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Rating Action:

MOODY'S ASSIGNS RATINGS OF Aaa TO MUNICIPAL AUCTION RATE PREFERRED SHARES ISSUED BY FOUR BLACKROCK CLOSED- END MUNICIPAL BOND TRUSTS

17 Dec 2002
MOODY'S ASSIGNS RATINGS OF Aaa TO MUNICIPAL AUCTION RATE PREFERRED SHARES ISSUED BY FOUR BLACKROCK CLOSED- END MUNICIPAL BOND TRUSTS

Approximately $407 Million of Preferred Securities Affected.

New York, December 17, 2002 -- Moody's Investors Service assigned credit ratings of Aaa to municipal auction rate cumulative preferred shares issued by four closed-end municipal bond trusts managed by BlackRock, Inc. whose shares began trading on the New York Stock Exchange on November 5, 2002. The Aaa ratings reflect an assessment that the preferred shares issued from these closed-end trusts constitute top quality investments with good asset protection and low risk of dividend impairment, consistent with the expected loss profile of other Aaa rated securities.

The preferred shares are issued from the following four closed-end trusts:

Fund Name (Ticker) SeriesLiquidation Preference

BlackRock Insured Municipal Income Trust III (BYM) 3,053 Series, M7, R7, F7 $228,975,000

BlackRock Florida Insured Municipal Income Trust III (BAF) 3,040 Series M7 $76,000,000

BlackRock California. Insured Municipal Income Trust III (BCK) 1,860 Series F7 $46,500,000

BlackRock New York Insured Municipal Income III Trust (BSE) 2,240 Series R7 $56,000,000

The Aaa rated preferred shares pay dividends set weekly via a Dutch auction process, with rates that reflect the short-term bond market.

Three of the trusts, including California, Florida, and New York are non-diversified closed-end investment management companies. The investment objective of each of the trusts is to provide current income exempt from federal (and local income taxes where an applicable exemption exists) income tax and also alternative minimum tax. The state oriented trusts also provide income free of taxes in their respective states. Each Trust, under normal circumstances, will be invested primarily in municipal bonds rated Aaa, or determined to be of comparable quality by BlackRock. These bonds will typically be insured as to timely payment of principal and interest. Up to 20% of each Trust's managed assets may be invested in bonds rated below Aaa, but not below Baa. Accordingly, the Trusts do not intend to invest any assets in municipal bonds rated below investment grade or in comparable unrated municipal issues. The Trusts intend to invest primarily in long-term bonds and bonds in their portfolio are expected to have a dollar weighted average maturity of 15 years or more under current market conditions.

At the time of their issuance, the preferred shares constitute approximately 38% of the total capital of each of the Trusts. Under current market conditions, these new closed-end investment companies could increase their earnings per common share by issuing municipal preferred shares and investing the net proceeds of such issuance in long-term municipal bonds in accordance with each Trust's investment policies.

The Aaa ratings incorporate Moody's assessment that the preferred shares issued from these closed-end trusts constitute top quality investments, given their good asset protection and the low risk of dividend impairment. This is a function of each trust's capital structure as well as the quality and adequacy of their assets. These assets serve to collateralize the issued preferred shares as well as dividends derived from the income produced by the assets of each investment vehicle. Given each portfolio's investment policies and modest price variability of the asset class, Moody's believes that the market values of the underlying assets are sufficient to provide good asset protection to investors in the preferred stock.

In addition to satisfying regulatory guidelines, Moody's rating process requires that closed-end funds support preferred stock issues with eligible assets in amounts that are sufficient to withstand a severe loss in value. To meet the Aaa rating requirements, the funds adhere to stricter diversification standards by seeking to reduce underlying obligor and sector concentrations. These rating agency guidelines supplement regulatory requirements which mandate asset coverage ratios of 200% to cover the liabilities of each fund pursuant to the Investment Company Act of 1940.

Moody's also cites the advisor's fixed-income research capability and conservative income orientation in support of the preferred stock ratings. BlackRock, Inc. and its affiliates manage assets on behalf of more than 3,300 institutions and 200,000 individuals worldwide, through a variety of equity, fixed income, liquidity and alternative investment separate accounts and mutual funds, including the company's flagship fund families, BlackRock Funds and BlackRock Provident Institutional Funds. BlackRock, Inc. is one of the largest publicly traded investment management firms in the United States with $246 billion of assets under management as of September 30, 2002.

BlackRock, a member of The PNC Financial Services Group, Inc. ("PNC"), is majority-owned by PNC and BlackRock employees. The firm's investment offerings include open-end, closed-end, taxable fixed income, municipal bond, domestic and international equity, and money market funds. With 13 years of experience managing closed-end products, BlackRock currently advises a closed-end family of 44 funds with approximately $11 billion in assets as of October 31, 2002. BlackRock has 35 leveraged municipal closed-end funds and six open-end municipal funds under management. As of September 30, 2002, BlackRock had approximately $18.6 billion in municipal assets under management firm-wide.

New York
Henry Shilling
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Martin Duffy
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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