New York, November 19, 2019 -- Moody's Investors Service ("Moody's") has affirmed
the ratings of Nuveen AMT-Free Municipal Credit Income Fund (NYSE:
NVG) following its acquisition of Nuveen Connecticut Quality Municipal
Income Fund (NYSE: NTC).
Series 1 VRDP shares, $179.0 million (1,790
shares with liquidation preference of $100,000 per share),
CUSIP: 67071L700: Aa2 affirmed
Series 2 VRDP shares, $385.4 million (3,854
shares with liquidation preference of $100,000 per share),
CUSIP: 67071L809: Aa2/P-1 affirmed (liquidity provider:
JPMorgan Chase Bank, N.A.)
Series 4 VRDP shares, $180.0 million (1,800
shares with liquidation preference of $100,000 per share),
CUSIP: 67071L 866: Aa2/P-1 affirmed (liquidity provider:
Citibank N.A.)
Series 5 VRDP shares, $340.5 million (3,405
shares with liquidation preference of $100,000 per share),
CUSIP: 67071L858: Aa2/P-1 affirmed (liquidity provider:
Société Générale)
Series 6 VRDP shares, $326.7 million (3,267
shares with liquidation preference of $100,000 per share),
CUSIP: 67071L841: Aa2/P-1 affirmed (liquidity provider:
Sumitomo Mitsui Banking Corporation)
Series B Variable Rate Remarketed Mode- MuniFund Preferred Shares,
$200 million (200,000 shares with liquidation preference
of $1,000 per share): Aa2 affirmed
RATINGS RATIONALE
On 18 November 2019, Nuveen AMT-Free Municipal Credit Income
Fund (NYSE: NVG) closed on its acquisition of Nuveen Connecticut
Quality Municipal Income Fund (NYSE: NTC), a fund that invests
in securities of Connecticut municipalities. The acquisition marginally
improves the duration and credit quality of the fund.
The merger is primarily intended to create greater scale resulting in
operating expense efficiencies and increased secondary market liquidity
for common shareholders. The merger is leverage neutral.
Currently, NTC's investment portfolio has higher credit quality
than NVG's investment portfolio.
Nuveen AMT-Free Municipal Credit Income Fund's Aa2 rating
is based on the fund's pro forma strong risk-adjusted asset coverage
ratio which combined with the low probability of breaching regulatory
coverage requirements also provides preferred shareholders with significant
protection from asset deterioration. The Fund also maintains strong
coverage of its financing costs, including senior leverage interest
expense and preferred dividend payments.
Offsetting these strengths is the fund's asset profile which principally
reflects the fund's proportion of investments at or below the Baa level,
as well as its modest level of unrated securities.
The Aa2 rating assigned to the shares issued by NVG could be upgraded
if: 1) there is sustained improvement in the credit quality and
liquidity of the fund's investment portfolio, and 2) the investment
portfolio exhibits a stronger fixed-charge coverage.
The ratings could be downgraded if 1) the fund's leverage approaches 40%
for a sustained period of time, 2) the fund exhibits a sharp,
sustained decline in the credit quality of its underlying investments
or exhibits a sustained increase in sector or issuer concentration,
and/or 3) the fund's fixed charge coverage is below 5x for a sustained
period of time.
NVG is a closed-end fund registered under the Investment Company
Act of 1940 with approximately $5.5 billion of assets under
management as of 31 October 2019.
Nuveen Fund Advisors, LLC is the investment adviser for the funds,
responsible for determining each fund's overall investment strategy.
Nuveen Investments and its affiliates had approximately $1 trillion
of assets under management as of 30 September 2019.
The principal methodology used in these ratings was "Securities Issued
by US Closed-End Funds" published in August 2018. Please
see the Rating Methodologies page on www.moodys.com for
a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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 credit rating action on the
support provider and in relation to each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
Stefan Kahandaliyanage, CFA
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Marc R. Pinto, CFA
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653