- Quarterly Schedule of Portfolio Holdings of Registered Management Investment Company (N-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number 811-21280

 

Name of Fund: BlackRock Credit Allocation Income Trust III (BPP)

 

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Credit Allocation Income Trust III, 55 East 52 ^nd Street, New York, NY 10055

 

Registrant’s telephone number, including area code: [phone], Option 4

 

Date of fiscal year end: 10/31/2011

 

Date of reporting period: 07/31/2011

 

Item 1 – Schedule of Investments

 

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Schedule of Investments July 31, 2011 (Unaudited)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Asset-Backed Securities		Par (000)			Value
Asset-Backed Securities — 0.5%
Atrium CDO Corp., Series 5A, Class A4, 0.65%, 7/20/20 (a)(b)		USD	1,300		$	1,072,500
Total Asset-Backed Securities – 0.5%						1,072,500
Corporate Bonds
Aerospace & Defense — 1.8%
BE Aerospace, Inc., 8.50%, 7/01/18			1,215			1,341,056
Bombardier, Inc., 7.75%, 3/15/20 (a)			1,405			1,580,625
Huntington Ingalls Industries, Inc. (a):
6.88%, 3/15/18			290			298,700
7.13%, 3/15/21			300			309,750
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17			570			608,475
						4,138,606
Airlines — 0.8%
American Airlines Pass-Through Trust, Series 2011-1, Class A, 5.25%, 7/31/22			640			628,800
Continental Airlines Pass-Through Certificates, Series 2009-2, Class B, 9.25%, 5/10/17			693			728,711
Delta Air Lines, Inc., Series 02G1, 6.72%, 7/02/24			588			592,504
						1,950,015
Auto Components — 0.8%
Delphi Corp., 6.13%, 5/15/21 (a)			280			282,800
Icahn Enterprises LP:
7.75%, 1/15/16			420			435,750
8.00%, 1/15/18			1,000			1,032,500
						1,751,050
Beverages — 0.5%
Constellation Brands, Inc., 7.25%, 5/15/17			955			1,045,725
Building Products — 0.3%
Building Materials Corp. of America (a):
7.00%, 2/15/20			180			188,550
6.75%, 5/01/21			570			577,838
						766,388
Capital Markets — 2.7%
Ameriprise Financial, Inc., 5.30%, 3/15/20 (c)			1,500			1,652,022
E*Trade Financial Corp., 12.50%, 11/30/17 (d)			720			860,400
Corporate Bonds		Par (000)			Value
Capital Markets (concluded)
The Goldman Sachs Group, Inc., 6.25%, 2/01/41 (c)		USD	2,150		$	2,162,429
Macquarie Bank, Ltd., 6.63%, 4/07/21 (a)(e)			805			831,124
UBS AG, 2.25%, 1/28/14 (c)			775			784,764
						6,290,739
Chemicals — 0.5%
CF Industries, Inc., 7.13%, 5/01/20			440			515,900
Celanese US Holdings LLC, 5.88%, 6/15/21			285			302,100
Omnova Solutions, Inc., 7.88%, 11/01/18 (a)			330			320,925
						1,138,925
Commercial Banks — 6.9%
Amsouth Bank, 4.85%, 4/01/13			525			520,811
Asciano Finance, 5.00%, 4/07/18 (a)			425			443,815
Associated Banc-Corp, 5.13%, 3/28/16			1,070			1,134,093
BNP Paribas:
3.60%, 2/23/16 (c)			2,100			2,133,697
7.20% (a)(b)(f)			700			654,500
Branch Banking & Trust Co. (b):
0.57%, 9/13/16			550			509,356
0.56%, 5/23/17			325			297,562
CIT Group, Inc.:
7.00%, 5/01/17			1,180			1,182,950
6.63%, 4/01/18 (a)			202			213,110
Credit Agricole SA (a)(b)(c)(f):
6.64%			725			619,875
8.38%			725			746,750
Discover Bank, 8.70%, 11/18/19			550			680,645
HSBC Holdings Plc, 5.10%, 4/05/21 (c)			2,700			2,835,904
RESPARCS Funding LP I, 8.00%, (f)(g)(h)			4,000			1,882,000
Regions Financial Corp.:
4.88%, 4/26/13			1,225			1,226,167
5.75%, 6/15/15			850			844,687
						15,925,922
Commercial Services & Supplies — 3.8%
Aviation Capital Group Corp. (a):
7.13%, 10/15/20 (c)			4,500			4,674,469
6.75%, 4/06/21			1,125			1,130,400
Casella Waste Systems, Inc., 7.75%, 2/15/19 (a)			336			332,640
Clean Harbors, Inc., 7.63%, 8/15/16			630			669,375

Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:
GO	General Obligation Bonds
LIBOR	London InterBank Offered Rate
RB	Revenue Bonds
USD	US Dollar

