCA

--VRDP Shares, $166,500,000 of Series W-7, due May 2041;

BlackRock MuniEnhanced Fund, Inc. MEN

--VRDP Shares, $142,500,000 of Series W-7, due June 2041;

BlackRock MuniYield Michigan Quality Fund, Inc. MIY

--VRDP Shares, $231,900,000 of Series W-7, due May 2041;

BlackRock MuniYield Pennsylvania Quality Fund MPA

--VRDP Shares, $82,600,000 of Series W-7, due June 2041;

BlackRock MuniYield California Fund, Inc. MYC

--VRDP Shares, $105,900,000 of Series W-7, due June 2041;

BlackRock MuniYield Investment Fund MYF

--VRDP Shares, $59,400,000 of Series W-7, due June 2041;

BlackRock MuniYield Quality Fund III, Inc. MYI

--VRDP Shares, $356,400,000 of Series W-7, due June 2041;

BlackRock MuniYield New Jersey Fund, Inc. MYJ

--VRDP Shares, $102,200,000 of Series W-7, due May 2041;

BlackRock MuniYield New York Quality Fund, Inc. MYN

--VRDP Shares, $247,700,000 of Series W-7, due May 2041;

BlackRock MuniYield Arizona Fund, Inc. (NYSE-MKT: MZA)

--VRDP Shares, $37,300,000 of Series W-7, due June 2041.

BlackRock Long-Term Municipal Advantage Trust BTA

--VRDP Shares, $76,000,000 of Series W-7, due Nov. 2045.

Additional information is available on www.fitchratings.com.

The sources of information used to assess this rating were the public domain and BlackRock Advisors, LLC.

Applicable Criteria

Rating Closed-End Fund Debt and Preferred Stock (pub. 16 Sep 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871119

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

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https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1003427

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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