Company: MYI
Filing Date: 2025-09-02
Form Type: N-14 8C/A
Source: 0001193125-25-193985
Chunk: 233

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-02
Form: N-14 8C/A
Chunk 233
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 payments of principal and interest made by the
credit enhancement provider.

The TOB Residuals held by MVF generally provide MVF with the right to cause the holders of a proportional share of the TOB
Floaters to tender their notes to the TOB Trust at par plus accrued interest. Thereafter, MVF may withdraw a corresponding share of the MVF Municipal Bonds from the TOB Trust. As a result, a TOB transaction, in effect, creates exposure for MVF to
the entire return of the MVF Municipal Bonds in the TOB Trust, with a net cash investment by MVF that is less than the value of the MVF Municipal Bonds in the TOB Trust. This multiplies the positive or negative impact of the MVF Municipal
Bonds’ return within MVF (thereby creating leverage). The leverage within a TOB Trust depends on the value of the MVF Municipal Bonds deposited in the TOB Trust relative to the value of the TOB Floaters it issues.

MVF may invest in highly leveraged TOB Residuals. A TOB Residual generally is considered highly leveraged if the principal amount of the TOB Floaters issued
by the related TOB Trust exceeds 75% of the principal amount of the MVF Municipal Bonds owned by the TOB Trust.

The leverage attributable to MVF’s
use of TOB Residuals may be “called away” on relatively short notice and therefore may be less permanent than more traditional forms of leverage. The TOB Trust may be collapsed without the consent of MVF upon the occurrence of
termination events, as defined in the TOB Trust agreements, including if TOB Floaters that are tendered to the TOBs Liquidity Provider cannot be remarketed. Attempts to remarket tendered securities often failed during volatile market conditions in
the past. Upon the occurrence of a

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termination event, a TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the remarketing agent of the TOB Floaters and the TOBs
Liquidity Provider. Upon certain termination events, the holders of the TOB Floaters would be paid before the TOB Residual holders (i.e., MVF) whereas in other termination events, the TOB Floater and TOB Residual holders would be paid pro rata. If
the proceeds upon liquidation of a TOB Trust, net of payment of fees, are less than the