Edgar Filing: BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

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 811-21286

Name of Fund: BlackRock Credit Allocation Income Trust II, Inc. (PSY)

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 II, Inc., 55 East 52^nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 10/31/2012

Date of reporting period: 07/31/2012

Item 1 – Schedule of Investments

Schedule of Investments July 31, 2012 (Unaudited)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Asset-Backed Securities

321 Henderson Receivables I LLC, Series 2012-1A, Class A, 4.21%, 2/16/65 (a)	US	D 1,029	$	1,054,789
American Airlines Pass-Through Trust, Series 2011-2, Class A, 8.63%, 4/15/23		553		582,214
Atrium CDO Corp., Series 5A, Class A4, 0.86%, 7/20/20 (a)(b)		2,650		2,232,625
Continental Airlines Pass-Through Certificates, Series 2009-2, Class B, 9.25%, 11/10/18		1,271		1,391,441
SLM Student Loan Trust, Series 2004-B, Class A2, 0.67%, 6/15/21 (b)		1,864		1,805,132

Total Asset-Backed Securities – 1.5%				7,066,201



Corporate Bonds

Aerospace & Defense — 0.9%
BE Aerospace, Inc., 5.25%, 4/01/22		1,745		1,832,250
Huntington Ingalls Industries, Inc.:
6.88%, 3/15/18		610		649,650
7.13%, 3/15/21		600		644,250
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17		1,014		1,090,050

				4,216,200

Airlines — 0.2%
Delta Air Lines, Inc., Series 2002-1, Class G-1, 6.72%, 7/02/24		1,013		1,094,337

Auto Components — 0.8%
Delphi Corp., 6.13%, 5/15/21		570		622,013
Icahn Enterprises LP:
7.75%, 1/15/16		610		641,262
8.00%, 1/15/18		2,270		2,411,875

				3,675,150

Beverages — 1.0%
Anheuser-Busch InBev Worldwide, Inc. (c):
1.38%, 7/15/17		1,000		1,009,974
2.50%, 7/15/22		1,475		1,503,733
Constellation Brands, Inc., 7.25%, 5/15/17		1,970		2,272,887

				4,786,594

Building Products — 0.3%
Building Materials Corp. of America (a):
7.00%, 2/15/20		375		408,750
6.75%, 5/01/21		1,060		1,158,050

				1,566,800


	Par (000)		Value
Corporate Bonds

Capital Markets — 5.1%
Ameriprise Financial, Inc., 5.30%, 3/15/20 (c)	US	D 3,250	$	3,767,491
E*Trade Financial Corp., 12.50%, 11/30/17		1,865		2,135,425
The Goldman Sachs Group, Inc. (c):
5.25%, 7/27/21		1,175		1,236,859
5.75%, 1/24/22		3,415		3,730,287
6.25%, 2/01/41		4,450		4,859,440
Morgan Stanley, 5.75%, 1/25/21 (c)		3,915		3,983,199
Murray Street Investment Trust I, 4.65%, 3/09/17 (d)		600		616,745
UBS AG (c):
2.25%, 1/28/14		1,627		1,644,650
5.88%, 7/15/16		2,800		3,000,883

				24,974,979

Chemicals — 1.4%
Celanese US Holdings LLC, 5.88%, 6/15/21		1,545		1,672,462
Hexion US Finance Corp., 6.63%, 4/15/20		755		771,988
Huntsman International LLC, 8.63%, 3/15/21		595		684,250
Ineos Finance Plc (a):
8.38%, 2/15/19		320		331,200
7.50%, 5/01/20		730		740,950
LyondellBasell Industries NV, 5.75%, 4/15/24		1,885		2,134,762
Solutia, Inc., 7.88%, 3/15/20		586		692,945

				7,028,557

Commercial Banks — 5.1%
Amsouth Bank, Series AI, 4.85%, 4/01/13		1,050		1,071,000
Asciano Finance Ltd., 5.00%, 4/07/18 (a)		900		947,735
Associated Banc-Corp, 5.13%, 3/28/16		2,200		2,370,474
Branch Banking & Trust Co. (b)(c):
0.79%, 9/13/16		1,100		1,041,091
0.77%, 5/23/17		675		625,445
CIT Group, Inc.:
7.00%, 5/02/16 (a)		1,570		1,577,850
7.00%, 5/02/17 (a)		418		420,555
4.25%, 8/15/17		1,380		1,380,000
5.25%, 3/15/18		1,190		1,259,912
5.50%, 2/15/19 (a)		1,040		1,097,200
5.00%, 8/15/22		520		520,000
City National Corp., 5.25%, 9/15/20 (c)		2,350		2,545,005
Discover Bank, 8.70%, 11/18/19		1,200		1,517,045
HSBC Finance Corp., 6.68%, 1/15/21 (c)		1,525		1,700,460
Regions Financial Corp.:
4.88%, 4/26/13		2,525		2,572,344



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	1

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Corporate Bonds

Commercial Banks (concluded)
Regions Financial Corp. (concluded):
5.75%, 6/15/15	USD	1,800	$	1,919,250
SVB Financial Group, 5.38%, 9/15/20		2,300		2,544,104

				25,109,470

Commercial Services & Supplies — 3.9%
Aviation Capital Group Corp. (a):
7.13%, 10/15/20 (c)		9,300		9,550,886
6.75%, 4/06/21		2,325		2,330,743
Casella Waste Systems, Inc., 7.75%, 2/15/19		721		715,592
Clean Harbors, Inc.:
7.63%, 8/15/16		1,238		1,290,615
5.25%, 8/01/20 (a)		463		477,469
Corrections Corp. of America, 7.75%, 6/01/17		3,375		3,655,547
Covanta Holding Corp., 6.38%, 10/01/22		665		713,732
Mobile Mini, Inc., 7.88%, 12/01/20		275		290,469

				19,025,053

Communications Equipment — 1.1%
Avaya, Inc., 9.75%, 11/01/15 (c)		900		702,000
Brocade Communications Systems, Inc., 6.88%, 1/15/20 (c)		2,965		3,217,025
Hughes Satellite Systems Corp., 6.50%, 6/15/19		420		451,500
Zayo Group LLC / Zayo Capital, Inc., 8.13%, 1/01/20 (a)		760		803,700

				5,174,225

Construction Materials — 0.2%
HD Supply, Inc., 8.13%, 4/15/19 (a)		900		981,000

Consumer Finance — 5.4%
American Express Credit Corp., 2.75%, 9/15/15 (c)		5,850		6,168,883
Capital One Bank USA NA, 8.80%, 7/15/19		3,325		4,282,620
Daimler Finance North America LLC, 2.63%, 9/15/16 (a)(c)		3,425		3,564,709
Experian Finance Plc, 2.38%, 6/15/17 (a)		750		758,207
Ford Motor Credit Co. LLC:
7.00%, 4/15/15		2,580		2,870,250
8.00%, 12/15/16		975		1,152,412
Inmarsat Finance Plc, 7.38%, 12/01/17 (a)		1,815		1,960,200
SLM Corp., 6.25%, 1/25/16		4,870		5,162,200
Toll Brothers Finance Corp., 5.88%, 2/15/22		410		437,340

