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Rating Action:

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

09 Mar 2015

New York, March 09, 2015 -- Moody's Investors Service, Inc. ("Moody's") has upgraded to P-1 from P-2 the short-term rating of the existing Variable Rate Demand Preferred Shares ("VRDP") issued by four closed-end funds managed by Nuveen Fund Advisors, LLC. Effective at the close of business on March 27, 2015, The Toronto-Dominion Bank will replace Deutsche Bank Trust Company Americas as the liquidity support provider for four series of VRDP. The rating upgrades are based on the rating substitutions for TD Bank's short-term rating.

Moody's is taking no rating actions on the long-term ratings of the affected VRDP shares or any of the other series of preferred shares.

Moody's has upgraded the short-term ratings for the following four series of VRDP:

Nuveen California AMT-Free Municipal Income Fund (NKX) - Series 3 VRDP

Nuveen California Dividend Advantage Municipal Fund (NAC) - Series 3 VRDP

Nuveen New York Performance Plus Municipal Fund, Inc. (NNP) - Series 1 VRDP

Nuveen Municipal Market Opportunity Fund, Inc. (NMO) - Series 1 VRDP

RATINGS RATIONALE

Short-Term Ratings

The VRDP shares' short-term ratings are based on ratings substitutions from the new liquidity support provider, The Toronto-Dominion Bank (Aa1 / P-1).

Long-Term Ratings

State-Specific Municipal Funds

NKX, NAC, and NNP with assets of $1.2 billion, $2.66 billion, $373.8 million respectively, as of February 25, 2015, are modestly levered with total leverage of 28%, 36%, and 36% respectively.

The Aa2 ratings are based on each of the funds' strong coverage ratios using municipal advance rates applied to all portfolio assets, the low risk of breaching coverage ratios imposed by the '40 Act, and the ratings of the State of New York (Aa1, Stable) for NNP and the State of California (Aa3, Stable) for NKX and NAC.

Moody's risk adjusted coverage ratios, based on advance rates applied to portfolio securities including tender option bonds, stood at 142%, 130%, and 127% for NKX, NAC, and NNP respectively. This, combined with the low probability of breaching the funds' 40 Act regulatory coverage, contributes to the funds' strong adjusted leverage profiles.

The funds' portfolio profiles, which capture the credit quality and liquidity of the funds' holdings, reflect the strong credit quality of each fund's state-specific holdings. This is offset by weaker concentration metrics due to the funds' single-state focus, which Moody's considers less diversified than national municipal funds.

National Municipal Fund

NMO with assets of $1.1 billion as of February 25, 2015 is modestly levered with total leverage of 36%.

The Aa1 rating is based on the fund's strong coverage ratios, using municipal advance rates applied to all portfolio assets, combined with low risk of breaching the coverage ratio imposed by the 40 Act. Moody's risk adjusted coverage ratio, based on advance rates applied to portfolio securities including tender option bonds, is strong at 149%. The fund's adjusted leverage profile is further supported by its low risk of breaching '40 Act regulatory coverage.

The fund's portfolio profile, which captures the credit quality and liquidity of the fund's holdings, reflects the broadly diversified, strong credit quality of the municipal holdings that span various general obligation, tax obligation, revenue bonds, pre-refunded bonds, and other security types. The long-term rating of the VRDP shares of NMO is further supported by the strong fixed charge coverage ratio at 8.5x when calculated on a trailing one-year basis. This demonstrates a strong capacity of the fund 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 these ratings, 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.

Nuveen Fund Advisors, LLC is the investment adviser for the funds, responsible for determining each fund's overall investment strategy. Nuveen Investments, Inc. and its affiliates had approximately $231 billion of assets under management as of December 31, 2014.

The principal methodology used in these ratings was "Moody's Methodology for Rating Securities Issued by U.S. Closed-End Funds" published in May 2013. 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.

James Chen
Analyst
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
Financial Institutions 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 four Nuveen municipal closed-end funds
No Related Data.
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