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Moody's Affirms P-1 Short-Term Rating for Nuveen California AMT-Free Quality Municipal Income Fund

Strategic Insights

— 2 min read

Moody's Investors Service 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). This decision comes after the change in the Liquidity Provider for the fund's Series 4 VRDP Shares to Royal Bank of Canada, effective February 12, 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.

Key Takeaways:

  • Moody's has affirmed the P-1 short-term rating of Series 4 VRDP Shares issued by Nuveen California AMT-Free Quality Municipal Income Fund.
  • The affirmation follows the change in the Liquidity Provider for the fund's Series 4 VRDP Shares to Royal Bank of Canada.
  • The new Liquidity Provider has a short-term credit rating of P-1(cr), identical to the previous provider, Citibank, N.A.
  • Moody's short-term ratings of securities with unconditional liquidity support are based solely on the Liquidity Provider's short-term rating.
  • The appointment of a new Liquidity Provider bank with the same short-term CRA has no impact on Moody's view of the short-term rating of the affected series of VRDP.
  • The Series 4 VRDP Shares have the benefit of an unconditional demand feature pursuant to a purchase obligation provided by Royal Bank of Canada, effective February 12, 2021.
  • Royal Bank of Canada's VRDP purchase obligation is substantially identical to the purchase obligation the fund had received from Citibank.
  • 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 Nuveen California AMT-Free Quality Municipal Income Fund.
  • The principal methodology used in this rating was "Closed-End Funds Methodology," published in December 2020.
  • For further information, please refer to the regulatory disclosures contained in this press release.

Statistics:

  • Moody's has affirmed the P-1 short-term rating of Series 4 VRDP Shares issued by Nuveen California AMT-Free Quality Municipal Income Fund, a $109,000,000 fixed-balance share class.
  • The rating reflects the unconditional liquidity support provided by Royal Bank of Canada, with a short-term CRA of P-1(cr).
  • The new VRDP purchase agreement with Royal Bank of Canada is substantially identical to the agreement with Citibank, N.A.
  • Moody's has taken no concurrent action on the long-term rating of the Series 4 VRDP Shares, which remains unchanged.

Sources:

  • Moody's Investors Service, "Moody's Investors Service Affirms P-1 Short-Term Rating of Nuveen California AMT-Free Quality Municipal Income Fund Series 4 Variable Rate Demand Preferred Shares"
  • Moody's, "Closed-End Funds Methodology," published in December 2020.
  • Moody's, "Moody's Rating Symbols and Definitions"

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