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Rating Action:

Moody's upgrades short-term ratings to P-1 for VRDP shares issued by seven BlackRock municipal closed-end funds

29 Nov 2012

$365.2 million of VRDP shares affected

New York, November 29, 2012 -- Moody's Investors Service has upgraded to P-1 from P-2 the short-term ratings of Variable Rate Demand Preferred (VRDP) shares issued by three national and four state-specific closed-end funds managed by BlackRock Advisors, LLC, in connection with the replacement of their Liquidity Provider. Barclays Bank PLC, rated P-1/A-2, stable, will enter into VRDP Purchase Agreements to provide liquidity support to the VRDP shares, replacing Morgan Stanley Bank (P-2/A-3, stable), effective November 29, 2012. The VRDP shares' short-term ratings are based on the strength of the liquidity support provided by the VRDP Liquidity Provider. Moody's also affirmed the long-term ratings of the VRDP shares, which remain at Aa1 and Aa2 for the national and state-specific funds respectively. The long-term ratings are based on each fund's risk adjusted leverage, portfolio profile and fixed charge coverage, combined with an assessment of the VRDP shares' relative priority of claim.

The seven funds, each managed by BlackRock Advisors, LLC, and the corresponding VRDP shares are listed below:

National Municipal Funds:

• BlackRock Municipal Bond Investment Trust (BIE) 178 shares @$100,000 per share for $17.8 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa1

• BlackRock Municipal Income Investment Trust (BBF) 342 shares @$100,000 per share for $34.2 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa1

• BlackRock Muniyield Quality Fund, Inc. (MQY) 1,766 shares @$100,000 for $176.6 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa1

State-Specific Municipal Funds:

• BlackRock Muni New York Intermediate Duration Fund, Inc. (MNE) 296 shares @$100,000 per share for $29.6 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa2

• BlackRock New York Municipal Bond Trust (BQH) 221 shares @$100,000 for $22.1 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa2

• BlackRock New York Municipal Income Quality Trust (BSE) 405 shares @$100,000 for $40.5 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa2

• BlackRock New York Municipal Income Trust II (BFY) 444 shares @$100,000 for $44.4 million Variable Rate Demand Preferred Shares Series W-7 (VRDP) mandatory redemption 10/1/2041/Barclays Bank PLC backed liquidity, Upgraded P-1/Affirmed Aa2

RATINGS RATIONALE

Short-Term Ratings

Summary

The short-term ratings are based upon the terms of the VRDP Shares Purchase Agreements entered into by Barclays Bank PLC, as Liquidity Provider, and The Bank of New York Mellon, as Tender and Paying Agent, which supports VRDP holders' ability to tender their shares with an unconditional commitment from Barclays to purchase unsuccessfully remarketed shares as the Liquidity Provider.

Credit Discussion

The Liquidity Provider agrees to purchase any rated shares that have been tendered for and not successfully remarketed on the 7th day after notice of tender. The VRDP Purchase Agreements have no automatic termination events or conditions precedent to funding, making it an unconditional agreement to purchase un-remarketed shares. The Prime-1 rating will expire upon the termination of the VRDP Purchase Agreements which are scheduled to terminate as of December 4, 2014, although the funds may request, not more than one hundred twenty (120) days nor less than ninety (90) days prior to this date that the Liquidity Provider extend the term of its VRDP Purchase Agreement for an additional period of up to 364 days, or longer if mutually agreed.

VRDP shareholders have the option to tender their VRDP shares for remarketing and purchase seven business days after providing notice to the tender and paying agent. If the remarketing agent is unable to sell any or all of the tendered shares submitted by VRDP shareholders pursuant to either a mandatory tender event or an optional tender, the tender and paying agent will deliver all unsold VRDP shares to the Liquidity Provider for purchase on such purchase date.

In addition to optional tenders, the VRDP Purchase Agreements include mandatory purchase events to address "roll over" risk and any unscheduled termination of the VRDP Purchase Agreements. Additionally, VRDP shares are subject to mandatory tender for remarketing upon the occurrence of mandatory tender events, which include: (a) failure of the fund to pay scheduled dividends; (b) downgrade of the Liquidity Provider rating to a certain level; (c) failure of the fund to remit fees to the Liquidity Provider for services rendered (if declared a mandatory tender event by the Liquidity Provider); (d) occurrence of an extraordinary corporate event; (e) substitution of the Liquidity Provider; (f) designation of a special rate period, and (g) breach of an effective leverage covenant continued for 60-days (if declared a mandatory tender event by the Liquidity Provider).