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	1

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Corporate Bonds		Par (000)			Value
Commercial Services & Supplies (concluded)
Corrections Corp. of America, 7.75%, 6/01/17		USD	1,600		$	1,738,000
Mobile Mini, Inc., 7.88%, 12/01/20			135			140,737
						8,685,621
Communications Equipment — 1.0%
Avaya, Inc.:
9.75%, 11/01/15			400			407,000
7.00%, 4/01/19 (a)			225			217,688
Brocade Communications Systems, Inc., 6.88%, 1/15/20			1,450			1,575,062
EH Holding Corp., 6.50%, 6/15/19 (a)			210			216,038
						2,415,788
Construction Materials — 0.2%
Inversiones CMPC SA, 4.75%, 1/19/18 (a)			400			410,326
Consumer Finance — 4.1%
American Express Credit Corp., 2.75%, 9/15/15 (c)			2,900			2,939,478
Capital One Bank USA NA, 8.80%, 7/15/19			1,625			2,043,832
Ford Motor Credit Co. LLC, 7.00%, 4/15/15			770			843,150
Inmarsat Finance Plc, 7.38%, 12/01/17 (a)			1,020			1,082,475
SLM Corp., 6.25%, 1/25/16			2,365			2,474,741
						9,383,676
Containers & Packaging — 1.3%
Ball Corp.:
7.13%, 9/01/16			850			931,812
6.75%, 9/15/20			1,070			1,144,900
Crown Americas LLC, 6.25%, 2/01/21 (a)			400			409,000
Graphic Packaging International, Inc., 9.50%, 6/15/17			325			359,937
Rock-Tenn Co., 9.25%, 3/15/16			150			162,188
						3,007,837
Diversified Financial Services — 10.0%
Ally Financial, Inc.:
4.50%, 2/11/14			400			398,000
8.30%, 2/12/15			780			854,100
8.00%, 11/01/31			1,030			1,103,388
Bank of America Corp. (c):
5.30%, 3/15/17			2,440			2,520,156
5.00%, 5/13/21			4,825			4,775,771
Citigroup, Inc. (c):
4.59%, 12/15/15			475			506,865
3.95%, 6/15/16			625			649,524
Dresdner Funding Trust I, 8.15%, 6/30/31 (a)			1,095			990,975
Corporate Bonds		Par (000)			Value
Diversified Financial Services (concluded)
Forethought Financial Group, Inc., 8.63%, 4/15/21 (a)		USD	525		$	546,321
General Electric Capital Corp., 5.30%, 2/11/21 (c)			2,225			2,371,719
General Motors Financial Co., Inc., 6.75%, 6/01/18 (a)			600			612,000
ING Bank NV, 5.00%, 6/09/21 (a)			1,150			1,178,434
Intesa Sanpaolo SpA:
2.38%, 12/21/12			1,700			1,643,885
6.50%, 2/24/21 (a)			300			310,490
Moody’s Corp., 6.06%, 9/07/17			1,500			1,578,222
Morgan Stanley, 5.50%, 7/28/21			1,950			2,009,966
Reynolds Group Issuer, Inc. (a):
7.88%, 8/15/19 (i)			100			101,125
6.88%, 2/15/21			320			307,200
8.25%, 2/15/21			390			359,775
WMG Acquisition Corp., 9.50%, 6/15/16 (a)			100			106,125
						22,924,041
Diversified Telecommunication Services — 5.3%
AT&T, Inc., 6.30%, 1/15/38 (c)			2,000			2,213,504
Level 3 Financing, Inc.:
8.75%, 2/15/17			475			483,313
10.00%, 2/01/18			90			96,975
8.13%, 7/01/19 (a)			1,247			1,256,352
Qwest Corp., 8.38%, 5/01/16			1,360			1,611,600
Telecom Italia Capital SA, 6.18%, 6/18/14			500			520,949
Telefonica Emisiones SAU, 5.46%, 2/16/21			660			661,881
Verizon Communications, Inc. (c):
1.95%, 3/28/14			1,775			1,819,968
7.35%, 4/01/39			1,950			2,473,665
Windstream Corp., 7.88%, 11/01/17			900			961,875
						12,100,082
Electric Utilities — 1.1%
Progress Energy, Inc., 7.00%, 10/30/31			2,000			2,428,088
Electronic Equipment, Instruments & Components — 0.8%
Jabil Circuit, Inc., 8.25%, 3/15/18			400			459,000
NXP BV, 3.00%, 10/15/13 (b)			1,450			1,449,094
						1,908,094
Energy Equipment & Services — 1.2%
Ensco Plc, 4.70%, 3/15/21			960			1,008,241
Frac Tech Services LLC, 7.13%, 11/15/18 (a)			525			547,312
Key Energy Services, Inc., 6.75%, 3/01/21			360			371,700
MEG Energy Corp., 6.50%, 3/15/21 (a)			465			483,600

