Fitch Rates New Blackrock Closed-End Fund VMTP Shares 'AAA'; VRDP Shares
Paid in Full
NEW YORK -- December 07, 2012
Fitch Ratings assigns an 'AAA' rating to the following $287.1 million of new
variable municipal term preferred shares (VMTP Shares) issued by BlackRock
Muni Intermediate Duration Fund, Inc. (NYSE: MUI). Proceeds will be used to
fully redeem the fund's variable rate demand preferred shares (VRDP Shares) on
Friday Dec. 21st, 2012.
BlackRock Muni Intermediate Duration Fund, Inc. (NYSE: MUI)
--$287,100,000 of Series W-7 VMTP Shares, with a liquidation preference of
$100,000 per share, due Jan. 4, 2016.
The fund's issuance of the VMTP Shares closed today Friday Dec. 7, 2012.
Proceeds received by the fund in connection with its issuance of the VMTP
Shares have been deposited with the fund's tender and paying agent for the
VRDP Shares for purposes of redeeming the fund's VRDP Shares in full
(principal plus accrued but unpaid dividends) on the redemption date, Friday
Dec. 21, 2012. Pursuant to this, as of today Friday Dec. 7, 2012, the fund's
VRDP Shares are no longer deemed outstanding under the VRDP Shares' governing
document, and therefore the fund's VRDP Shares will not be included in the
fund's calculation of asset coverage ratio and effective leverage ratio (as
described below). Fitch expects to mark the VRDP Shares as paid in full on
Friday Dec. 21, 2012.
KEY RATING DRIVERS
The 'AAA' long-term primarily reflects:
--Sufficient asset coverage provided to the preferred shares as calculated per
the fund's asset coverage tests;
--The structural protections afforded by mandatory collateral maintenance and
de-leveraging provisions in the event of asset coverage declines;
--The legal and regulatory parameters that govern the fund's operations;
--The capabilities of BlackRock Advisors, LLC. as investment advisor.
The fund is a closed-end management investment company regulated by the
Investment Company Act of 1940. The fund seek to provide common shareholders
with high current income exempt from federal income taxes by investing
primarily in a portfolio of qualified municipal obligations.
Under normal market conditions, the fund expects to invest at least 75% of its
total assets in a portfolio of municipal obligations rated at least 'BBB' by
Fitch or equivalent or, if unrated, are considered by the fund's investment
adviser to be of comparable quality. As a non-fundamental policy, under normal
market conditions the fund also maintains a dollar-weighted average portfolio
duration of three to 10 years. As of Nov 23, 2012, fund's total assets were
$1,038 million. Leverage comprised approximately 38% of total assets,
consisting of $287.1 million in rated preferred shares and $102.7 million in
floating rate notes of tender option bonds.
As of end of November 2012, the fund's pro forma asset coverage ratio, as
calculated in accordance with the Fitch total and net over-collateralization
tests per the 'AAA' rating guidelines outlined in Fitch's criteria, was in
excess of 100%, which is the minimum threshold required under the VMTP Shares'
As of the same date, the fund's asset coverage ratio for VMTP Shares, as
calculated in accordance with the Investment Company Act of 1940, was in
excess of the minimum asset coverage threshold of 225% as currently set by
corresponding transactional documents.
The fund has also covenanted to maintain an effective leverage ratio for both
the preferred shares and floating-rate certificates of tender option bonds
below 45% (or 46% if the increase in the ratio is due exclusively to asset
market value volatility). The fund's Effective Leverage Ratio is currently
In the event of asset coverage decline, the VMTP Shares' transactional
documents require the fund to reduce leverage in order to restore compliance
with the particular test(s) breaching the required threshold(s).
BlackRock Advisors, LLC, a subsidiary of BlackRock, Inc., is the advisor to
the fund, responsible for the overall investment strategies and their
implementation. BlackRock, Inc. and its affiliates had approximately $3.673
trillion of assets under management as of Sept. 30, 2012.
The rating assigned to the VMTP Shares may be sensitive to material changes in
the leverage composition, portfolio credit quality, portfolio diversification
or market risk of the fund, as described above. A material adverse deviation
from Fitch guidelines for any key rating driver could result in a downgrade by
For additional information about Fitch rating guidelines applicable to debt
and preferred stock issued by closed-end funds, please review the criteria
referenced below, which can be found on Fitch's web site at
To opt in to Fitch's complimentary closed-end fund research, follow the link
Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
The sources of information used to assess this rating were the public domain
and BlackRock Advisors, LLC.
Applicable Criteria and Related Research:
--'Municipal CEF Leverage Continues to Evolve' (Nov. 27, 2012);
--'Municipal Closed-End Funds Diversify Funding and Moderate Rollover Risk'
(Oct. 11, 2012)
--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 16, 2012);
--'Municipal CEFs Refinance Pre-Crisis ARPS' (May 3, 2012);
--'Primer: CEF Variable-Rate Demand Preferred Shares' (Oct. 27, 2011).
Applicable Criteria and Related Research:
Municipal Closed-End Funds Diversify Funding and Moderate Rollover Risk
Rating Closed-End Fund Debt and Preferred Stock
Municipal CEFs Refinance Pre-Crisis ARPS
Primer: CEF Variable-Rate Demand Preferred Shares (Closed-End Fund VRDPs
Target Short-Term, Money Market Investors)
Municipal CEF Leverage Continues to Evolve
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Yuriy Layvand, CFA, +1-212-908-9191
One State Street Plaza
New York, NY 10004
Gwen Fink-Stone, +1-212-908-9128
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Brian Bertsch, +1-212-908-0549
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