				26,356,821


	Par (000)		Value
Corporate Bonds

Containers & Packaging — 1.3%
Ardagh Packaging Finance Plc (a):
7.38%, 10/15/17	USD	425	$	455,531
9.13%, 10/15/20		235		246,750
Ball Corp.:
7.13%, 9/01/16		1,750		1,900,938
6.75%, 9/15/20		2,210		2,447,575
Crown Americas LLC, 6.25%, 2/01/21		825		911,625
Sealed Air Corp., 8.38%, 9/15/21 (a)		130		148,200

				6,110,619

Diversified Financial Services — 7.0%
Ally Financial, Inc.:
4.50%, 2/11/14		1,775		1,830,469
8.30%, 2/12/15		1,230		1,366,838
8.00%, 11/01/31		1,230		1,472,925
Bank of America Corp.:
3.75%, 7/12/16 (c)		1,395		1,444,800
5.30%, 3/15/17 (c)		3,640		3,909,385
5.00%, 5/13/21		50		53,898
Citigroup, Inc. (c):
6.38%, 8/12/14		1,300		1,404,246
4.59%, 12/15/15		975		1,037,361
4.45%, 1/10/17		2,680		2,863,569
DPL, Inc., 7.25%, 10/15/21 (a)		1,080		1,228,500
General Electric Capital Corp., 6.25% (b)(e)		2,700		2,761,884
General Motors Financial Co., Inc., 6.75%, 6/01/18		500		550,486
ING Bank NV, 5.00%, 6/09/21 (a)(c)		2,350		2,525,733
Intesa Sanpaolo SpA:
2.38%, 12/21/12		3,500		3,427,602
6.50%, 2/24/21 (a)(c)		475		427,614
Moody’s Corp., 6.06%, 9/07/17		6,000		6,421,002
Reynolds Group Issuer, Inc.:
7.13%, 4/15/19		245		260,313
7.88%, 8/15/19		740		815,850
9.88%, 8/15/19 (a)		305		323,300
6.88%, 2/15/21		110		117,150
WMG Acquisition Corp., 9.50%, 6/15/16		205		224,731

				34,467,656

Diversified Telecommunication Services — 4.0%
AT&T, Inc., 6.30%, 1/15/38 (c)		4,000		5,313,068
Level 3 Financing, Inc.:
8.13%, 7/01/19		3,149		3,314,322
8.63%, 7/15/20		650		697,125
Telecom Italia Capital SA, 6.18%, 6/18/14		975		989,625
Telefonica Emisiones SAU, 5.46%, 2/16/21		1,360		1,223,995



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	2

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Corporate Bonds

Diversified Telecommunication Services (concluded)
Verizon Communications, Inc.:
1.95%, 3/28/14 (c)	USD	3,650	$	3,735,837
7.35%, 4/01/39		2,375		3,593,548
Windstream Corp., 7.88%, 11/01/17		730		802,088

				19,669,608

Electric Utilities — 2.8%
CMS Energy Corp., 5.05%, 3/15/22		1,125		1,199,315
Great Plains Energy, Inc., 5.29%, 6/15/22 (d)		1,650		1,823,724
Mirant Mid Atlantic Pass Through Trust, Series B, 9.13%, 6/30/17		517		547,960
Nisource Finance Corp.:
6.40%, 3/15/18		1,070		1,259,926
5.25%, 2/15/43		1,200		1,311,548
Oncor Electric Delivery Co. LLC (a)(c):
4.10%, 6/01/22		1,200		1,275,805
5.30%, 6/01/42		820		931,453
Progress Energy, Inc., 7.00%, 10/30/31 (c)		4,000		5,390,792

				13,740,523

Electronic Equipment, Instruments & Components — 0.3%
Jabil Circuit, Inc., 8.25%, 3/15/18		800		960,000
NXP BV, 3.21%, 10/15/13 (b)		400		398,500

				1,358,500

Energy Equipment & Services — 3.4%
Atwood Oceanics, Inc., 6.50%, 2/01/20		110		117,150
Cie Generale de Geophysique - Veritas, 6.50%, 6/01/21		700		721,000
Energy Transfer Partners LP, 5.20%, 2/01/22		3,000		3,315,105
Ensco Plc, 4.70%, 3/15/21		1,965		2,204,245
Frac Tech Services LLC, 8.13%, 11/15/18 (a)		1,085		1,101,275
Hornbeck Offshore Services, Inc., 5.88%, 4/01/20 (a)		285		285,000
Key Energy Services, Inc., 6.75%, 3/01/21		745		746,863
MEG Energy Corp. (a):
6.50%, 3/15/21		955		990,813
6.38%, 1/30/23		225		230,344
Oil States International, Inc., 6.50%, 6/01/19		505		531,513
Peabody Energy Corp., 6.25%, 11/15/21 (a)		1,555		1,535,562
Precision Drilling Corp., 6.50%, 12/15/21		425		442,000
Transocean, Inc.:
6.50%, 11/15/20		1,125		1,343,459
6.38%, 12/15/21		1,375		1,654,181


	Par (000)		Value
Corporate Bonds

Energy Equipment & Services (concluded)
Transocean, Inc. (concluded):
6.80%, 3/15/38	USD	975	$	1,207,226

				16,425,736

Food & Staples Retailing — 0.7%
Wal-Mart Stores, Inc., 5.25%, 9/01/35 (c)		2,500		3,202,610

Food Products — 1.2%
Kraft Foods Group, Inc., 5.00%, 6/04/42 (a)		1,325		1,494,503
Kraft Foods, Inc.:
6.50%, 8/11/17		1,665		2,045,719
6.13%, 8/23/18		1,660		2,059,695
Smithfield Foods, Inc., 10.00%, 7/15/14		374		440,385

				6,040,302

Gas Utilities — 0.2%
El Paso Natural Gas Co., 8.63%, 1/15/22		695		895,701

Health Care Equipment & Supplies — 0.6%
Fresenius US Finance II, Inc., 9.00%, 7/15/15 (a)		2,250		2,595,937
Teleflex, Inc., 6.88%, 6/01/19		490		520,625

				3,116,562

Health Care Providers & Services — 3.8%
Aetna, Inc., 6.75%, 12/15/37 (c)		1,700		2,352,462
Aviv Healthcare Properties LP, 7.75%, 2/15/19		460		475,525
HCA, Inc.:
8.50%, 4/15/19		240		270,450
6.50%, 2/15/20		2,380		2,659,650
7.25%, 9/15/20		3,435		3,838,612
INC Research LLC, 11.50%, 7/15/19 (a)		695		688,050
inVentiv Health, Inc. (a): 10.00%, 8/15/18		270		222,750
Tenet Healthcare Corp.:
10.00%, 5/01/18		1,530		1,774,800
8.88%, 7/01/19		1,125		1,275,469
UnitedHealth Group, Inc., 6.88%, 2/15/38 (c)		3,400		4,891,675

				18,449,443

Health Care Technology — 1.3%
Amgen, Inc.:
5.15%, 11/15/41 (c)		4,208		4,657,726
5.65%, 6/15/42		42		49,272
5.38%, 5/15/43 (c)		1,650		1,881,368

				6,588,366

Household Durables — 0.3%
Beazer Homes USA, Inc., 6.63%, 4/15/18 (a)		690		701,213



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	3

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Corporate Bonds

Household Durables (concluded)
Standard Pacific Corp., 8.38%, 1/15/21	USD	890	$	999,025

