DEFA14A: ISS Backs BlackRock's Board Nominees, Rejects Saba's Proposals to Terminate BlackRock as Investment Adviser at Multiple Closed-End Funds

Institutional Shareholder Services (ISS) recommends shareholders vote for BlackRock's board nominees and against Saba Capital Management's proposals to terminate BlackRock as investment adviser at several closed-end funds.

Summary

• Institutional Shareholder Services (ISS), a leading independent proxy advisory firm, has issued supportive reports for BlackRock and its Board nominees at several closed-end funds.
• ISS recommends shareholders vote against all proposals by Saba Capital Management to terminate BlackRock as investment adviser for multiple funds, including BlackRock Capital Allocation Term Trust (BCAT), BlackRock California Municipal Income Trust (BFZ), and others.
• ISS recommends shareholders vote for all BlackRock Board nominees at BCAT, BMEZ, BlackRock New York Municipal Income Trust (BNY), and BlackRock MuniYield Pennsylvania Quality Fund (MPA).
• ISS also recommends voting for Board nominee Arthur Steinmetz at BlackRock MuniHoldings New York Quality Fund, Inc. (MHN) and BlackRock MuniYield New York Quality Fund, Inc. (MYN).
• ISS rejected Saba's nominees at the majority of the funds.
• BlackRock acknowledges that ISS did not support their nominees at BIGZ and ECAT but maintains their nominees are the right stewards.
• ISS highlighted that BCAT has improved returns and trades at a narrower discount to NAV than peers, with competitive distributions and fees.
• ISS noted that BMEZ has positive total shareholder return (TSR) over all measurement periods.
• ISS stated that ECAT has improved returns, with TSR since inception now better than peers, and has narrowed the NAV discount.
• BlackRock recently announced enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, with ISS supporting BlackRock's nominees and rejecting Saba's proposals. However, the acknowledgment of ISS not supporting all nominees and the presence of activist pressure temper the overall sentiment.

Positives

• ISS support for BlackRock's management and Board nominees.
• Improved returns and narrower discount to NAV for BCAT.
• Positive total shareholder return (TSR) for BMEZ.
• Improved returns and narrowed NAV discount for ECAT.
• BlackRock's enhancements providing $2.9 billion in liquidity.

Negatives

• ISS did not support BlackRock's nominees at BIGZ and ECAT.
• Saba's proposals to terminate BlackRock as investment adviser, although rejected by ISS, indicate shareholder concern.

Risks

• Changes and volatility in political, economic, or industry conditions could impact the funds.
• The relative and absolute investment performance of the funds could affect demand.
• Increased competition could impact the funds.
• Unfavorable resolution of legal proceedings could negatively affect the funds.
• Technological changes could pose risks.
• Legislative and regulatory actions could impact the funds.
• Terrorist activities, international hostilities, health epidemics, and natural disasters could adversely affect the economy and markets.
• BlackRock's ability to attract and retain talented professionals is a risk.
• Problems at other financial institutions could have an impact.
• The impact of BlackRock electing to provide support to its products from time to time.

Future Outlook

The press release contains forward-looking statements regarding BlackRock's and the funds' future financial or business performance, strategies, or expectations, which are subject to numerous assumptions, risks, and uncertainties.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated that the ISS recommendations speak to BlackRock's depth of investment experience and the Boards track record of stewardship.
• Hubbard added that they continue to believe their nominees are the right stewards to represent all shareholders, even though ISS did not support their nominees at BIGZ and ECAT.

Industry Context

This announcement reflects the ongoing engagement between activist investors like Saba Capital and established asset managers like BlackRock, particularly in the closed-end fund space, where discounts to NAV can be a point of contention.

Comparison to Industry Standards

• The document mentions Liberty All-Star Growth Fund, Inc. (ASG) as a comparable fund to BIGZ, noting that BIGZ's distribution rate has exceeded that of ASG over the past two calendar years.
• The document states that BCAT trades at a narrower discount to NAV than peers, suggesting a favorable comparison to other similar funds.
• ECAT's TSR since inception is now better than peers, and its NAV discount has narrowed, bringing it in line with peers, indicating improved performance relative to its competitors.

Stakeholder Impact

• Shareholders are directly impacted by the voting recommendations and the outcome of the board elections.
• BlackRock's employees and management are affected by the support or rejection of their nominees and proposals.
• The funds' performance and management impact investors and beneficiaries.

Next Steps

• Shareholders are encouraged to vote using the WHITE proxy card.
• Shareholders can change their vote by using the website or calling the toll-free number provided on the WHITE proxy card.
• Annual meetings of shareholders will be held on various dates in June 2024 for different funds.

Key Dates

Keywords

BlackRock, ISS, Saba Capital, proxy, closed-end funds, investment adviser, Board nominees, shareholders, BCAT, BMEZ, ECAT, BFZ, BIGZ, BSTZ, BNY, MPA, MHN, MYN