Fitch Ratings confirms the 'AAA' ratings of the Variable Rate MuniFund Term Preferred Shares (VMTP shares) issued by DTF Tax-Free Income Fund Inc. (NYSE: DTF), a closed-end fund managed by Duff & Phelps Investment Management Co. (DPIM) following amendments to the fund's operating documents extending the maturity on the VMTP Shares from August 2018 to January 2021.

--$65,000,000 VMTP shares due Jan. 31, 2021, confirmed at 'AAA'.

The maturity on the VMTP shares has effectively been extended following the cashless exchange of Series 2018 VMTP shares for new Series 2021 VMTP shares. Fitch has verified that no other terms have changed on the VMTP shares, including outstanding issue amount, total leverage or any structural covenants impacting asset coverage.

KEY RATING DRIVERS

The rating confirmation primarily reflects:

--The maturity extension does not negatively impact coverage available to the VMTP shares;

--Sufficient asset coverage provided to the VMTP shares as calculated per the fund's over-collateralization (OC) tests;

--The structural protections afforded by mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines;

--The legal and regulatory parameters that govern the fund's operations;

--The capabilities of DPIM as investment advisor.

ASSET COVERAGE

The fund's asset coverage ratio, as calculated in accordance with the Fitch total and net overcollateralization tests (Fitch OC tests) per the 'AAA' rating guidelines outlined in Fitch's applicable criteria, were in excess of 100%. This is the minimum threshold required under the terms of the VMTP shares.

The test calculates standardized asset coverage by applying haircuts to portfolio holdings based on perceived riskiness and diversification of the assets and measuring its ability to cover both on and off-balance sheet liabilities, if any, at the assigned 'AAA' stress level.

The fund's asset coverage ratio for the VMTP shares, as calculated in accordance with the Investment Company Act of 1940, was in excess of the minimum asset coverage threshold of 225% required by the fund's governing documents (Asset Coverage Ratio).

The fund has covenanted to maintain the effective leverage ratio (Effective Leverage Test) for the VMTP shares below 45% of total assets. The fund's Effective Leverage Ratio is currently below 45%.

In the event of breaches to any of the above thresholds, the fund is required to restore compliance per structural protections described below.

STRUCTURAL PROTECTIONS

Compliance with the Fitch OC, Asset Coverage and Effective Leverage thresholds is tested periodically. The fund manager is expected to cure any breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC breaches), or by reducing leverage in a sufficient amount (for all other breaches) within a pre-specified time period.

For Fitch OC, Asset Coverage and Effective Leverage Tests, the maximum market value exposure (i.e. valuation, cure and redemption) that preferred shareholders would be exposed to before cure or redemption is approximately 45 business days.

THE FUND

The fund's investment objective is current income exempt from regular federal income tax consistent with preservation of capital. The fund seeks to achieve its investment objective through investment of at least 80% of assets in a diversified portfolio of tax-exempt obligations. The fund may not invest more than 25% of its total assets (calculated at market value at the time of each investment) in the securities of issuers in a single industry; provided that, for purposes of this restriction, tax exempt securities of issuers that are states, municipalities or their political subdivisions are not considered to be the securities of issuers in any single industry. Under normal market conditions, the fund may not invest more than 20% of its total assets in obligations that pay interest that is subject to the federal alternative minimum tax.

DPIM is responsible for the implementation and execution of the investment strategy on a day-to-day basis. DPIM is an SEC registered and regulated investment advisor with $9.5 billion in assets under management as of Nov. 30, 2015. DPIM acts as investment adviser to three other closed-end investment companies and six open-end investment companies registered under the 1940 Act and as sub-adviser to two closed-end investment companies under the 1940 Act.

RATING SENSITIVITIES

The ratings assigned to the preferred shares may be sensitive to material changes in the leverage composition, portfolio credit quality or market risk of the funds, as described above. A material adverse deviation from Fitch guidelines for any key rating driver could cause ratings to be lowered by Fitch. The funds have the ability to assume economic leverage through derivative transactions which may not be captured by the funds' Preferred Shares Asset Coverage test or Effective Leverage Ratio.

The fund currently does not engage in derivative activities for speculative purposes and does not envision engaging in such activity in the future. Material derivative exposure in the future could have potential negative rating implications if it adversely affects asset coverage available to rated preferred shares.

Additional information is available on www.fitchratings.com

Applicable Criteria

Rating Closed-End Fund Debt and Preferred Stock (pub. 16 Sep 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871119

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=997715

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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