				1,700,238

Independent Power Producers & Energy Traders — 1.1%
The AES Corp.:
9.75%, 4/15/16		985		1,184,462
7.38%, 7/01/21 (a)		135		154,406
Calpine Corp., 7.25%, 10/15/17 (a)		440		476,300
Energy Future Intermediate Holding Co. LLC, 10.00%, 12/01/20		1,880		2,070,350
Exelon Generation Co. LLC, 4.00%, 10/01/20		190		196,823
Laredo Petroleum, Inc.:
9.50%, 2/15/19		295		333,350
7.38%, 5/01/22 (a)		265		279,575
QEP Resources, Inc., 5.38%, 10/01/22		569		584,648

				5,279,914

Industrial Conglomerates — 0.3%
The ADT Corp., 4.88%, 7/15/42 (a)		1,310		1,401,562

Insurance — 6.3%
American International Group, Inc. (c):
3.80%, 3/22/17		1,500		1,558,988
8.25%, 8/15/18		625		770,010
6.40%, 12/15/20		2,590		3,030,163
Aon Corp., 5.00%, 9/30/20 (c)		4,600		5,211,395
Fairfax Financial Holdings Ltd., 5.80%, 5/15/21 (a)		2,800		2,855,672
Forethought Financial Group, Inc., 8.63%, 4/15/21 (a)		1,000		1,044,498
Genworth Financial, Inc., 7.63%, 9/24/21		970		949,817
ING Verzekeringen NV, 2.51%, 6/21/21 (b)	EUR	430		500,899
Manulife Financial Corp., 4.90%, 9/17/20 (c)	USD	4,700		5,088,939
MPL 2 Acquisition Canco, Inc., 9.88%, 8/15/18 (a)		430		362,275
Principal Financial Group, Inc., 8.88%, 5/15/19		980		1,303,218
Prudential Financial, Inc., 6.63%, 12/01/37 (c)		3,400		4,066,686
XL Group Ltd., 5.75%, 10/01/21 (c)		3,430		3,926,053

				30,668,613

IT Services — 1.1%
Ceridian Corp., 8.88%, 7/15/19 (a)		1,760		1,852,400


	Par (000)		Value
Corporate Bonds

IT Services (concluded)
Epicor Software Corp., 8.63%, 5/01/19	USD	720	$	738,000
First Data Corp.:
7.38%, 6/15/19 (a)(c)		935		975,906
8.25%, 1/15/21 (a)		85		84,788
12.63%, 1/15/21		710		717,100
SunGard Data Systems, Inc., 7.38%, 11/15/18		730		775,625

				5,143,819

Life Sciences Tools & Services — 1.9%
Bio-Rad Laboratories, Inc., 8.00%, 9/15/16		3,825		4,188,375
Life Technologies Corp., 6.00%, 3/01/20 (c)		4,200		5,020,239

				9,208,614

Machinery — 1.1%
Ingersoll-Rand Global Holding Co., Ltd., 9.50%, 4/15/14		3,400		3,853,550
UR Merger Sub Corp. (a):
5.75%, 7/15/18		235		245,575
7.38%, 5/15/20		600		634,500
7.63%, 4/15/22		548		582,935

				5,316,560

Media — 8.6%
AMC Networks, Inc., 7.75%, 7/15/21		395		447,338
CCH II LLC, 13.50%, 11/30/16		2,317		2,566,077
Comcast Corp., 6.30%, 11/15/17 (c)		3,400		4,177,906
Cox Communications, Inc., 8.38%, 3/01/39 (a)		3,400		5,117,687
CSC Holdings LLC:
8.50%, 4/15/14		680		749,700
8.63%, 2/15/19		1,200		1,407,000
DIRECTV Holdings LLC, 5.00%, 3/01/21		2,575		2,949,317
DISH DBS Corp., 7.00%, 10/01/13		1,750		1,844,062
Intelsat Jackson Holdings SA, 7.25%, 4/01/19		190		203,063
Intelsat Luxemburg SA:
11.25%, 2/04/17		890		925,600
11.50%, 2/04/17 (f)		400		416,000
The Interpublic Group of Cos., Inc., 10.00%, 7/15/17		1,175		1,321,875
News America, Inc., 6.15%, 3/01/37		2,750		3,336,567
Time Warner Cable, Inc., 6.75%, 6/15/39		4,050		5,294,168
Time Warner, Inc., 7.70%, 5/01/32		4,150		5,766,579



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	4

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Corporate Bonds

Media (concluded)
Unitymedia Hessen GmbH & Co. KG (a):
8.13%, 12/01/17	USD	1,566	$	1,699,110
7.50%, 3/15/19		1,040		1,101,396
Virgin Media Secured Finance Plc, 6.50%, 1/15/18		2,675		2,942,500

				42,265,945

Metals & Mining — 2.1%
AngloGold Ashanti Holdings Plc, 5.13%, 8/01/22		1,450		1,488,215
Barrick Gold Corp., 2.90%, 5/30/16 (c)		1,150		1,208,872
FMG Resources August 2006 Property Ltd. (a):
6.88%, 2/01/18		100		101,000
6.88%, 4/01/22		85		84,787
Freeport-McMoRan Copper & Gold, Inc., 3.55%, 3/01/22		1,400		1,413,318
Freeport-McMoRan Corp., 7.13%, 11/01/27		2,900		3,655,369
New Gold, Inc., 7.00%, 4/15/20 (a)		130		135,525
Novelis, Inc., 8.75%, 12/15/20		975		1,082,250
Teck Resources Ltd., 10.75%, 5/15/19		874		1,057,540

				10,226,876

Multi-Utilities — 1.6%
CenterPoint Energy, Inc.:
5.95%, 2/01/17		3,150		3,624,176
6.50%, 5/01/18		3,350		4,033,487

				7,657,663

Oil, Gas & Consumable Fuels — 12.7%
Alpha Natural Resources, Inc. (c):
6.00%, 6/01/19		105		91,350
6.25%, 6/01/21		145		125,425
Anadarko Petroleum Corp., 6.38%, 9/15/17		23		27,589
Berry Petroleum Co., 6.38%, 9/15/22		425		450,500
BP Capital Markets Plc (c):
3.88%, 3/10/15		1,500		1,617,357
3.20%, 3/11/16		1,875		2,011,942
Chesapeake Energy Corp. (c):
6.63%, 8/15/20		485		482,575
6.13%, 2/15/21		470		459,425
Chesapeake Midstream Partners LP:
5.88%, 4/15/21		595		593,512
6.13%, 7/15/22		475		478,562
Concho Resources, Inc., 5.50%, 10/01/22		420		425,250
CONSOL Energy, Inc., 6.38%, 3/01/21		450		438,750
Copano Energy LLC, 7.13%, 4/01/21		500		518,750


