Company: MYI
Filing Date: 2025-09-08
Form Type: DEF 14A
Source: 0001193125-25-198172
Chunk: 199

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-08
Form: DEF 14A
Chunk 199
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 of the yield curve. An MMD Swap is a contract between MIY and an MMD Swap provider pursuant to which the parties agree to make payments
to each other on a notional amount, contingent upon whether the Municipal Market Data AAA General Obligation Scale is above or below a specified level on the expiration date of the contract. For example, if MIY buys an MMD Swap and the Municipal
Market Data AAA General Obligation Scale is below the specified level on the expiration date, the counterparty to the contract will make a payment to MIY equal to the specified level minus the actual level, multiplied by the notional amount of the
contract. If the Municipal Market Data AAA General Obligation Scale is above the specified level on the expiration date, MIY will make a payment to the counterparty equal to the actual level minus the specified level, multiplied by the notional
amount of the contract.

In connection with investments in SIFMA and MMD Swaps, there is a risk that municipal yields will move in the
opposite direction than anticipated by MIY, which would cause MIY to make payments to its counterparty in the transaction that could adversely affect MIY’s performance.

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MIY has no obligation to enter into SIFMA Swaps or MMD Swaps and may elect not to do so. The
net amount of the excess, if any, of MIY’s obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis, and MIY will segregate or designate on its books and records liquid assets having an
aggregate NAV at least equal to the accrued excess.

If there is a default by the other party to an uncleared interest rate swap
transaction, generally MIY will have contractual remedies pursuant to the agreements related to the transaction. With respect to interest rate swap transactions cleared through a central clearing counterparty, a clearing organization will be
substituted for the counterparty and will guarantee the parties’ performance under the swap agreement. However, there can be no assurances that the clearing organization will satisfy its obligation to MIY or that MIY would be able to recover
the full amount of assets deposited on its behalf with the clearing organization in the event of the default by the clearing organization or MIY’s clearing broker. Certain U.S. federal income tax requirements may limit MIY’s ability to
engage in interest rate swaps. Distributions attributable to transactions in interest rate swaps generally will be taxable as ordinary income to shareholders.

Counterparty Credit Standards