$319.7 million of VRDP shares affected
New York, April 13, 2015 -- Moody's Investors Service, Inc. ("Moody's")
has affirmed the long-term Aa2 ratings of Variable Rate Demand
Preferred Shares (VRDP) issued by two state-specific closed-end
funds managed by BlackRock Advisors, LLC. as follows:
-- BlackRock MuniHoldings New Jersey Quality Fund,
Inc. (MUJ), $237.1 million (2,371 shares
with liquidation preference of $100,000 per share)
-- BlackRock MuniYield Pennsylvania Quality Fund (MPA),
$82.6 million (826 shares with liquidation preference of
$100,000 per share)
The rating affirmations follow BlackRock's announcement that it
reorganized four of its closed-end funds as follows:
-- BlackRock MuniYield New Jersey Quality Fund, Inc.
(MJI) reorganized with and into BlackRock MuniHoldings New Jersey Quality
Fund, Inc. (MUJ).
-- BlackRock Pennsylvania Strategic Municipal Trust (BPS)
reorganized with and into the BlackRock MuniYield Pennsylvania Quality
Fund (MPA).
Each of the surviving funds issued new VRDP shares on a one-for-one
basis, in the same amount as the retired VRDP shares of the merged
funds.
RATINGS RATIONALE
The affirmation of the long-term Aa2 ratings is supported by the
following considerations, assessed on a pro forma basis as if the
mergers of the respective funds had already occurred:
Adjusted Leverage
MUJ's pro-forma risk adjusted asset coverage ratio,
at 162%, is strong and the risk of an Investment Company
of 1940 Act (1940 Act) breach is low at 4.7 times, as calculated
by Moody's based on the portfolio's historic volatility and leverage.
The results are consistent with a score of Aaa for these factors.
MPA's pro-forma risk adjusted asset coverage ratio,
at 166%, is strong and the risk of an Investment Company
of 1940 Act (1940 Act) breach is low at 5.0 times, and are
also consistent with a score of Aaa for these factors.
MUJ's leverage is expected to remain consistent with its level prior
to the reorganization, or approximately 37%. The fund
will adhere to an asset coverage test that mandates that it delevers when
effective leverage exceeds 45%.
MPA's leverage is expected to remain consistent with its level prior
to the reorganization, or approximately 36%. The fund
will adhere to an asset coverage test that mandates that it delevers when
effective leverage exceeds 45%.
Portfolio Profile
The funds' portfolio profiles, which capture the credit quality
and liquidity of the funds' holdings, reflect the strong credit
quality of state-specific municipal holdings that are invested
across various general obligations, tax obligations, revenue
bonds, pre-refunded bonds as well as other security types.
MUJ's pro-forma portfolio has a weighted average credit quality
of A2, and MPA's pro-forma portfolio has a weighted
average credit quality of A1.
Fixed Charge Coverage
The fixed charge coverage ratio of MUJ's pro-forma portfolio
is calculated at 13.5 times when calculated on a trailing one-year
basis. The fixed charge coverage ratio of MPA's pro-forma
portfolio is calculated at 18.3 times. These levels indicate
the funds' strong capacity to meet periodic dividend payments from
recurring earnings.
Relative Priority of Claim
In addition to assessing the key rating factors described above,
Moody's considers the priority of claim of a fund's specific security
types and any other qualitative factors relevant to the fund's credit
profile. In the case of preferred securities, which is the
instrument class associated with this rating, a one- notch
downward adjustment from the senior rating profile suggested by the key
factors is made to reflect the subordinate position of investors holding
preferred stock relative to those holding senior unsecured debt obligations.
The principal methodology used in this rating was "Securities Issued by
U.S. Closed-End Funds" published in March 2015.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Neal M. Epstein, CFA
VP - Senior Credit Officer
Managed Investments Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Marc R Pinto
Associate Managing Director
Managed Investments Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's affirms Aa2 long term ratings of VRDP shares issued by two BlackRock state-specific municipal closed-end funds