	Par (000)		Value
Corporate Bonds

Oil, Gas & Consumable Fuels (continued)
DCP Midstream LLC, 4.75%, 9/30/21 (a)	USD	298	$	316,392
El Paso Pipeline Partners Operating Co. LLC:
6.50%, 4/01/20		1,530		1,797,807
5.00%, 10/01/21		525		572,669
Enbridge Energy Partners LP, 9.88%, 3/01/19		2,100		2,881,897
Energy Transfer Partners LP, 6.50%, 2/01/42		700		797,532
Energy XXI Gulf Coast, Inc., 7.75%, 6/15/19		1,025		1,076,250
Enterprise Products Operating LLC, 6.65%, 4/15/18		4,200		5,078,951
EP Energy LLC / EP Energy Finance Inc., 6.88%, 5/01/19 (a)		475		507,062
Forest Oil Corp., 8.50%, 2/15/14		1,240		1,295,800
Kinder Morgan Energy Partners LP, 6.85%, 2/15/20		4,200		5,190,419
Kodiak Oil & Gas Corp., 8.13%, 12/01/19 (a)		190		202,350
Linn Energy LLC:
6.25%, 11/01/19 (a)		1,125		1,113,750
7.75%, 2/01/21		450		474,750
Marathon Petroleum Corp., 3.50%, 3/01/16		1,375		1,455,836
MarkWest Energy Partners LP, 6.25%, 6/15/22		530		555,175
Newfield Exploration Co.:
6.88%, 2/01/20		595		651,525
5.63%, 7/01/24		420		447,825
Nexen, Inc., 6.40%, 5/15/37		1,380		1,752,151
Oasis Petroleum, Inc.:
7.25%, 2/01/19		270		280,800
6.50%, 11/01/21		305		307,288
OGX Petroleo e Gas Participacoes SA, 8.50%, 6/01/18 (a)(c)		524		461,775
ONEOK Partners LP, 8.63%, 3/01/19		3,400		4,453,130
Petrobras International Finance Co.:
3.88%, 1/27/16		3,725		3,872,462
5.38%, 1/27/21		2,200		2,461,100
Petrohawk Energy Corp., 10.50%, 8/01/14		615		678,136
Petroleum Geo-Services ASA, 7.38%, 12/15/18 (a)		445		462,800
Phillips 66, 2.95%, 5/01/17 (a)		1,060		1,111,854
Pioneer Natural Resources Co.:
6.65%, 3/15/17		650		763,587
6.88%, 5/01/18		490		591,000
Premier Oil Plc, 5.00%, 6/09/18		3,400		3,519,000
Range Resources Corp.:
6.75%, 8/01/20		520		572,000
5.75%, 6/01/21		335		355,938



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	5

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY) (Percentages shown are based on Net Assets)


	Par (000)		Value
Corporate Bonds

Oil, Gas & Consumable Fuels (concluded)
Ruby Pipeline LLC, 6.00%, 4/01/22 (a)	USD	2,975	$	3,233,736
Samson Investment Co., 9.75%, 2/15/20 (a)		63		65,363
SandRidge Energy, Inc.:
7.50%, 3/15/21		200		204,000
8.13%, 10/15/22 (a)		220		228,800
SM Energy Co.:
6.63%, 2/15/19		220		227,700
6.50%, 11/15/21		345		357,075
6.50%, 1/01/23 (a)		215		219,300
Targa Resources Partners LP, 6.88%, 2/01/21		375		395,625
Tennessee Gas Pipeline Co., 8.00%, 2/01/16		831		980,063
Western Gas Partners LP, 5.38%, 6/01/21		1,525		1,714,573
The Williams Cos., Inc., 8.75%, 3/15/32		711		989,353

				62,395,586

Paper & Forest Products — 2.0%
Boise Paper Holdings LLC:
9.00%, 11/01/17		120		134,100
8.00%, 4/01/20		480		541,200
International Paper Co.:
7.50%, 8/15/21		3,325		4,335,358
7.30%, 11/15/39		3,400		4,470,619
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (a)		330		340,725

				9,822,002

Pharmaceuticals — 1.8%
Capsugel Finance Co. SCA, 9.88%, 8/01/19 (a)	EUR	300		409,723
Merck & Co., Inc., 6.50%, 12/01/33 (c)	USD	2,070		3,132,537
Pfizer, Inc., 7.20%, 3/15/39 (c)		1,425		2,305,475
Roche Holdings, Inc., 7.00%, 3/01/39 (a)(c)		1,825		2,838,295
Valeant Pharmaceuticals International, 6.50%, 7/15/16 (a)		250		265,000

				8,951,030

Real Estate Investment Trusts (REITs) — 2.8%
AvalonBay Communities, Inc., 6.10%, 3/15/20 (c)		3,400		4,180,409
Developers Diversified Realty Corp.:
4.75%, 4/15/18		645		686,408
7.88%, 9/01/20		775		956,979
ERP Operating LP, 5.75%, 6/15/17		3,405		4,013,902
HCP, Inc., 5.38%, 2/01/21		1,025		1,190,499
UDR, Inc., 4.25%, 6/01/18		1,475		1,606,029


	Par (000)		Value
Corporate Bonds

Real Estate Investment Trusts (REITs) (concluded)
Ventas Realty LP / Ventas Capital Corp., 4.75%, 6/01/21	USD	1,135	$	1,245,510

				13,879,736

Real Estate Management & Development — 0.3%
Realogy Corp. (a)(c):
7.88%, 2/15/19		495		499,950
7.63%, 1/15/20		620		665,725
Shea Homes LP, 8.63%, 5/15/19		480		522,000

				1,687,675

Road & Rail — 1.4%
Florida East Coast Railway Corp., 8.13%, 2/01/17		200		210,500
The Hertz Corp., 6.75%, 4/15/19		338		354,900
Norfolk Southern Corp., 6.00%, 3/15/05 (c)		5,000		6,403,870

				6,969,270

Semiconductors & Semiconductor Equipment — 0.6%
Advanced Micro Devices, Inc., 7.75%, 8/01/20		775		811,813
KLA-Tencor Corp., 6.90%, 5/01/18		1,928		2,317,768

				3,129,581

Software — 0.3%
Infor US, Inc. (FKA Lawson Software, Inc.), 9.38%, 4/01/19 (a)		960		1,027,200
Symantec Corp., 2.75%, 6/15/17		600		608,156

				1,635,356

Specialty Retail — 1.5%
AutoNation, Inc., 6.75%, 4/15/18		1,965		2,183,606
Limited Brands, Inc., 7.00%, 5/01/20		980		1,089,025
QVC, Inc. (a):
7.38%, 10/15/20		105		117,461
5.13%, 7/02/22		1,510		1,573,705
Sally Holdings LLC / Sally Capital, Inc., 6.88%, 11/15/19		595		664,169
VF Corp., 5.95%, 11/01/17 (c)		1,475		1,757,415

				7,385,381

Tobacco — 2.2%
Altria Group, Inc., 10.20%, 2/06/39		3,929		6,806,659
BAT International Finance Plc, 3.25%, 6/07/22 (a)		1,425		1,458,805
Lorillard Tobacco Co., 3.50%, 8/04/16		2,450		2,595,834

				10,861,298



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	6

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Corporate Bonds

Trading Companies & Distributors — 0.3%
Doric Nimrod Air Finance Alpha Ltd., Series 2012-1, Class A, 5.13%, 11/30/24 (a)		USD 1,390	$	1,410,850

Transportation Infrastructure — 1.0%
Penske Truck Leasing Co. LP / PTL Finance Corp. (a):
3.75%, 5/11/17		3,150		3,194,318
4.88%, 7/11/22		1,650		1,648,028

