BlackRock Municipal Credit Alpha (MUNEX): Assets Down 84%

From a listed fund to an interval fund: what the filings say happened

The fund is the former BlackRock Municipal Income Fund, Inc. (MUI), a listed closed-end fund. Its Schedule TO of October 15, 2024 offered to buy 50% of its shares for cash at 98% of NAV; 71,992,145 shares were outstanding on October 8, 2024. A Form 8-K of January 21, 2025 reports a standstill agreement with Saba Capital Management, L.P. dated January 20, 2025, running until the day after the 2027 annual meeting or August 31, 2027, whichever is earlier. The prospectus of November 26, 2025 says the fund converted from a listed closed-end fund to an unlisted, continuously offered interval fund effective March 24, 2025, and the shares outstanding before the conversion were redesignated Institutional Shares. We found nothing in the documents we read that says why the board chose to convert, so this page does not say.

The structure is explained across the market in our list of interval funds, and the difference between a quarterly interval offer and a one-off tender offer is covered in tender offer funds explained. Here the two were mixed in one fund inside 12 months, which is why the headline number needs splitting.

Net assets: $949 million to $149 million in two fiscal years

The decline is 84.3% from July 2024 to July 2026 and 61.1% in fiscal 2026 alone (our arithmetic). The statements of changes in net assets show where the money went.

Our arithmetic on those lines: repurchases and tenders together were $536.7 million in fiscal 2025 and $247.4 million in fiscal 2026, $784.0 million over the two years. Of that, $586.3 million (74.8%) was the two tender offers and $197.7 million (25.2%) was quarterly repurchase offers. New money was $9.2 million in fiscal 2026, so the fund is not adding assets at a rate that offsets the offers. At July 31, 2026 there were 11,146,463 Institutional, 38,314 Class A and 932,607 Class U shares, 12,117,384 in all (our sum), against 71,992,145 shares of the listed fund on October 8, 2024.

Shrinking assets also meant selling bonds and cutting leverage. Preferred shares (VRDP) outstanding were $561.7 million on July 31, 2024, with 5,617 shares redeemed in fiscal 2025; 350 new shares ($35.0 million) were issued in fiscal 2026. With TOB Trust certificates of $51.5 million in 2024 and $9.4 million in 2026, leverage fell from $613.2 million to $44.4 million (our arithmetic), from 64.6% of net assets to 29.9%. In fiscal 2026 the fund sold $276,311,223 of long-term investments and bought $94,571,677.

Every repurchase offer since the conversion

In each of the six completed offers the annual report shows shares purchased equal to shares tendered, so none was prorated. The first two exceeded the stated 15% and 25% by less than the 2% the notices allow the fund to add, so the fund took the extra shares. Class A and Class U had no tenders in any of them. One discrepancy between the fund’s own reports: for the January 2026 offer the semiannual report (April 7, 2026) shows 691,027 shares, 5.68% and $8,617,102, while the annual report shows 687,027 shares, 5.65% and $8,567,222. We use the annual report, the later one; its four offers add up to the 9,721,961 shares it reports (our arithmetic). The result of the August 7, 2026 offer appears only as a subsequent event in the annual report; the results of the offer that closes on November 6 should appear in the semiannual report for the period ending January 31, 2027, going by where the November 2025 result was published (the April 2026 report). That is an estimate from the pattern, not a stated date.

Since the conversion the four most recent offers were 3.31% to 5.65% of shares, below the 7.5% on offer. One worked example (our arithmetic, hypothetical): if holders tendered 15% of shares against a 7.5% offer that the fund raised by the full 2%, 9.5% of shares would be bought, and a holder who tendered 1,000 shares would have 633 accepted. At 7.5% of the 12,117,384 shares outstanding on July 31, 2026, the cap is about 908,804 shares, or $10.4 million at $11.48 (before the August 7 purchases of 534,309 shares and any new sales; the actual figure is set on November 6).

NAV: $12.27 on July 31, $11.48 on September 30

Between the two year-end dates NAV was $12.47 and $12.27, down 1.60%, and in the fiscal year it ranged from $12.11 to $12.69. The September 30 figure is outside that range, 5.2% below the year’s low (our arithmetic). The fund’s 30-day standardized yield on July 31, 2026 was 4.06% for Institutional shares (4.05% unsubsidized); a 6.4% fall in NAV is about 1.6 years of that yield (our arithmetic). The October 7 notice gives only the three NAVs. The filing does not say whether the fall came from interest rates, credit marks or a distribution, and the annual report’s discussion ends on July 31. The semiannual report for the period ending January 31, 2027 is the next document that should explain it.

For a tax-exempt fund the yield should be read on a taxable-equivalent basis: at a 37% federal bracket, 4.06% is 6.44% (our arithmetic, federal only, ignoring the alternative minimum tax and state tax); the tax-equivalent yield calculator shows the steps.

Performance against the benchmarks

For the year to July 31, 2026, the report shows Institutional shares at 4.54% without a sales charge, Class A at 4.08%, and Class U at 3.92%. The Bloomberg Custom Blend Benchmark (80% Bloomberg Municipal High Yield Index, 10% Bloomberg BBB Index, 10% Bloomberg Single A Index) returned 6.86% and the Bloomberg Municipal Bond Index 5.27%, which puts the fund 2.32 and 0.73 percentage points behind (our arithmetic). Over five years Institutional shows an average of negative 0.57% a year against 1.16% for the blend, and over ten years 1.86% against 1.95% for the muni index. Returns before March 24, 2025 are the listed fund’s, with different reinvestment assumptions, as the report notes.