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	2

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Corporate Bonds		Par (000)			Value
Energy Equipment & Services (concluded)
Oil States International, Inc., 6.50%, 6/01/19 (a)		USD	245		$	249,900
SunCoke Energy, Inc., 7.63%, 8/01/19 (a)			90			92,250
						2,753,003
Food & Staples Retailing — 2.1%
CVS Caremark Corp., 6.30%, 6/01/62 (b)			1,650			1,608,750
Wal-Mart Stores, Inc. (c):
5.25%, 9/01/35			1,850			1,936,310
6.20%, 4/15/38			1,075			1,267,971
						4,813,031
Food Products — 1.0%
Blue Merger Sub, Inc., 7.63%, 2/15/19 (a)			210			216,038
JBS USA LLC, 7.25%, 6/01/21 (a)			70			69,125
Kraft Foods, Inc.:
6.50%, 8/11/17			800			961,120
6.13%, 8/23/18			800			945,452
Smithfield Foods, Inc., 10.00%, 7/15/14			187			218,556
						2,410,291
Gas Utilities — 0.1%
Targa Resources Partners LP, 6.88%, 2/01/21 (a)			240			240,000
Health Care Equipment & Supplies — 0.6%
Boston Scientific Corp.:
4.50%, 1/15/15			0.00			0.00
6.40%, 6/15/16			0.00			0.00
5.13%, 1/12/17			0.00			0.00
Fresenius US Finance II, Inc., 9.00%, 7/15/15 (a)			1,000			1,135,000
Teleflex, Inc., 6.88%, 6/01/19			240			247,200
						1,382,200
Health Care Providers & Services — 4.4%
Aetna, Inc., 6.75%, 12/15/37			1,725			2,070,436
Aviv Healthcare Properties LP, 7.75%, 2/15/19 (a)			220			224,125
HCA, Inc.:
8.50%, 4/15/19			240			264,600
6.50%, 2/15/20 (i)			950			964,250
7.25%, 9/15/20			1,645			1,735,475
7.50%, 2/15/22 (i)			1,120			1,136,800
inVentiv Health, Inc., 10.00%, 8/15/18 (a)			250			243,750
Tenet Healthcare Corp.:
10.00%, 5/01/18			745			847,438
8.88%, 7/01/19			550			607,750
UnitedHealth Group, Inc., 6.88%, 2/15/38			1,725			2,087,945
						10,182,569
Corporate Bonds		Par (000)			Value
Household Durables — 0.3%
Cemex Espana Luxembourg, 9.25%, 5/12/20 (a)		USD	723		$	666,968
IT Services — 0.7%
Eagle Parent Canada, Inc., 8.63%, 5/01/19 (a)			550			528,000
First Data Corp. (a):
7.38%, 6/15/19			355			357,663
12.63%, 1/15/21			680			720,800
						1,606,463
Independent Power Producers & Energy Traders — 0.8%
AES Corp.:
9.75%, 4/15/16			480			549,600
7.38%, 7/01/21 (a)			210			217,350
Calpine Corp., 7.25%, 10/15/17 (a)			220			225,500
Energy Future Intermediate Holding Co. LLC, 10.00%, 12/01/20			720			759,704
						1,752,154
Insurance — 4.5%
American International Group, Inc.:
6.40%, 12/15/20 (c)			810			888,658
8.18%, 5/15/58 (b)			400			436,000
The Dai-ichi Life Insurance Co. Ltd, 7.25% (a)(b)(f)			337			355,692
Fairfax Financial Holdings, Ltd., 5.80%, 5/15/21 (a)			1,500			1,482,986
Genworth Financial, Inc., 7.63%, 9/24/21			480			458,400
Lincoln National Corp., 6.25%, 2/15/20 (c)			1,725			1,964,045
MPL 2 Acquisition Canco, Inc., 9.88%, 8/15/18 (a)			230			230,575
Northwestern Mutual Life Insurance, 6.06%, 3/30/40 (a)(c)			1,800			1,976,486
Principal Financial Group, Inc., 8.88%, 5/15/19			475			615,974
Prudential Financial, Inc., 6.63%, 12/01/37 (c)			1,725			1,936,677
						10,345,493
Life Sciences Tools & Services — 2.0%
Bio-Rad Laboratories, Inc., 8.00%, 9/15/16			1,830			2,047,312
INC Research LLC, 11.50%, 7/15/19 (a)			340			340,000
Life Technologies Corp., 6.00%, 3/01/20			2,000			2,250,384
						4,637,696
Machinery — 1.3%
AGY Holding Corp., 11.00%, 11/15/14			390			376,350