The Liquidity Provider has a mandatory purchase obligation with respect to all outstanding VRDP shares upon termination of a VRDP Purchase Agreement and to the extent that an alternate VRDP Purchase Agreement is not put in place. The occurrence of any mandatory purchase events would begin a process whereby all VRDP shareholders would be notified of a mandatory purchase event and their VRDP shares subject to purchase by the Liquidity Provider.

To mitigate the risk of a short-fall at maturity, the funds are also required to segregate securities starting five months prior to redemption, with a value equal to at least 110% of the redemption amounts.

Long-Term Ratings Credit Discussion

National Municipal Funds

BIE, BBF, and MQY, with gross assets of $92.7 million, $174.6 million, and $811.0 million, respectively as of October 31, 2012, are modestly levered with effective leverage of 39%, 39%, and 36%, respectively, including tender option bonds.

The Aa1 ratings are based on each of the funds' strong coverage ratios, using municipal advance rates applied to all portfolio assets, combined with low risk of breaching the coverage ratio imposed by the Investment Company Act of 1940 (40 Act). Moody's risk adjusted coverage ratios, based on advance rates applied to portfolio securities including tender option bonds, stood at 163%, 163%, and 174% for BIE, BBF, and MQY, respectively of the Aaa standard for this metric. This, combined with the low probability of breaching the funds' 40 Act regulatory coverage, contributes to the funds' strong adjusted leverage profile. The leverage profile is reinforced by each fund's commitment to maintain an effective leverage ratio at or below 45%.

The funds' portfolio profiles, which capture the credit quality and liquidity of the funds' holdings, reflects the strong credit quality of each fund's municipal holdings, that are well diversified nationally, across various general obligation, tax obligation, revenue bonds, pre-refunded bonds, as well as other security types. The long-term ratings of the national municipal fund VRDP shares are further supported by very high quality 10 times-to-11 times fixed charge coverage ratios, calculated on a trailing one year basis, and 9 times-to-11 times fixed charge coverage ratios, calculated on a trailing five year basis, evidencing the funds' excellent capacity to meet periodic dividend payments and recurring earnings.

The ratings also reflect a one notch downward adjustment to reflect the weaker position of investors holding preferred stock relative to senior unsecured debt obligations.

New York State-Specific Municipal Funds

MNE, BQH, BSE, and BFY with assets of $101.7 million, $75.4 million, $161.1 million and $127.7 million respectively, as of October 31, 2012, are modestly levered effective leverage of 35%, 39%, 38%, and 35%, respectively, including tender option bonds.

The Aa2 ratings are based on each of the funds' strong coverage ratios, using municipal advance rates applied to all portfolio assets, combined with low risk of breaching the coverage ratio imposed by the40 Act, as well as the State of New York's (Aa2, Stable) rating. Moody's risk adjusted coverage ratios, based on advance rates applied to portfolio securities including tender option bonds, stood at 168%, 152%, 158%, and 165% for MNE, BQH, BSE, and BFY, respectively of the Aaa standard for this metric. This, combined with the low probability of breaching the funds' 40 Act regulatory coverage, contributes to the funds' strong adjusted leverage profile. The leverage profile is reinforced by the fund's commitment to maintain a leverage ratio at or below 45%, lower than the 40 Act limit of 50%.

The funds' portfolio profiles, which capture the credit quality and liquidity of the funds' holdings, reflects the strong credit quality of each fund's municipal holdings, that are well diversified nationally, across various general obligation, tax obligation, revenue bonds, pre-refunded bonds, as well as other security types. This is offset by lower liquidity metrics, due to the funds' single-state focus and industry and sector concentrations, which could be exacerbated in any future municipal market downturn.

The long-term ratings of the national municipal fund VRDP shares are further supported by high quality 5 times-to-6 times fixed charge coverage ratios, calculated on a trailing one year basis, and 5 times-to-10 times fixed charge coverage ratios, calculated on a trailing five year basis, evidencing the funds' strong capacity to meet periodic dividend payments and recurring earnings.

The ratings also reflect a one notch downward adjustment to reflect the weaker position of investors holding preferred stock relative to senior unsecured debt obligations.

The principal methodology used in this rating was "Moody's Methodology for Rating Securities Issued by U.S. Closed-End Funds" published in May 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, 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 has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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.

Neal M Epstein
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Yaron Ernst
MD - Managed Investments
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

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 upgrades short-term ratings to P-1 for VRDP shares issued by seven BlackRock municipal closed-end funds
No Related Data.
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