On what drove the year, the report says holdings in development district bonds made the largest contribution, with Puerto Rico Contingent Value Instruments, Puerto Rico Electric Power Authority bonds and charter schools also helping. It adds that “The bonds of Brightline West and Brightline East, which were issued to finance high-speed rail products, detracted from absolute performance.”

Cost: the waiver that ended on June 30, 2026

The fund pays the Manager a monthly fee at an annual rate of 0.90% of net assets, defined as total assets minus accrued liabilities. At July 31, 2026 that base was $193,032,325 (our arithmetic: $196,228,033 less $3,195,708), larger than the $148.7 million of net assets because it includes the assets bought with leverage. The notes say that effective December 1, 2025 the Manager agreed to waive the fund’s advisory fees through June 30, 2026, up to the full 0.90%, and that “The contractual agreement expired on June 30, 2026 and was not renewed.” The waiver was $796,399 for December 1, 2025 to June 30, 2026.

Our arithmetic: in fiscal 2026 the fund recorded $1,567,114 of advisory expense and $796,399 of waiver, so the Manager kept $770,715 net. A full 0.90% on the July 31, 2026 base is about $1.74 million a year, or about 18.7% of fiscal 2026 net investment income of $9,285,641, or roughly $0.14 a share on 12,117,384 shares. Net investment income of $0.67 a share against $0.76 distributed left $0.09 a share paid from other sources; the report classes $0.10 a share as return of capital. The first full period without the waiver is the one that ends on January 31, 2027.

The prospectus of November 26, 2025 lists total annual expenses of 2.34% for Institutional and 3.09% for Class A and Class U, assuming leverage at 27.7% of net assets, before the December 2025 waiver took effect. Class A has a sales load of up to 2.50%, Class A and Class U pay a distribution and servicing fee of up to 0.75%, and minimum initial investments are $100,000 for Institutional, $1,000 for Class A and $2,500 for Class U. A 1.50% deferred charge applies to Class A repurchases within 18 months in some purchases of $250,000 or more.

What the fund holds

The investment objective is to provide attractive after-tax total return, with at least 80% of net assets in municipal securities whose income is exempt from federal income tax, except that interest may be subject to the federal alternative minimum tax. At least 75% of assets are in bonds rated in the medium to lower categories or unrated.

State shares are percentages of net assets from the schedule of investments, where total municipal bonds are 113.2% and total investments 129.6%. Not rated does not mean low quality, only that no rating agency rating is shown; it means the credit work is the adviser’s rather than a rating agency’s.

How the November 6, 2026 offer works

Because pricing happens on the deadline day, a holder decides before the price is known. The notice says the NAV on the pricing date could be lower or higher than on the day the request is submitted. Shares held through an adviser or broker need the request in before the intermediary’s own cutoff, which the notice says may be earlier.

What a reader can do with this

• If you hold shares and want out: the next deadline is November 6, 2026, and the one after should come around early January 2027 if the pattern of the last six notices holds (they were dated between the 7th and 8th of April, July, October and January). Ask your intermediary for its cutoff date and whether it charges a fee. The offers since the conversion have been filled in full.
• If you hold and are watching the price: compare the $11.48 NAV on September 30 with the NAV you see on your statement, and read the semiannual report for the period ending January 31, 2027 when it is filed, for the discussion of the drop and the first period without the fee waiver.
• If you sell at a loss: a repurchase is a sale, and the wash-sale and reporting rules apply. Our pages on the wash sale rule for tenders and on Form 8949 and Schedule D for REIT, BDC and interval fund sales show the steps.
• If you are comparing structures: this fund moved from daily liquidity on an exchange, at a market price that was 6.4% below NAV on July 31, 2024, to liquidity four times a year at NAV, a trade-off covered in NAV REIT vs interval fund. Other deadlines this quarter are on our Q4 2026 tender deadline calendar.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

All figures are from the fund's SEC filings read on EDGAR on October 31, 2026 (CIK 1232860, Investment Company Act file number 811-21348): the Form N-23c-3 notices of May 1, 2025, July 8, 2025, October 7, 2025, January 8, 2026, April 8, 2026, July 8, 2026 and October 7, 2026 (accessions 0001193125-25-108110, 0001193125-25-156664, 0001193125-25-232811, 0001193125-26-007675, 0001193125-26-146244, 0001193125-26-298051 and 0001193125-26-416378); the annual report for the year ended July 31, 2026 (Form N-CSR, accession 0001193125-26-413733); the semiannual report for the period ended January 31, 2026 (Form N-CSRS, accession 0001193125-26-145036); the Schedule TO of October 15, 2024 (accession 0001193125-24-237639) and the Schedule TO of August 20, 2025 (accession 0001193125-25-184103); the Form 8-K of January 21, 2025 (accession 0001193125-25-009174); and the prospectus of November 26, 2025 (Form 486BPOS, accession 0001193125-25-300483). Percentage changes, sums, ratios and the worked examples are our arithmetic and are labelled where used. The number of shares tendered in the offer that closes November 6, 2026 is not yet filed.