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	3

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Corporate Bonds		Par (000)			Value
Machinery (concluded)
Ingersoll-Rand Global Holding Co., Ltd., 9.50%, 4/15/14		USD	1,725		$	2,074,340
Navistar International Corp., 8.25%, 11/01/21			475			516,563
						2,967,253
Media — 9.7%
AMC Networks, Inc., 7.75%, 7/15/21 (a)			405			426,263
CCH II LLC, 13.50%, 11/30/16			1,128			1,331,040
CMP Susquehanna Corp., 3.52%, 5/15/14 (a)(g)			9			8,550
CSC Holdings LLC:
8.50%, 6/15/15			800			864,000
8.63%, 2/15/19			580			664,100
Cox Communications, Inc., 8.38%, 3/01/39 (a)			1,725			2,372,646
Comcast Corp., 6.30%, 11/15/17			1,725			2,042,398
DIRECTV Holdings, LLC, 5.00%, 3/01/21			1,250			1,333,947
DISH DBS Corp., 7.00%, 10/01/13			850			915,875
Gannett Co., Inc., 9.38%, 11/15/17			900			1,001,250
Intelsat Bermuda Ltd.:
11.25%, 2/04/17			170			181,900
11.50%, 2/04/17 (a)(d)			120			129,000
11.50%, 2/04/17 (d)			160			172,000
Kabel BW Erste Beteiligungs GmbH, 7.50%, 3/15/19 (a)			500			515,000
The New York Times Co., 6.63%, 12/15/16			1,725			1,759,500
News America, Inc., 6.15%, 3/01/37			2,000			2,008,358
Time Warner Cable, Inc., 6.75%, 6/15/39			1,950			2,234,913
Time Warner, Inc., 7.70%, 5/01/32			2,000			2,503,512
Unitymedia Hessen GmbH & Co. KG, 8.13%, 12/01/17 (a)			505			542,875
Virgin Media Secured Finance Plc, 6.50%, 1/15/18			1,300			1,430,000
						22,437,127
Metals & Mining — 2.5%
Alcoa, Inc., 5.40%, 4/15/21			1,190			1,237,004
Barrick Gold Corp., 2.90%, 5/30/16 (a)			550			566,555
Barrick North America Finance LLC, 5.70%, 5/30/41 (a)			650			668,217
Freeport-McMoRan Corp., 7.13%, 11/01/27			1,400			1,540,773
JMC Steel Group, 8.25%, 3/15/18 (a)			80			83,000
Novelis, Inc., 8.75%, 12/15/20			500			556,250
Teck Resources Ltd., 10.75%, 5/15/19			850			1,081,625
Corporate Bonds		Par (000)			Value
Metals & Mining (concluded)
United States Steel Corp., 7.38%, 4/01/20		USD	95		$	98,681
						5,832,105
Multi-Utilities — 1.6%
CenterPoint Energy, Inc.:
5.95%, 2/01/17			1,500			1,715,425
6.50%, 5/01/18			1,600			1,881,517
						3,596,942
Multiline Retail — 0.6%
JC Penney Co., Inc., 5.65%, 6/01/20			1,400			1,386,000
Oil, Gas & Consumable Fuels — 10.8%
Alpha Natural Resources, Inc.:
6.00%, 6/01/19			155			159,844
6.25%, 6/01/21			365			377,775
Anadarko Petroleum Corp.:
5.95%, 9/15/16			497			572,974
6.38%, 9/15/17			12			14,146
Arch Coal, Inc. (a):
7.00%, 6/15/19			115			120,463
7.25%, 6/15/21			350			367,500
BP Capital Markets Plc:
3.88%, 3/10/15			700			753,284
3.20%, 3/11/16 (c)			925			969,930
Buckeye Partners LP, 4.88%, 2/01/21			475			497,881
Chesapeake Energy Corp., 6.13%, 2/15/21			1,690			1,766,050
Consol Energy, Inc., 6.38%, 3/01/21 (a)			410			414,100
Copano Energy LLC, 7.13%, 4/01/21			270			276,750
Denbury Resources, Inc., 6.38%, 8/15/21			280			288,400
Enbridge Energy Partners LP, 9.88%, 3/01/19			1,000			1,349,274
Energy XXI Gulf Coast, Inc., 7.75%, 6/15/19			500			504,375
Enterprise Products Operating LLC, 6.65%, 4/15/18			2,000			2,366,320
Forest Oil Corp.:
8.50%, 2/15/14			90			97,875
7.25%, 6/15/19			150			156,000
Hilcorp Energy I LP, 7.75%, 11/01/15 (a)			345			356,213
Kinder Morgan Energy Partners LP, 6.85%, 2/15/20			2,000			2,388,970
Linn Energy LLC, 7.75%, 2/01/21 (a)			510			543,150
Marathon Petroleum Corp., 3.50%, 3/01/16 (a)			650			676,820
OGX Petroleo e Gas Participacoes SA, 8.50%, 6/01/18 (a)			575			606,050

