ALLIANCEBERNSTEIN NATIONAL MUNICIPAL INCOME FUND, INC. ANNOUNCES COMPLETION OF FULL REDEMPTION OF 2018 VARIABLE RATE MUNIFUND TERM PREFERRED SHARES AND CREATION OF TENDER OPTION BOND TRUSTS AS SUBSTITUTE LEVERAGE

AllianceBernstein National Municipal Income Fund, Inc. (NYSE: AFB), a closed-end investment firm, announced the completion of the full redemption of all its outstanding 2018 Variable Rate MuniFund Term Preferred Shares (2018 VMTPS). This significant financial action, which took place on October 27, 2025, involved the Fund using the proceeds from the creation of Tender Option Bond (TOB) trusts to facilitate the redemption. Each share was redeemed at a price of $25,000, in addition to accumulated but unpaid dividends, resulting in a total disbursement of approximately $88.275 million.

The decision to redeem the VMTPS is part of the Fund’s strategy to optimize its leverage structure by replacing the previously used equity with more efficient financing through the TOB trusts. This move allows the Fund to maintain liquidity while potentially enhancing returns for its investors. Shift towards TOB structures is generally viewed as a strategic addition to a fund's capital base, providing a tailored leverage solution that can respond more dynamically to interest rate changes and market conditions.

The press release emphasizes that this announcement does not constitute an offer to buy or sell any securities, but rather serves as a formal notification of the completed redemption and the Fund's evolving financing strategy. This strategic transition reflects the Fund's commitment to efficient capital management and responsiveness to market developments, ensuring that it remains well-positioned to pursue its investment objectives effectively. As always, investors are encouraged to stay informed about the underlying strategies and market conditions that can impact fund performance.

The recent announcement from AllianceBernstein National Municipal Income Fund, Inc. regarding the full redemption of its 2018 Variable Rate MuniFund Term Preferred Shares (VMTPS) and the creation of Tender Option Bond (TOB) trusts as a substitute leverage strategy presents a significant shift in the fund's capital structure and risk management strategy.

The complete redemption of VMTPS, which cost the fund approximately $88.275 million, marks a proactive approach to managing leverage. By transitioning to TOB trusts, the fund is opting for a potentially more stable and flexible source of financing. TOBs can mitigate interest rate risk and provide greater liquidity, which is especially important in the current rate environment characterized by volatility following recent Federal Reserve rate changes.

Investors should closely monitor the implications of this strategic move. The replacement of variable rate preferred shares, which can expose a fund to fluctuations in interest rates, with TOBs could lead to improved predictability in the fund's income generation. This could enhance the risk-adjusted returns for shareholders, particularly in a rising interest rate scenario where the cost of debt can be less predictable.

Moreover, the continuous focus on municipal bonds, particularly in a time when infrastructure spending is critical, presents a favorable backdrop for the fund. Municipal bonds typically benefit from tax-advantaged returns, which might be attractive to investors in higher tax brackets.

In conclusion, the transition to TOB trusts could enhance the fund's operational efficiency while bolstering income stability. For investors considering or holding shares in AllianceBernstein National Municipal Income Fund, this shift should be viewed positively, with the potential for enhanced returns and managed risk in a dynamic interest rate environment. It may be prudent for investors to reassess their positions in light of these changes and consider the fund's updated leverage strategy moving forward.