Company: MYI
Filing Date: 2025-09-05
Form Type: 424B3
Source: 0001193125-25-196285
Chunk: 192

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-05
Form: 424B3
Chunk 192
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 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.

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.

To the extent that MIY engages in principal transactions, including, but not limited to, OTC
options, forward currency transactions, swap transactions, repurchase and reverse repurchase agreements and the purchase and sale of bonds and other fixed-income securities, it must rely on the creditworthiness of its counterparties under such
transactions. In certain instances, the credit risk of a counterparty is increased by the lack of a central clearing house for certain transactions, including certain swap contracts. In the event of the insolvency of a counterparty, MIY may not be
able to recover its assets, in full or at all, during the insolvency process. Counterparties to investments may have no obligation to make markets in such investments and may have the ability to apply essentially discretionary margin and credit
requirements. Similarly, MIY will be subject to the risk of bankruptcy of,