| Item 1 – | Reports to Stockholders | |
| (a) The Reports to Shareholders are attached herewith. | ||
January 31, 2025
| 2025 Semi-Annual Report (Unaudited) |
| BlackRock Long-Term Municipal Advantage Trust (BTA) |
| BlackRock MuniAssets Fund, Inc. (MUA) |
| BlackRock Municipal Income Fund, Inc. (MUI) |
| BlackRock MuniYield Fund, Inc. (MYD) |
| BlackRock MuniYield Quality Fund, Inc. (MQY) |
| BlackRock MuniYield Quality Fund III, Inc. (MYI) |
| Not FDIC Insured • May Lose Value • No Bank Guarantee |
Municipal Market Overview
For the Reporting Period Ended January 31, 2025
Municipal Market Conditions
Volatility was heightened across fixed income markets as the Federal Reserve (“Fed”) began to ease monetary policy and the contentious election cycle ended in a Republican
sweep. While front-end interest rates fell, intermediate and long-end rates surprisingly rose amid stronger than expected economic growth and fiscal deficit concerns.
Municipal bonds started the year slow but rebounded as seasonals turned increasingly positive in the summer. Weakness in the fourth quarter eroded most of the gains, before
a volatile but virtually flat January ended the period. The Bloomberg Municipal Bond Index returned 2.08% as high yield bonds, barbell yield curve strategies, and the Puerto
Rico, IDR/PCR, and housing sectors performed best. On a relative basis, the asset class outperformed versus duration matched Treasuries.
| Bloomberg Municipal Bond Index (a) | ||
| Total Returns as of January 31, 2025 | ||
| 6 |
months: |
1.05% |
| 12 |
months: |
2.08% |
During the 12-months ended January 31, 2025, municipal bond funds experienced net inflows totaling $27 billion
(based on data from the Investment Company Institute), concentrated in long-term and high yield funds. At the same
time, the market absorbed $494 billion in issuance, a 35% year-over-year increase, boosted by increased borrowing
needs on the back of deferred maintenance and elevated inflation as well as a pull forward of supply ahead of the
election.
A Closer Look at Yields
AAA Municipal Yield Curves
Source: Thomson Municipal Market Data.
From January 31, 2024, to January 31, 2025, yields on AAA-rated 30-year
municipal bonds increased by 45 basis points (bps) from 3.52% to 3.97%, ten-year
yields increased by 59 bps from 2.38% to 2.97%, five-year yields increased
by 41 bps from 2.36% to 2.77%, and two-year yields increased by 3 bps from
2.64% to 2.67% (as measured by Refinitiv Municipal Market Data). As a result,
the municipal yield curve steepened over the 12-month period with the spread
between two- and 30-year maturities steepening by 42 bps to a slope of 130 bps,
lagging the 63 bps of steepening experienced by the Treasury curve.
Despite a slight cheapening of the asset class during the period, relative
valuations remain historically rich and should continue to limit interest from
crossover investors.
Financial Conditions of Municipal Issuers
Most municipal issuers are stable, as tax receipts and spending have normalized since the COVID era. With reserves at record highs, debt service burdens near 50-year lows,
and pension funding levels dramatically improving, states are well positioned to weather an economic slowdown or significant targeted changes to federal spending or tax
policy. Local governments and suburban school districts that primarily rely on property tax revenues typically fare well during a slowdown. However, affordability is becoming
a concern as the rapid appreciation of home values drives property taxes and homeowner insurance costs higher. Large cities have adjusted to declining commercial real
estate values, but changes to federal immigration policy will create near-term budgetary pressure. We view changes in federal tax and spending policy as the largest risk to the
sector since federal funds represent, on average, 35% of state budgets. States with higher poverty rates and limited own-source revenue rely more on federal aid, making it
difficult to enact dramatic across-the-board cuts to large non-discretionary programs such as Medicaid.