				4,842,346

Wireless Telecommunication Services — 4.7%
America Movil SAB de CV (c):
2.38%, 9/08/16		2,675		2,759,353
3.13%, 7/16/22		1,025		1,054,652
American Tower Corp.:
4.50%, 1/15/18		1,925		2,064,449
5.90%, 11/01/21		1,295		1,468,499
Cricket Communications, Inc., 7.75%, 5/15/16		670		710,200
Crown Castle International Corp., 9.00%, 1/15/15		890		970,656
Crown Castle Towers LLC (a):
5.50%, 1/15/37		1,175		1,312,193
6.11%, 1/15/40		1,300		1,530,888
Nextel Communications, Inc., Series E, 6.88%, 10/31/13		270		271,012
SBA Telecommunications, Inc., 5.75%, 7/15/20 (a)		249		262,073
SBA Tower Trust, 5.10%, 4/15/42 (a)		4,225		4,621,170
Sprint Capital Corp., 6.88%, 11/15/28		1,000		895,000
Sprint Nextel Corp. (a):
9.00%, 11/15/18		1,860		2,171,550
7.00%, 3/01/20		2,670		2,910,300

				23,001,995

Total Corporate Bonds – 107.9%				528,896,722



Floating Rate Loan Interests — 0.1% (b)

Oil, Gas & Consumable Fuels — 0.1%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17		580		578,312



Municipal Bonds – 0.9%

Metropolitan Transportation Authority, RB, Build America Bonds, 6.55%, 11/15/31		3,450		4,436,424


	Par (000)		Value
Preferred Securities

Capital Trusts

Capital Markets — 4.3%
Ameriprise Financial, Inc., 7.52%, 6/01/66 (b)		USD 2,500	$	2,703,750
RBS Capital Trust I, 4.71% (b)(e)		1,200		726,000
RBS Capital Trust II, 6.43% (b)(e)		1,250		943,750
State Street Capital Trust III, 5.46% (b)(e)		2,920		2,935,768
State Street Capital Trust IV, 1.47%, 6/15/37 (b)		18,235		13,600,684

				20,909,952

Commercial Banks — 3.2%
Barclays Bank Plc, 7.43% (a)(b)(e)		650		648,663
BNP Paribas, 7.20% (a)(b)(c)(e)		1,500		1,359,000
Credit Agricole SA, 8.38% (a)(b)(c)(e)		1,475		1,290,625
Dresdner Funding Trust I, 8.15%, 6/30/31 (a)		1,190		969,850
HSBC Capital Funding LP/Jersey Channel Islands, 10.18% (a)(b)(c)(e)		4,835		6,333,850
M&T Capital Trust II, 8.28%, 6/01/27		3,630		3,684,210
National City Preferred Capital Trust I, 12.00% (b)(e)		1,100		1,132,362

				15,418,560

Diversified Financial Services — 1.2%
JPMorgan Chase Capital XXIII, 1.47%, 5/15/47 (b)(c)		8,775		6,084,295

Electric Utilities — 0.6%
PPL Capital Funding, 6.70%, 3/30/67 (b)		3,000		3,067,500

Insurance — 9.3%
Ace Capital Trust II, 9.70%, 4/01/30 (c)		2,500		3,525,000
The Allstate Corp., 6.50%, 5/15/67 (b)		5,000		5,150,000
American General Capital II, 8.50%, 7/01/30		100		109,027
American International Group, Inc., 8.18%, 5/15/68 (b)		900		1,026,000
Aon Corp., 8.21%, 1/01/27		2,500		2,941,252
AXA SA, 6.38% (a)(b)(e)		3,000		2,437,500
Bank One Capital III, 8.75%, 9/01/30		2,000		2,781,500
The Chubb Corp., 6.38%, 3/29/67 (b)		2,000		2,090,000
Liberty Mutual Group, Inc., 10.75%, 6/15/88 (a)(b)		2,925		4,051,125
Lincoln National Corp., 7.00%, 5/17/66 (b)		3,350		3,324,875
MetLife, Inc., 6.40%, 12/15/66		3,325		3,472,886



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	7

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


	Par (000)		Value
Capital Trusts

Insurance (concluded)
Mitsui Sumitomo Insurance Co., Ltd., 7.00%, 3/15/72 (a)(b)	USD	1,420	$	1,497,032
Northwestern Mutual Life
Insurance, 6.06%, 3/30/40 (a)(c)		3,800		4,936,474
Principal Life Insurance Co., 8.00%, 3/01/44 (a)		2,500		2,792,988
Reinsurance Group of America, 6.75%, 12/15/65 (b)		3,000		2,838,972
Swiss Re Solutions Holding Corp., 7.75%, 6/15/30 (c)		2,000		2,542,292

				45,516,923

Multi-Utilities — 1.4%
Dominion Resources Capital Trust I, 7.83%, 12/01/27		2,500		2,562,493
Dominion Resources, Inc., 7.50%, 6/30/66 (b)		3,900		4,212,000

				6,774,493

Oil, Gas & Consumable Fuels — 1.3%
Enterprise Products Operating LLC, 8.38%, 8/01/66 (b)		2,000		2,190,000
TransCanada PipeLines Ltd., 6.35%, 5/15/67 (b)		4,000		4,175,532

				6,365,532

Road & Rail — 0.8%
BNSF Funding Trust I, 6.61%, 12/15/55 (b)		3,750		4,068,750

Total Capital Trusts – 22.1%				108,206,005




	Shares
Preferred Stocks

Aerospace & Defense — 0.1%
United Technologies Corp., 7.50% (g)		9,500		501,125

Auto Components — 0.1%
Dana Holding Corp., 4.00% (a)		4,000		454,500

Diversified Financial Services — 0.4%
Ally Financial, Inc., 7.00% (a)		2,350		2,111,769

Thrifts & Mortgage Finance — 0.0%
Fannie Mae, Series S, 8.25% (b)(h)		14,000		26,040
Freddie Mac, Series Z, 8.38% (b)(h)		14,000		28,000

				54,040



	Shares		Value
Preferred Stocks

Wireless Telecommunication Services — 0.6%
Centaur Funding Corp., 9.08% (a)		2,423	$	2,904,571

Total Preferred Stocks – 1.2%				6,026,005



Trust Preferreds

Diversified Financial Services — 0.3%
GMAC Capital Trust I, Series 2, 8.13% (b)		57,110		1,392,342

Machinery —0.4%
Stanley Black & Decker, Inc., 5.75%		70,000		1,764,700

Total Trust Preferreds – 0.7%				3,157,042

Total Preferred Securities – 24.0%				117,389,052




US Government Sponsored Agency Securities — 0.3%	Par (000)

Fannie Mae, 2.61%, 10/09/19 (c)(i)	USD	1,670		1,385,933



US Treasury Obligations

US Treasury Bonds (c):
3.75%, 8/15/41		1,470		1,835,892
3.13%, 11/15/41		990		1,103,850
3.00%, 5/15/42		3,400		3,697,500
US Treasury Notes:
0.88%, 12/31/16 (c)		3,847		3,907,110
0.63%, 5/31/17 (c)		10,380		10,405,140
2.00%, 2/15/22		145		152,137
1.75%, 5/15/22		115		117,713

Total US Treasury Obligations – 4.3%				21,219,342

Total Long-Term Investments (Cost – $631,271,687) – 139.0%				680,971,986



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	8

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)