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	4

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Corporate Bonds		Par (000)			Value
Oil, Gas & Consumable Fuels (concluded)
ONEOK Partners LP, 8.63%, 3/01/19		USD	1,725		$	2,241,632
Oasis Petroleum, Inc., 7.25%, 2/01/19 (a)			185			190,550
Petrobras International Finance Co., 3.88%, 1/27/16			1,800			1,866,523
Petrohawk Energy Corp.:
10.50%, 8/01/14			300			341,250
6.25%, 6/01/19 (a)			345			399,769
Plains Exploration & Production Co.:
7.75%, 6/15/15			385			399,437
10.00%, 3/01/16			200			226,000
Precision Drilling Corp., 6.50%, 12/15/21 (a)			130			132,600
Premier Oil, 5.00%, 5/10/18			1,625			1,669,687
Range Resources Corp., 6.75%, 8/01/20			415			453,387
SM Energy Co., 6.63%, 2/15/19 (a)			235			242,050
SandRidge Energy, Inc., 7.50%, 3/15/21 (a)			350			367,500
Western Gas Partners LP, 5.38%, 6/01/21			725			771,929
						24,926,458
Paper & Forest Products — 3.2%
Georgia-Pacific LLC, 8.25%, 5/01/16 (a)			1,635			1,861,004
International Paper Co.:
7.50%, 8/15/21			1,625			1,985,189
8.70%, 6/15/38			900			1,174,114
7.30%, 11/15/39			1,725			1,982,255
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (a)			160			164,000
Verso Paper Holdings LLC, 11.50%, 7/01/14			170			180,625
						7,347,187
Pharmaceuticals — 5.9%
Bristol-Myers Squibb Co., 5.88%, 11/15/36 (c)			883			1,017,656
GlaxoSmithKline Capital, Inc., 6.38%, 5/15/38 (c)			3,460			4,188,634
Merck & Co., Inc. (c):
6.50%, 12/01/33			990			1,217,859
6.55%, 9/15/37			1,979			2,447,900
Pfizer, Inc., 7.20%, 3/15/39 (c)			2,500			3,319,943
Valeant Pharmaceuticals International, 6.50%, 7/15/16 (a)			125			122,500
Watson Pharmaceuticals, Inc., 6.13%, 8/15/19			1,021			1,187,609
						13,502,101
Professional Services — 0.0%
FTI Consulting, Inc., 7.75%, 10/01/16			100			104,000
Corporate Bonds		Par (000)			Value
Real Estate Investment Trusts (REITs) — 2.8%
AvalonBay Communities, Inc., 6.10%, 3/15/20		USD	1,725		$	1,972,824
Developers Diversified Realty Corp.:
4.75%, 4/15/18			315			319,423
7.88%, 9/01/20			375			443,759
ERP Operating LP, 5.75%, 6/15/17			1,715			1,943,520
HCP, Inc., 5.38%, 2/01/21			500			535,377
UDR, Inc., 4.25%, 6/01/18			725			736,341
Ventas Realty LP, 4.75%, 6/01/21			550			558,461
						6,509,705
Real Estate Management & Development — 0.1%
Shea Homes LP, 8.63%, 5/15/19 (a)			120			119,700
Road & Rail — 1.5%
Avis Budget Car Rental LLC, 8.25%, 1/15/19			314			323,812
Florida East Coast Railway Corp., 8.13%, 2/01/17 (a)			80			84,000
The Hertz Corp., 6.75%, 4/15/19 (a)			518			518,000
Norfolk Southern Corp., 6.00%, 3/15/05 (c)			2,500			2,569,300
						3,495,112
Semiconductors & Semiconductor Equipment — 0.6%
Advanced Micro Devices, Inc., 7.75%, 8/01/20			400			421,000
KLA-Tencor Corp., 6.90%, 5/01/18			918			1,056,199
						1,477,199
Specialty Retail — 1.1%
Academy Ltd., 9.25%, 8/01/19 (a)(i)			330			334,950
AutoNation, Inc., 6.75%, 4/15/18			940			1,010,500
Best Buy Co., Inc., 5.50%, 3/15/21			650			654,636
Limited Brands, Inc., 7.00%, 5/01/20			470			499,375
						2,499,461
Tobacco — 1.4%
Altria Group, Inc.:
9.25%, 8/06/19			240			320,290
10.20%, 2/06/39 (c)			1,919			2,868,222
						3,188,512
Wireless Telecommunication Services — 2.6%
American Tower Corp., 4.50%, 1/15/18			925			962,736
Cricket Communications, Inc., 7.75%, 5/15/16			325			346,531

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	5

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Corporate Bonds		Par (000)			Value
Wireless Telecommunication Services (concluded)
Crown Castle Towers LLC (a):
5.50%, 1/15/37		USD	575		$	628,522
6.11%, 1/15/40			625			697,948
Intelsat Jackson Holdings SA (a):
7.25%, 4/01/19			150			151,875
7.50%, 4/01/21			300			304,500
Nextel Communications, Inc., Series E, 6.88%, 10/31/13			395			396,728
SBA Tower Trust, 5.10%,4/15/17 (a)			2,500			2,593,750
						6,082,590
Total Corporate Bonds – 105.3%						242,532,243
Preferred Securities
Capital Trusts
Capital Markets — 4.1%
State Street Capital Trust III, 5.24% (b)(f)			1,385			1,384,543
State Street Capital Trust IV, 1.25%, 6/01/67 (b)			9,675			7,948,119
						9,332,662
Commercial Banks — 3.0%
ABN AMRO North America Holding Preferred Capital Repackaging Trust I, 6.52% (a)(b)(f)			1,650			1,509,750
Barclays Bank Plc (a)(b)(f):
5.93%			1,700			1,513,000
7.43%			325			325,813
FCB/NC Capital Trust I, 8.05%, 3/01/28			1,100			1,144,313
NBP Capital Trust III, 7.38% (f)			2,000			1,760,000
National City Preferred Capital Trust I, 12.00% (b)(f)			600			655,350
						6,908,226
Diversified Financial Services — 4.9%
ING Capital Funding Trust III, 3.85% (b)(f)			850			795,043
JPMorgan Chase Capital XXI, Series U, 1.20%, 2/02/37 (b)			7,125			5,717,606
JPMorgan Chase Capital XXIII, 1.26%, 5/15/77 (b)			6,190			4,835,498
						11,348,147
Electric Utilities — 0.4%
PPL Capital Funding, 6.70%, 3/30/67 (b)			900			886,950