We continue to favor revenue-sector issuers over state and local governments since they are typically lower-rated and offer additional yield. Most municipal revenue sector
borrowers are highly defensive, as they are monopolistic providers of essential services that can raise user fees to cover operations. In the investment-grade sector, we prefer
single-A and triple-B bonds. We also favor prepaid gas and housing bonds that offer attractive yields, high quality, and good liquidity.
The opinions expressed are those of BlackRock as of January 31, 2025 and are subject to change at any time due to changes in market or economic conditions. The comments should not
be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your
investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond
values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal
issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (“AMT”). Capital
gains distributions, if any, are taxable.
(a)
The Bloomberg Municipal Bond Index, a broad, market value-weighted index, seeks to measure the performance of the U.S. municipal bond market. All bonds in the index are exempt
from U.S. federal income taxes or subject to the AMT. Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. It is not possible to
invest directly in an index.
Municipal Market Overview
3
The Benefits and Risks of Leveraging
The Funds may utilize leverage to seek to enhance the distribution rate on, and net asset value (“NAV”) of, their common shares (“Common Shares”). However, there is no
guarantee that these objectives can be achieved in all interest rate environments.
In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income
earned by a Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of each Fund (including the assets
obtained from leverage) are invested in higher-yielding portfolio investments, each Fund
’
s shareholders benefit from the incremental net income. The interest earned on
securities purchased with the proceeds from leverage (after paying the leverage costs) is paid to shareholders in the form of dividends, and the value of these portfolio holdings
(less the leverage liability) is reflected in the per share NAV.
To illustrate these concepts, assume a Fund
’
s Common Shares capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of
$130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has
a strongly positive slope. In this case, a Fund
’
s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the
same time, the securities purchased by a Fund with the proceeds from leverage earn income based on longer-term interest rates. In this case, a Fund
’
s financing cost of
leverage is significantly lower than the income earned on a Fund
’
s longer-term investments acquired from such leverage proceeds, and therefore the holders of Common
Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.
However, in order to benefit Common Shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If
interest and other costs of leverage exceed a Fund
’
s return on assets purchased with leverage proceeds, income to shareholders is lower than if a Fund had not used leverage.
In such circumstance, the investment adviser may nevertheless determine to maintain a Fund
’
s leverage if it deems such action to be appropriate. Furthermore, the value of
the Funds’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments.
In contrast, the amount of each Fund
’
s obligations under its respective leverage arrangement generally does not fluctuate in relation to interest rates. As a result, changes in
interest rates can influence the Funds’ NAVs positively or negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no
assurance that a Fund
’
s intended leveraging strategy will be successful.
The use of leverage also generally causes greater changes in each Fund
’
s NAV, market price and dividend rates than comparable portfolios without leverage. In a declining
market, leverage is likely to cause a greater decline in the NAV and market price of a Fund’s Common Shares than if the Fund were not leveraged. In addition, each Fund may
be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as
required by the terms of leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit a Fund’s ability to invest in certain types of securities
or use certain types of hedging strategies. Each Fund incurs expenses in connection with the use of leverage, all of which are borne by Common Shareholders and may reduce
income to the Common Shares. Moreover, to the extent the calculation of each Fund
’
s investment advisory fees includes assets purchased with the proceeds of leverage, the
investment advisory fees payable to the Funds’ investment adviser will be higher than if the Funds did not use leverage.
To obtain leverage, each Fund has issued Variable Rate Demand Preferred Shares (“VRDP Shares” or “Preferred Shares”) and/or leveraged its assets through the use of
tender option bond trusts (“TOB Trusts”) as described in the Notes to Financial Statements.