	Shares		Value
Short-Term Securities

BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15% (j)(k)		1,347,013	$	1,347,013

Total Short-Term Securities (Cost – $1,347,013) – 0.3%				1,347,013




Options Purchased	Notional Amount (000)

Over-the-Counter Interest Rate Call Swaptions — 0.0%
Pay a fixed rate of 2.36% and receive a floating rate based on 3-month LIBOR, Expires 10/17/12, Broker Barclays Plc	USD	600		21,212
Pay a fixed rate of 0.71% and receive a floating rate based on 3-month LIBOR, Expires 6/28/13, Broker Deutsche Bank AG		36,800		205,638
Pay a fixed rate of 1.16% and receive a floating rate based on 3-month LIBOR, Expires 7/11/13, Broker Citigroup, Inc.		8,100		107,030

				333,880

Over-the-Counter Interest Rate Put Swaptions — 0.1%
Pay a fixed rate of 2.36% and receive a floating rate based on 3-month LIBOR, Expires 10/17/12, Broker Barclays Plc		600		23,024
Pay a fixed rate of 0.71% and receive a floating rate based on 3-month LIBOR, Expires 6/28/13, Broker Deutsche Bank AG		36,800		64,566
Pay a fixed rate of 1.16% and receive a floating rate based on 3-month LIBOR, Expires 7/11/13, Broker Citigroup, Inc.		8,100		82,299
Pay a fixed rate of 4.50% and receive a floating rate based on 3-month LIBOR, Expires 9/16/13, Broker Credit Suisse Group AG	EUR	5,300		23,421
Pay a fixed rate of 4.50% and receive a floating rate based on 3-month LIBOR, Expires 10/21/13, Broker Citigroup, Inc.		5,000		27,563
Pay a fixed rate of 4.50% and receive a floating rate based on 3-month LIBOR, Expires 12/12/13, Broker Credit Suisse Group AG	EUR	4,000		29,421


Options Purchased	Notional Amount (000)		Value

Over-the-Counter Interest Rate Put Swaptions (concluded)
Pay a fixed rate of 4.50% and receive a floating rate based on 3-month LIBOR, Expires 2/02/17, Broker Deutsche Bank AG	USD	4,800	$	108,864

				359,158

Total Options Purchased (Cost – $1,017,597) – 0.1%				693,038

Total Investments Before Options Written *(Cost – $633,636,297) – 139.4%**				683,012,037




Options Written	Notional Amount (000)

Over-the-Counter Interest Rate Call Swaptions — (0.0)%

Pay a fixed rate of 2.34% and receive a floating rate based on 3-month LIBOR, Expires 5/07/13, Broker Morgan Stanley		700	$	(42,674	)
Pay a fixed rate of 1.40% and receive a floating rate based on 3-month LIBOR, Expires 5/08/14, Broker Citigroup, Inc.		2,700		(47,493	)
Pay a fixed rate of 1.00% and receive a floating rate based on 3-month LIBOR, Expires 7/11/14, Broker Credit Suisse Group AG		8,400		(59,626	)

				(149,793	)

Over-the-Counter Interest Rate Put Swaptions — (0.1)%

Receive a fixed rate of 2.34% and pay a floating rate based on 3-month LIBOR, Expires 5/07/13, Broker Morgan Stanley		700		(8,031	)
Receive a fixed rate of 2.40% and pay a floating rate based on 3-month LIBOR, Expires 5/08/14, Broker Citigroup, Inc.		2,700		(18,750	)
Receive a fixed rate of 2.00% and pay a floating rate based on 3-month LIBOR, Expires 7/11/14, Broker Credit Suisse Group AG		8,400		(99,500	)
Receive a fixed rate of 6.00% and pay a floating rate based on 3-month LIBOR, Expires 2/02/17, Broker Deutsche Bank AG		9,600		(109,859	)

				(236,140	)

Total Options Written (Premiums Received – $462,915) – (0.1)%				(385,933	)



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	9

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

(Percentages shown are based on Net Assets)


Total Investments, Net of Options Written – 139.3%		682,626,104
Liabilities in Excess of Other Assets – (39.3)%		(192,662,083)

Net Assets – 100.0%	$	489,964,021

*	As of July 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

(c)	All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.

(d)	Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown is as of report date.

(e)	Security is perpetual in nature and has no stated maturity date.

(f)	Represents a payment-in-kind security which may pay interest/dividends in additional par/shares.

(g)	Convertible security.

(h)	Non-income producing security.

(i)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(j)	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, 2011		Net Activity		Shares Held at July 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		405,708		941,305		1,347,013	$	4,132

(k)	Represents the current yield as of report date.


Tax cost	$	633,495,435

Gross unrealized appreciation	$	55,754,758
Gross unrealized depreciation		(6,238,156)

Net unrealized appreciation	$	49,516,602

(a)	Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. 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.

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:


EUR		Euro
Fannie Mae		Federal National Mortgage Association
FKA		Formerly Known As
Freddie Mac		Federal Home Loan Mortgage Corporation
LIBOR		London Interbank Offered Rate
RB		Revenue Bonds
USD		US Dollar

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.

Ÿ	Reverse repurchase agreements outstanding as of July 31, 2012 were as follows:


Counterparty	Interest Rate	Trade Date	Maturity Date¹	Net Closing Amount	Face Amount
UBS Securities LLC	(1.25%)	2/02/12	Open	$ 522,148	$ 525,450
Credit Suisse Securities (USA) LLC	0.35%	2/15/12	Open	4,183,262	4,176,440
Credit Suisse Securities (USA) LLC	0.35%	2/22/12	Open	4,448,202	4,441,250

UBS Securities LLC	0.35%	3/13/12	Open	5,031,888	5,025,000
UBS Securities LLC	0.37%	3/13/12	Open	5,488,067	5,480,125
UBS Securities LLC	0.38%	3/13/12	Open	4,222,650	4,216,375
UBS Securities LLC	0.32%	3/13/12	Open	2,329,416	2,326,500
Credit Suisse Securities (USA) LLC	0.38%	3/21/12	Open	21,044,021	21,014,519
Credit Suisse Securities (USA) LLC	0.35%	3/21/12	Open	9,313,709	9,301,681



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	10

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

•	Reverse repurchase agreements outstanding as of July 31, 2012 were as follows:


Counterparty	Interest Rate	Trade Date	Maturity Date¹	Net Closing Amount	Face Amount
Credit Suisse Securities (USA) LLC	0.35%	3/22/12	Open	$ 1,408,055	$ 1,406,250
UBS Securities LLC	0.35%	3/23/12	Open	439,364	438,805
Credit Suisse Securities (USA) LLC	0.35%	3/27/12	Open	1,563,849	1,561,920
UBS Securities LLC	0.38%	3/27/12	Open	3,770,548	3,765,500
UBS Securities LLC	0.10%	4/16/12	Open	783,233	783,000
Barclays Capital, Inc.	0.35%	4/18/12	Open	30,397,910	30,366,910
Credit Suisse Securities (USA) LLC	0.35%	4/23/12	Open	2,692,639	2,690,050
Barclays Capital, Inc.	0.35%	4/24/12	Open	1,742,269	1,740,594
Deutsche Bank Securities, Inc.	0.12%	4/24/12	Open	3,877,132	3,875,853
UBS Securities LLC	0.34%	4/24/12	Open	1,326,489	1,325,250
BNP Paribas Securities Corp.	0.23%	4/25/12	Open	1,330,570	1,329,737
BNP Paribas Securities Corp.	0.19%	4/25/12	Open	1,656,444	1,655,588
UBS Securities LLC	0.34%	4/25/12	Open	6,402,296	6,396,376
BNP Paribas Securities Corp.	0.35%	4/26/12	Open	2,777,617	2,775,000
BNP Paribas Securities Corp.	0.37%	4/26/12	Open	4,368,351	4,364,000
UBS Securities LLC	0.00%	5/07/12	Open	381,875	381,875
UBS Securities LLC	0.38%	5/07/12	Open	17,680,035	17,664,000
UBS Securities LLC	0.35%	5/07/12	Open	3,879,241	3,876,000
UBS Securities LLC	0.25%	5/07/12	Open	1,279,514	1,278,750
UBS Securities LLC	0.25%	5/10/12	Open	842,915	842,435
Credit Suisse Securities (USA) LLC	0.35%	5/11/12	Open	1,566,279	1,565,031
Credit Suisse Securities (USA) LLC	0.35%	5/14/12	Open	717,738	717,187
Credit Suisse Securities (USA) LLC	0.35%	5/15/12	Open	1,607,906	1,606,688
Deutsche Bank Securities, Inc.	(1.00%)	5/16/12	Open	411,368	412,250
Credit Suisse Securities (USA) LLC	0.35%	5/18/12	Open	2,596,642	2,594,750
Credit Suisse Securities (USA) LLC	0.35%	5/24/12	Open	1,671,559	1,670,438
Deutsche Bank Securities, Inc.	0.19%	5/29/12	Open	1,047,279	1,046,925
UBS Securities LLC	0.34%	5/31/12	Open	3,341,330	3,339,375
Deutsche Bank Securities, Inc.	(1.50%)	6/07/12	Open	114,649	114,912
Deutsche Bank Securities, Inc.	(1.50%)	6/11/12	Open	82,774	82,950
UBS Securities LLC	0.32%	6/29/12	Open	2,390,701	2,390,000
Deutsche Bank Securities, Inc.	(2.00%)	7/02/12	Open	423,755	424,462
Merrill Lynch	0.10%	7/02/12	Open	10,367,889	10,367,025
Credit Suisse Securities (USA) LLC	0.35%	7/03/12	Open	3,163,392	3,162,500
Credit Suisse Securities (USA) LLC	0.35%	7/12/12	Open	2,014,942	2,014,550



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	11

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

•	Reverse repurchase agreements outstanding as of July 31, 2012 (concluded):


Counterparty	Interest Rate	Trade Date	Maturity Date¹	Net Closing Amount		Face Amount
Credit Suisse Securities (USA) LLC	0.35%	7/13/12	Open	$	3,447,787	$	3,447,150
Credit Suisse Securities (USA) LLC	0.35%	7/16/12	Open		1,412,533		1,412,313
Barclays Capital, Inc.	0.35%	7/25/12	Open		4,245,374		4,245,085
UBS Securities LLC	0.33%	7/25/12	Open		2,254,495		2,254,350
Credit Suisse Securities (USA) LLC	0.35%	7/25/12	Open		1,955,664		1,955,531
BNP Paribas Securities Corp.	0.15%	7/27/12	Open		3,740,078		3,740,000
Credit Suisse Securities (USA) LLC	0.35%	7/27/12	Open		979,923		979,875
UBS Securities LLC	0.34%	7/27/12	Open		1,163,305		1,163,250
Credit Suisse Securities (USA) LLC	(0.25%)	7/30/12	Open		1,248,590		1,248,607
Credit Suisse Securities (USA) LLC	0.35%	7/30/12	Open		1,160,085		1,160,062
Total				$	198,309,746	$	198,140,499

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, 2012 were as follows:

Contracts

Issue

Exchange

Expiration

Notional

Value

Unrealized

Appreciation

223

5-Year US Treasury Note

Chicago Board of Trade

September 2012

USD

27,826,219

$ 227,386

•	Financial futures contracts sold as of July 31, 2012 were as follows:

Contracts

Issue

Exchange

Expiration

Notional

Value

Unrealized

Depreciation

Euro-Bund

Eurex

September 2012

EUR

177,879

(1,441)

482

10-Year US Treasury Note

Chicago Board of Trade

September 2012

USD

64,904,312

(926,089)

30-Year US Treasury Bond

Chicago Board of Trade

September 2012

USD

6,645,375

(168,807)

131

Ultra Long Term US

Treasury Bond

Chicago Board of Trade

September 2012

USD

22,597,500

(1,047,602)

Total

(2,143,939)

•	Foreign currency exchange contracts as of July 31, 2012 were as follows:


Currency Purchased	Currency Sold		Counterparty	Settlement Date	Unrealized Depreciation
USD 559,669	EUR	456,500	Citibank NA	10/22/12	$ (3,062)

•	Credit default swaps on single-name issues - buy protection outstanding as of July 31, 2012 were as follows:

Issuer

Pay

Fixed

Rate

Counterparty

Expiration

Date

Notional

Amount

(000)

Unrealized

Appreciation

(Depreciation)

Southwest Airlines Co.

1.00%

Goldman Sachs Bank USA

12/20/16

USD

1,185

(36,873)

Southwest Airlines Co.

1.00%

Royal Bank of Scotland Plc

12/20/16

USD

1,185

(41,229)

Time Warner Inc.

1.00%

Credit Suisse Securities (USA) LLC

3/20/17

USD

7,500

(3,555)

STMicroelectronics NV

1.00%

Barclays Capital, Inc.

6/20/17

EUR

1,215

(5,637)

General Dynamic Corp.

1.00%

Credit Suisse Securities (USA) LLC

9/20/17

USD

1,655

(5,971)

Hewlett-Packard Co.

1.00%

Credit Suisse Securities (USA) LLC

9/20/17

USD

810

22,808

Lockheed Martin Corp.

1.00%

Credit Suisse Securities (USA) LLC

9/20/17

USD

1,655

(9,833)



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	12

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

•	Credit default swaps on single-name issues - buy protection outstanding as of July 31, 2012 were as follows:


Issuer	Pay Fixed Rate	Counterparty	Expiration Date	Notional Amount (000)		Unrealized Appreciation (Depreciation)
Northrop Grumman Corp.	1.00%	Credit Suisse Securities (USA) LLC	9/20/17	USD	1,400	$	(6,474)
Raytheon Co.	1.00%	Credit Suisse Securities (USA) LLC	9/20/17	USD	1,400		(5,772)
Viacom, Inc.	1.00%	Credit Suisse Securities (USA) LLC	9/20/17	USD	3,600		(13,865)
Cigna Corp.	1.00%	Goldman Sachs Bank USA	9/20/17	USD	2,275		(1,782)
Humana, Inc.	1.00%	Goldman Sachs Bank USA	9/20/17	USD	2,275		6,251
Hewlett-Packard Co.	1.00%	JPMorgan Chase & Co.	9/20/17	USD	150		3,393

Total						$	(98,539)

•	Credit default swaps on single-name issues - sold protection outstanding as of July 31, 2012 were as follows:

Issuer

Receive

Fixed

Rate

Counterparty

Expiration

Date

Issuer

Credit

Rating¹

Notional

Amount

(000)²

Unrealized

Appreciation

(Depreciation)

DIRECTV Holdings LLC

1.00%

Credit Suisse Securities (USA) LLC

3/20/17

BBB

USD

7,500

186,074

Anadarko Petroleum Corp.

