New York, January 28, 2021 -- Moody's Investors Service, ("Moody's") has
affirmed the P-1 short-term rating of Series 4 Variable
Rate Demand Preferred (VRDP) Shares issued by Nuveen California AMT-Free
Quality Municipal Income Fund (Ticker: NKX), as follows:
-- Nuveen California AMT-Free Quality Municipal Income
Fund, Series 4 Variable Rate Demand Preferred Shares, $109,000,000
(1,090 shares with liquidation preference of $100,000
per share): affirmed P-1
The affirmation follows the change in the Liquidity Provider for the fund's
Series 4 VRDP Shares to Royal Bank of Canada (Aa2, P-1(cr))
from Citibank, N.A. (Aa3, P-1(cr)),
which will be effective at the close of business on 12 February 2021.
Moody's has taken no concurrent action on the long-term rating
of the Series 4 VRDP Shares or the long or short-term ratings of
any other series of preferred shares issued by NKX.
RATINGS RATIONALE
The short-term ratings of securities such as VRDP shares with unconditional
liquidity support provided by a bank are based solely on the Liquidity
Provider's short-term rating and is tied to its creditworthiness.
We use the Counterparty Risk Assessment (CRA) as an input to determine
the short-term payment risk of the bank, and our evaluation
of the terms of the liquidity commitment. The appointment of a
new Liquidity Provider bank with the same short-term CRA has no
impact on our view of the short term rating of the affected series of
VRDP.
Through and including 12 February 2021, the Series 4 VRDP Shares
have the benefit of an unconditional demand feature pursuant to a purchase
obligation provided by Citibank, N.A. ("Citibank").
Effective at the close of business on 12 February 2021, upon the
expiration of the Citibank VRDP purchase agreement, the Series 4
VRDP Shares will have the benefit of an unconditional demand feature pursuant
to a purchase obligation provided by Royal Bank of Canada ("RBC").
RBC's VRDP purchase obligation is substantially identical to the purchase
obligation the fund had received from Citibank.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The P-1 rating for the Series 4 VRDP Shares may be downgraded if
the short-term counterparty risk assessment of P-1(cr) for
Royal Bank of Canada is downgraded.
The principal methodology used in this rating was "Closed-End Funds
Methodology" published in December 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1205925.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
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.
The rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
This rating is solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
available on www.moodys.com.
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
Robert M. Callagy
Associate Managing Director
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