Under the Investment Company Act of 1940, as amended (the “1940 Act”), each Fund is permitted to borrow money (including through the use of TOB Trusts) or issue debt
securities up to 33 1/3% of its total managed assets or equity securities (e.g., Preferred Shares) up to 50% of its total managed assets. A Fund may voluntarily elect to limit its
leverage to less than the maximum amount permitted under the 1940 Act. In addition, a Fund may also be subject to certain asset coverage, leverage or portfolio composition
requirements imposed by the Preferred Shares’ governing instruments or by agencies rating the Preferred Shares, which may be more stringent than those imposed by the
1940 Act.
Derivative Financial Instruments
The Funds may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets
without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency
exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect
correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument.
Pursuant to Rule 18f-4 under the 1940 Act, among other things, the Funds must either use derivative financial instruments with embedded leverage in a limited manner or
comply with an outer limit on fund leverage risk based on value-at-risk. The Funds
’
successful use of a derivative financial instrument depends on the investment adviser’s
ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used,
may limit the amount of appreciation a Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Funds’ investments in these
instruments, if any, are discussed in detail in the Notes to Financial Statements.
4
2025
BlackRock Semi-Annual Report to Shareholders
Fund Summary
as of January 31, 2025
BlackRock Long-Term Municipal Advantage Trust (BTA)
Investment Objective
BlackRock Long-Term Municipal Advantage Trust
’
s (BTA) (the “
Fund
”)
investment objective is to provide current income exempt from regular U.S. federal income tax.
The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in municipal obligations and derivative instruments
with exposure to such municipal obligations, in each case that are expected to pay interest or income that is exempt from U.S. federal income tax (except that the interest may
be subject to the U.S. federal alternative minimum tax). The Fund invests, under normal market conditions, primarily in long-term municipal bonds with a maturity of more than
ten years at the time of investment and, under normal market conditions, the Fund’s municipal bond portfolio will have a dollar-weighted average maturity of greater than
10 years. The Fund may invest directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Fund’s investment objective will be achieved.
On January 20, 2025, the Board of Trustees of the Fund and the Board of Directors of BlackRock MuniAssets Fund, Inc. (MUA) each approved the reorganization of the Fund
into MUA, with MUA continuing as the surviving Fund. Subject to the requisite approvals by each Fund’s respective common and preferred shareholders and the satisfaction
of customary closing conditions, the reorganization is expected to occur during the second half of 2025.
Fund Information
| Symbol on New York Stock Exchange |
BTA |
| Initial Offering Date |
February 28, 2006 |
| Yield on Closing Market Price as of January 31, 2025 ($9.89) (a) |
6.01% |
| Tax Equivalent Yield (b) |
10.15% |
| Current Monthly Distribution per Common Share (c) |
$0.049500 |
| Current Annualized Distribution per Common Share (c) |
$0.594000 |
| Leverage as of January 31, 2025 (d) |
37% |
| (a) |
Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance is not an indication of future results. |
| (b) |
Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
| (c) |
The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain. |
| (d) |
Represents VRDP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Fund, including any assets attributable to VRDP Shares and TOB Trusts, minus the sum of its accrued liabilities. Does not reflect derivatives or other instruments that may give rise to economic leverage. For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging and Derivative Financial Instruments. |
Market Price and Net Asset Value Per Share Summary
| |
01/31/25 |
07/31/24 |
Change |
High |
Low |
| Closing Market Price |
$ 9.89 |
$ 10.41 |
(5.00 ) % |
$ 10.91 |
$ 9.62 |
| Net Asset Value |
10.46 |
10.73 |
(2.52 ) |
11.04 |
10.19 |
Performance
Returns for the period ended January 31, 2025 were as follows:
| |
|
Average Annual Total Returns | ||
| |
6-month |
1 Year |
5 Years |
10 Years |
| Fund at NAV (a)(b) |
0.21 % |
5.77 % |
0.76 % |
3.35 % |
| Fund at Market Price (a)(b) |
(2.34 ) |
0.88 |
(0.12 ) |
3.79 |
| Customized Reference Benchmark (c) |
1.23 |
3.44 |
1.15 |
N/A |
| Bloomberg Municipal Bond Index (d) |
1.05 |
2.08 |
0.73 |
2.12 |
| (a) |
All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices. Performance results reflect the Fund’s use of leverage, if any. |
| (b) |
The Fund ’ s discount to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV. |
| (c) |
The Customized Reference Benchmark is comprised of the Bloomberg Municipal Bond Index Total Return Index Value Unhedged (75%) and the Bloomberg Municipal Bond: High Yield (non-Investment Grade) Total Return Index (25%). The Customized Reference Benchmark commenced on September 30, 2016. |
| (d) |
An unmanaged index that tracks the U.S. long term tax-exempt bond market, including state and local general obligation bonds, revenue bonds, pre-refunded bonds, and insured bonds. |
Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.