Capital Trusts		Par (000)			Value
Insurance — 3.5%
AXA SA, 6.38% (a)(b)(f)		USD	900		$	756,000
American General Capital II, 8.50%, 7/01/30 (b)			100			110,000
Chubb Corp., 6.38%, 3/29/67 (b)			900			929,250
Liberty Mutual Group, Inc., 10.75%, 6/15/88 (a)(b)			900			1,190,250
Lincoln National Corp., 7.00%, 5/17/66 (b)			900			909,000
MetLife, Inc., 6.40%, 12/15/66			900			891,932
Reinsurance Group of America, 6.75%, 12/15/65 (b)			1,300			1,262,787
Swiss Re Capital I LP, 6.85% (a)(b)(f)			1,000			980,427
UBS Preferred Funding Trust V, 6.50%, 5/15/57 (b)			900			882,000
ZFS Finance (USA) Trust IV, 5.88%, 5/09/32 (a)(b)			190			191,640
						8,103,286
Oil, Gas & Consumable Fuels — 0.4%
TransCanada PipeLines Ltd., 6.35%, 5/15/67 (b)			900			921,873
Total Capital Trusts – 16.3%						37,501,144
Preferred Stocks		Shares
Commercial Banks — 0.4%
SG Preferred Capital II, 6.30% (a)(b)			1,000			984,062
Diversified Financial Services — 0.4%
Ally Financial, Inc., 7.00% (a)			1,020			926,670
Insurance — 2.5%
Prudential Plc, 6.50% (f)			6,000,000			5,730,000
Media — 0.0%
CMP Susquehanna Radio Holdings Corp. (a)(b)			2,052			17,442
Total Preferred Stocks – 3.3%						7,658,174
Trust Preferreds
Diversified Financial Services — 0.4%
GMAC Capital Trust I, Series 2, 8.13%, 2/15/40 (b)			826		$	846,229
Total Trust Preferreds – 0.4%						846,229
Total Preferred Securities – 20.0%						46,005,547

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	6

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

Taxable Municipal Bonds		Par (000)			Value
Metropolitan Transportation Authority, RB, 6.55%, 11/15/31		USD	1,675			1,883,453
State of California, GO, Build America Bonds, 7.35%, 11/01/39			425			513,906
Total Taxable Municipal Bonds – 1.0%						2,397,359
U.S. Government Sponsored Agency Securities
Agency Obligations — 0.2%
Fannie Mae, 4.41%, 10/09/19 (j)			805			581,889
Total U.S. Government Sponsored Agency Securities – 0.2%						581,889
U.S. Treasury Obligations
US Treasury Note, 4.75%, 2/15/41 (c)			1,295			1,434,415
Total U.S. Treasury Obligations – 0.6%						1,434,415
Warrants (g)		Shares
Media — 0.0%
CMP Susquehanna Radio Holdings Corp. (Expires 3/26/19)			2,345			17,379
Total Warrants – 0.0%						17,379
Total Long-Term Investments (Cost – $285,070,247) – 127.6%						294,041,332
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.06% (k)(l)			83			83
Total Short-Term Securities (Cost – $83) – 0.0%						83
Options Purchased		Contracts
Exchange-Traded Put Options — 0.1%
S&P 500 Index, Strike Price USD 1,250, Expires 9/17/11			58		$	151,380
					Value
Total Options Purchased (Cost – $280,140) – 0.1%						151,380
Total Investments Before Outstanding Options Written (Cost – $285,350,470*) – 127.7%						294,192,795

Options Written		Notional Amount (000 )
Over-the-Counter Call Swaptions — (0.3)%
Pay a fixed rate of 4.03% and receive a floating rate based on 3-month LIBOR, Expires 4/16/12, Broker UBS AG		USD	3,700			(293,875	)
Pay a fixed rate of 4.75% and receive a floating rate based on 3-month LIBOR, Expires 3/24/14, Broker Citibank NA			5,000			(471,247	)
						(765,122	)
Over-the-Counter Put Swaptions — (0.2)%
Receive a fixed rate of 4.03% and pay a floating rate based on 3-month LIBOR, Expires 4/16/12, Broker UBS AG			3,700			(38,558	)
Receive a fixed rate of 4.75% and pay a floating rate based on 3-month LIBOR, Expires 3/24/14, Broker Citibank NA			5,000			(196,881	)
Sold credit default protection on Dow Jones CDX North America Investment Grade Series 16, Strike Price $120, Expires 09/21/11, Broker Credit Suisse International			72,000			(109,214	)
						(344,653	)
Total Options Written (Premiums Received – $1,110,600) – (0.5)%						(1,109,775	)
Total Investments, Net of Outstanding Options Written – 127.2%					$	293,083,020
Liabilities in Excess of Other Assets – (27.2)%						(62,742,728	)
Net Assets – 100.0%					$	230,340,292

*	The cost and unrealized appreciation (depreciation) of investments as of July 31, 2011, as computed for federal income tax purposes, were as follows:

Aggregate cost		$	284,887,853
Gross unrealized appreciation		$	14,991,701
Gross unrealized depreciation			(5,686,759	)
Net unrealized appreciation		$	9,304,942

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	7

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)
	(Percentages shown are based on Net Assets)

(a)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(b)	Variable rate security. Rate shown is as of report date.
(c)	All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.
(d)	Represents a payment-in-kind security which may pay interest/dividends in additional par/shares.
(e)	All or a portion of security has been pledged as collateral in connection with swaps.
(f)	Security is perpetual in nature and has no stated maturity date.
(g)	Non-income producing security.
(h)	Issuer filed for bankruptcy and/or is in default of interest payments.
(i)	When-issued security. Unsettled when-issued transactions were as follows:

Counterparty		Value			Unrealized Appreciation
Credit Suisse Securities		$	227,766		$	1,755
JPMorgan Chase Bank		$	56,941		$	439
Deutsche Bank Securities		$	50,243		$	387
JPMorgan Securities		$	1,136,800		$	16,800
JPMorgan Securities		$	964,250		$	14,250
Credit Suisse Securities		$	101,125		$	1,857

(j)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.
(k)	Investments in companies considered to be an affiliate of the Trust during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate		Shares Held at October 31, 2010			Net Activity			Shares Held at July 31, 2011			Income
BlackRock Liquidity Funds, TempFund, Institutional Class			34,466,527			(34,466,444	)		83		$	7,503

(l)	Represents the current yield as of report date.
•	For Trust compliance purposes, the Trust’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Trust management. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	8

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)

•	Reverse repurchase agreements outstanding as of July 31, 2011 were as follows:

Counterparty		Interest Rate		Trade Date			Maturity Date 1		Net Closing Amount			Face Amount
Credit Suisse Securities (USA), LLC		0.35%		4/11/11			Open		$	742,801		$	742,000
Credit Suisse Securities (USA), LLC		0.35%		4/12/11			Open			911,568			910,594
UBS Securities, LLC		0.37%		4/13/11			Open			1,690,804			1,688,912
Barclays Capital, Inc.		0.35%		4/14/11			Open			1,391,647			1,390,188
Deutsche Bank Securities, Inc.		0.38%		4/18/11			Open			1,103,085			1,101,875
UBS Securities, LLC		0.40%		5/9/11			Open			1,546,425			1,545,000
UBS Securities, LLC		0.38%		5/10/11			Open			1,888,783			1,887,150
UBS Securities, LLC		0.38%		5/18/11			Open			6,277,900			6,273,000
Credit Suisse Securities (USA), LLC		0.40%		5/19/11			Open			2,320,631			2,318,750
Credit Suisse Securities (USA), LLC		0.40%		5/20/11			Open			1,887,008			1,885,500
UBS Securities, LLC		0.38%		5/31/11			Open			4,761,439			4,758,375
UBS Securities, LLC		0.35%		6/1/11			Open			1,961,606			1,960,462
Credit Suisse Securities (USA), LLC		0.40%		6/7/11			Open			2,649,809			2,648,220
UBS Securities, LLC		0.35%		6/9/11			Open			4,468,508			4,466,250
UBS Securities, LLC		0.38%		6/10/11			Open			3,455,785			3,453,925
UBS Securities, LLC		0.38%		6/14/11			Open			2,080,031			2,079,000
BNP Paribas Securities Corp.		0.35%		6/15/11			Open			2,107,942			2,107,000
UBS Securities, LLC		0.38%		6/15/11			Open			1,764,668			1,763,812
UBS Securities, LLC		0.37%		6/27/11			Open			558,445			558,250
BNP Paribas Securities Corp.		0.35%		6/28/11			Open			922,521			922,225
Deutsche Bank Securities, Inc.		0.35%		6/29/11			Open			4,561,044			4,559,625
Deutsche Bank Securities, Inc.		0.35%		7/1/11			Open			617,368			617,188
Credit Suisse Securities (USA), LLC		0.35%		7/5/11			Open			2,677,052			2,676,375
UBS Securities, LLC		0.31%		7/7/11			Open			481,037			480,938
BNP Paribas Securities Corp.		0.35%		7/11/11			Open			848,235			848,070
UBS Securities, LLC		0.30%		7/11/11			Open			2,452,609			2,452,200
Deutsche Bank Securities, Inc.		0.35%		7/20/11			Open			6,700,617			6,699,900
Deutsche Bank Securities, Inc.		0.17%		7/29/11			Open			1,440,702			1,440,688
Total									$	64,270,070		$	64,235,472

	1	Certain agreements have no stated maturity and can be terminated by either party at any time.

•	Financial futures contracts purchased as of July 31, 2011 were as follows:

Contracts

Issue

Exchange

Expiration

Notional Value

Unrealized Appreciation

208

2-Year US Treasury Note

Chicago Board of Trade

September 2011

$

45,636,017

$

107,733

•	Financial futures contracts sold as of July 31, 2011 were as follows:

Contracts		Issue		Exchange		Expiration		Notional Value			Unrealized Depreciation
109		5-Year US Treasury Note		Chicago Board of Trade		September 2011		$	12,896,371		$	(341,168	)
318		10-Year US Treasury Note		Chicago Board of Trade		September 2011			39,070,620			(898,005	)
1		30-Year US Treasury Bond		Chicago Board of Trade		September 2011			124,472			(3,653	)
13		Ultra Long US Treasury Bond		Chicago Board of Trade		September 2011			1,665,600			(49,587	)
Total											$	(1,292,413	)

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	9

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Schedule of Investments (continued)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)

•	Credit default swaps on single-name issues - buy protection outstanding as of July 31, 2011 were as follows:

Issuer		Pay Fixed Rate			Counterparty		Expiration Date		Notional Amount (000)			Unrealized Appreciation
Computer Sciences Corp.		1.00	%		JPMorgan Chase & Co.		6/20/16		$	650		$	3,696
Republic of Finland		0.25	%		Deutsche Bank AG		6/20/16			3,600			27,680
Republic of Finland		0.25	%		Royal Bank of Scotland Plc		6/20/16			2,900			22,306
Arrow Electronics Inc.		1.00	%		Credit Suisse Securities (USA), LLC		9/20/16			700			972
Goldman Sachs Group Inc.		1.00	%		Credit Suisse Securities (USA), LLC		9/20/16			4,300			6,763
The New York Times Co.		1.00	%		Barclays Bank Plc		12/20/16			1,725			8,618
Total												$	70,035

•	Credit default swaps on single-name issues - sold protection outstanding as of July 31, 2011 were as follows:

Issuer		Receive Fixed Rate		Counterparty		Expiration Date		Credit Rating 2		Notional Amount (000) 3			Unrealized Appreciation (Depreciation)
Aviva USA Corp.		1.00%		Deutsche Bank AG		5/25/12		A		$	1,300		$	(152	)
Citigroup Inc.		1.00%		Credit Suisse Securities (USA), LLC		9/20/16		A			4,300			(13,205	)
MetLife, Inc.		1.00%		Deutsche Bank AG		3/20/18		A	-		425			3,539
Total													$	(9,819	)

	2	Using Standard and Poor’s ratings.
	3	The maximum potential amount the Trust may be required to pay should a negative credit event take place as defined under the terms of agreement.

•	Interest rate swaps outstanding as of July 31, 2011 were as follows:

Fixed Rate

Floating Rate

Counterparty

Expiration Date

Notional Amount (000)

Unrealized Appreciation (Depreciation)

0.25% (a)

3-month LIBOR

Citibank NA

3/30/13

USD

28,800

$

(207,599

)

0.25% (a)

3-month LIBOR

Deutsche Bank AG

7/21/13

USD

14,400

(18,646

)

0.25% (a)

3-month LIBOR

Deutsche Bank AG

7/22/13

USD

13,200

(14,941

)

2.32% (b)

3-month LIBOR

Citibank NA

3/28/16

USD

2,000

74,352

0.25% (a)

3-month LIBOR

Citibank NA

4/14/41

USD

800

(78,521

)

0.28% (a)

3-month LIBOR

Goldman Sachs International

4/14/41

USD

1,200

(125,663

)

0.28% (a)

3-month LIBOR

Deutsche Bank AG

4/15/41

USD

1,500

(150,674

)

0.26% (a)

3-month LIBOR

Citibank NA

5/19/41

USD

500

(14,410

)

0.25% (a)

3-month LIBOR

Citibank NA

7/21/41

USD

4,100

(95,393

)

3.97% (b)

3-month LIBOR

Citibank NA

7/25/41

USD

1,500

44,589

Total

$

(586,905

)

(a)	Pays a fixed interest rate and receives floating rate.
(b)	Pays floating interest rate and receives fixed rate.

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	10

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Schedule of Investments (concluded)	BlackRock Credit Allocation Income Trust III, Inc. (BPP)

•	Fair Value Measurements - Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs are categorized in three broad levels for financial reporting purposes as follows:
	•	Level 1 — price quotations in active markets/exchanges for identical assets and liabilities
	•	Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)
	•	Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Trust’s perceived risk of investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to the Trust’s most recent financial statements as contained in its semi-annual report.

The following tables summarize the inputs used as of July 31, 2011 in determining the fair valuation of the Trust’s investments and derivative financial instruments:

Valuation Inputs		Level 1			Level 2			Level 3			Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities			—			—		$	1,072,500		$	1,072,500
Corporate Bonds			—		$	242,523,693			8,550			242,532,243
Preferred Securities		$	846,229			45,141,876			17,442			46,005,547
Taxable Municipal Bonds			—			2,397,359			—			2,397,359
U.S. Government Sponsored Agency Securities			—			581,889			—			581,889
U.S Treasury Obligations			—			1,434,415			—			1,434,415
Warrants			—			—			17,379			17,379
Short-Term Securities			83			—			—			83
Total		$	846,312		$	292,079,232		$	1,115,871		$	294,041,415

Valuation Inputs		Level 1			Level 2			Level 3			Total
Derivative Financial Instruments 1
Assets:
Equity contracts		$	151,380			—			—		$	151,380
Credit contracts			—			73,574			—			73,574
Interest rate contracts		$	107,733			118,941			—			226,674
Liabilities:
Credit contracts			—			(122,419	)	$	(152	)		(122,571	)
Interest rate contracts			(1,292,413	)		(1,706,408	)		—			(2,998,821	)
Total		$	(1,033,300	)	$	(1,636,312	)	$	(152	)	$	(2,669,764	)

1	Derivative financial instruments are swaps, financial futures contracts, and options. Financial futures contracts and swaps are valued at the unrealized appreciation/depreciation on the instrument and options are shown at value.

	BLACKROCK CREDIT ALLOCATION INCOME TRUST III, INC.	JULY 31, 2011	11

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Item 2 –	Controls and Procedures
2(a) –	The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.
2(b) –	There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3 –	Exhibits
	Certifications – Attached hereto
	Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
	BlackRock Credit Allocation Income Trust III
	By:	/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Credit Allocation Income Trust III
	Date: September 26, 2011
	Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
	By:	/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Credit Allocation Income Trust III
	Date: September 26, 2011
	By:	/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Credit Allocation Income Trust III
	Date: September 26, 2011

 

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