1.00%

UBS AG

6/20/17

BBB-

USD

994

24,405

Comcast Corp.

1.00%

Credit Suisse Securities (USA) LLC

9/20/17

BBB+

USD

3,600

8,360

United Health Group, Inc.

1.00%

Goldman Sachs Bank USA

9/20/17

A-

USD

2,275

(1,211)

Wellpoint, Inc.

1.00%

Goldman Sachs Bank USA

9/20/17

A-

USD

2,275

(371)

MetLife, Inc.

1.00%

Deutsche Bank AG

3/20/18

A-

USD

900

(24,596)

Total

192,661

¹	Using Standard & Poor’s rating.

²	The maximum potential amount the Trust may pay should a negative credit event take place as defined under the terms of agreement.

•	Interest rate swaps outstanding as of July 31, 2012 were as follows:

Fixed

Rate

Floating

Rate

Counterparty

Expiration

Date

Notional

Amount

(000)

Unrealized
Appreciation
(Depreciation)

1.18%³

3-month LIBOR

Deutsche Bank AG

4/11/17

USD

20,700

(422,130)

1.10%³

3-month LIBOR

JPMorgan Chase & Co.

5/22/17

USD

27,800

(441,388)

1.10%³

3-month LIBOR

Deutsche Bank AG

5/29/17

USD

1,400

(22,610)

4.03%³

3-month LIBOR

UBS AG

4/18/22

USD

3,700

(703,995)

2.06%⁴

3-month LIBOR

Credit Suisse Securities (USA) LLC

5/08/22

USD

3,300

144,543

1.80%⁴

3-month LIBOR

Citibank NA

6/01/22

USD

900

17,495

2.48%³

3-month LIBOR

Credit Suisse Securities (USA) LLC

7/05/42

USD

2,200

(61,263)

2.26%³

3-month LIBOR

Goldman Sachs Bank USA

7/26/42

USD

1,100

24,491

Total

(1,464,857)

³	Trust pays a fixed rate and receives floating rate.

⁴	Trust pays a floating rate and receives fixed rate.



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	13

Schedule of Investments (continued)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

•	Fair Value Measurements - Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes as follows:

•

Level 1 – unadjusted 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)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. 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 is not necessarily an indication of the risks associated with 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 Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy as of July 31, 2012:


	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long Term Investments
Asset-Backed Securities		–	$	4,833,576	$	2,232,625	$	7,066,201
Corporate Bonds		–		525,377,722		3,519,000		528,896,722
Floating Rate Loan Interests		–		578,312		–		578,312
Municipal Bonds		–		4,436,424		–		4,436,424
Preferred Securities	$	1,947,507		115,441,545		–		117,389,052
US Government Sponsored Agency Securities		–		1,385,933		–		1,385,933
US Treasury Obligations		–		21,219,342		–		21,219,342
Short-Term Securities		1,347,013		–		–		1,347,013
Total	$	3,294,520	$	673,272,854	$	5,751,625	$	682,318,999


	Level 1		Level 2		Level 3		Total
Derivative Financial Instruments¹
Assets
Interest rate contracts	$	227,386	$	879,567		–	$	1,106,953
Credit contracts		–		251.291		–		251,291
Liabilities
Interest rate contracts		(2,143,939)		(2,037,319)		–		(4,181,258)
Foreign currency exchange contracts		–		(3,062)		–		(3,062)
Credit contracts		–		(157,169)		–		(157,169)
Total	$	(1,916,553)	$	(1,066,692)		–	$	(2,983,245)

Derivative financial instruments are swaps, financial futures contracts, foreign currency exchange contracts and options. Swaps, financial futures contracts and foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options are shown at value.



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	14

Schedule of Investments (concluded)

BlackRock Credit Allocation Income Trust II, Inc. (PSY)

Certain of the Trust’s assets and liabilities are held at carrying or face amount, which approximates fair value for financial reporting purposes. As of July 31, 2012, such assets and liabilities are categorized within the disclosure hierarchy as follows:



	Level 1		Level 2		Level 3		Total

Assets:
Cash pledged as collateral for financial futures contracts	$	1,252,000		–		–	$	1,252,000
Cash pledged as collateral for Swaps		230,000		–		–		230,000
Foreign currency		517		–		–		517
Liabilities:
Bank overdraft		–	$	(1,000)		–		(1,000)
Cash received as collateral for Reverse
Repurchase
Agreements		–		(2,123,000)		–		(2,123,000)
Reverse Repurchase Agreements		–	$	(198,140,499)		–		(198,140,499)

Total	$	1,482,517	$	(200,264,499)		–	$	(198,781,982)

There were no transfers between Level 1 and Level 2 during the period ended July 31, 2012.

Certain of the Trust’s investments are categorized as Level 3 and were valued utilizing transaction prices or third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in the unobservable inputs could result in a significantly lower or higher value in such Level 3 investments.

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

Asset-Backed
Securities

Corporate

Bonds

Total

Assets:

Opening Balance, as of October 31, 2011

2,053,750

3,536,000

5,589,750

Transfers into Level 3¹

–

Transfers out of Level 3¹

–

Accrued discounts/premiums

28,288

–

28,288

Net realized gain (loss)

–

Net change in unrealized appreciation/depreciation²

150,587

(17,000)

133,587

Purchases

–

Sales

–

Closing Balance, as of July 31, 2012

2,232,625

3,519,000

5,751,625

Transfers into and transfers out of Level 3 represent the values as of the beginning of the reporting period.

The change in unrealized appreciation/depreciation on investments still held as of July 31, 2012 was $133,587.

The following table is a reconciliation of Level 3 derivative financial instruments for which significant unobservable inputs were used in determining fair value:



	Credit Contracts

Assets:
Opening Balance, as of October 31, 2011	$	5,018
Transfers into Level 3¹
Transfers out of Level 3¹
Accrued discounts/premium		–
Net realized gain (loss)		–
Net change in unrealized appreciation/depreciation³		(5,018)
Purchases		–
Issues⁴		–
Sales		–
Settlements⁵		–

Closing Balance, as of July 31, 2012	$	–

The change in unrealized appreciation/depreciation on derivative financial instruments still held as of July 31, 2012 was $0.

⁴

Issues represent upfront cash received on certain derivative financial instruments.

⁵

Settlements represent periodic contractual cash flows and/or cash flows to terminate certain derivative financial instruments.

A reconciliation of Level 3 investments and derivative financial instruments is presented when the Trust had a significant amount of Level 3 investments and derivative financial instruments at the beginning and/or end of the period in relation to net assets.



BLACKROCK CREDIT ALLOCATION INCOME TRUST II, INC.	JULY 31, 2012	15

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 II, Inc.


By:		/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Credit Allocation Income Trust II, Inc.

Date: September 25, 2012

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 II, Inc.

Date: September 25, 2012


By:		/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Credit Allocation Income Trust II, Inc.

Date: September 25, 2012