Past performance is not an indication of future results.
The Fund is presenting the performance of one or more indices for informational purposes only. The Fund
is actively managed and does not seek to track or replicate the
performance of any index. The index performance shown is not intended to be indicative of the Fund’s investment strategies, portfolio components or past or future
performance.
More information about the Fund’s historical performance can be found in the “Closed End Funds” section of
blackrock.com
.
Fund Summary
5
Fund Summary
as of January 31, 2025
(continued)
BlackRock Long-Term Municipal Advantage Trust (BTA)
The following discussion relates to the Fund’s absolute performance based on NAV:
Income contributed to the Fund’s return during the reporting period, but the benefit was largely offset by the impact of falling prices. The bond market faced headwinds from
concerns that robust economic growth and sticky inflation would prompt the U.S. Federal Reserve to slow the pace of its interest rate cuts.
Holdings in the tax-backed state sector, particularly contingent value instruments issued by Puerto Rico, contributed to performance. The transportation, corporate-backed,
and healthcare sectors were also large contributors. With respect to rating categories, non-rated securities made the largest contribution, followed by As and BBBs. High-yield
bonds with maturities of 25 years and longer further benefited performance, as did positions in premium coupon issues. On the other hand, the tobacco and housing sectors
detracted. Holdings in 15- to 18-year maturities also detracted, as did discount-coupon bonds.
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions.
These views are not intended to be a forecast of future events and are no guarantee of future results.
Overview of the Fund’s Total Investments
| SECTOR ALLOCATION | |
| Sector (a) |
Percent of Total Investments (b) |
| County/City/Special District/School District |
20.6 % |
| Corporate |
15.5 |
| Health |
15.1 |
| Transportation |
14.2 |
| Education |
10.6 |
| State |
7.7 |
| Tobacco |
6.4 |
| Utilities |
5.5 |
| Housing |
4.4 |
| CALL/MATURITY SCHEDULE | |
| Calendar Year Ended December 31, (c) |
Percent of Total Investments (b) |
| 2025 |
13.2 % |
| 2026 |
8.8 |
| 2027 |
8.8 |
| 2028 |
11.9 |
| 2029 |
12.1 |
| CREDIT QUALITY ALLOCATION | |
| Credit Rating (d) |
Percent of Total Investments (b) |
| AAA/Aaa |
3.0 % |
| AA/Aa |
18.8 |
| A |
18.1 |
| BBB/Baa |
11.5 |
| BB/Ba |
7.8 |
| B |
3.1 |
| CCC/Caa |
0.4 |
| N/R (e) |
37.3 |
| (a) |
For purposes of this report, sector sub-classifications may differ from those utilized by the Fund for compliance purposes. |
| (b) |
Excludes short-term securities. |
| (c) |
Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years. |
| (d) |
For purposes of this report, credit quality ratings shown above reflect the highest rating assigned by either S&P Global Ratings or Moody’s Investors Service, Inc. if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change. |
| (e) |
The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of January 31, 2025, the market value of unrated securities deemed by the investment adviser to be investment grade represents 2.4% of total investments. |
6
2025
BlackRock Semi-Annual Report to Shareholders
