KBRA Assigns Ratings to Senior Notes and Mandatory Redeemable Preferred Shares Issued by Three ClearBridge Closed-End Funds

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns ratings of AAA to the Senior Notes and A to the Mandatory Redeemable Preferred Shares (MRPS) issued by three closed-end funds managed by ClearBridge Investments (ClearBridge):

ClearBridge Closed-End Funds

Fund Name

Ticker

Fund

Inception

Notes Series

Average Senior

Asset Coverage

KBRA

Rating

ClearBridge Energy Midstream

Opportunity Fund Inc.

EMO

2011

B, C, D, E, G, H

422%

AAA

ClearBridge MLP and Midstream

Fund Inc.

CEM

2010

C, D, A, B, A, H, I, J, K

425%

AAA

ClearBridge MLP and Midstream

Total Return Fund Inc.

CTR

2012

B, C, D, E, F

407%

AAA

ClearBridge Closed-End Funds

Fund Name

Ticker

Fund

Inception

MRPS Series

Average Total

Asset Coverage1

KBRA

Rating

ClearBridge Energy Midstream

Opportunity Fund Inc.

EMO

2011

B, C, D, E, F, G

315%

A

ClearBridge MLP and Midstream

Fund Inc.

CEM

2010

A, B, C, D, E, F, G

319%

A

ClearBridge MLP and Midstream

Total Return Fund Inc.

CTR

2012

B, C

345%

A

1Average Total Asset Coverage calculated for times when MRPS have been outstanding.

The Funds are registered under the Investment Company Act of 1940 (the “40 Act”) and are closed-end investment funds that are advised by Legg Mason Partners Fund Advisor, LLC (“LMPFA”). ClearBridge Energy Midstream Opportunity Fund Inc., ClearBridge MLP and Midstream Fund Inc., and ClearBridge MLP and Midstream Total Return Fund Inc. had their Initial Public Offerings in June 2011, 2010 and 2012, respectively and each fund’s shares are listed on the New York Stock Exchange under the symbols EMO, CEM and CTR, respectively. Under current investment guidelines, EMO invests at least 80% of its managed assets in energy midstream entities structured as both partnerships and corporations. Moreover, CEM and CTR will invest at least 80% of their managed assets in energy related MLPs and energy midstream entities.

The ratings assigned to ClearBridge’s Notes and MRPS are driven by a combination of the Funds’ historically strong asset coverage ratios and liquidity, coupled with ClearBridge’s management experience. All three funds have historically demonstrated their willingness and ability to remain in compliance with the 1940 Act requirements. Average senior asset coverage has averaged above 400% for all three Funds, which is meaningfully above the 1940 Act 300% senior debt threshold. Furthermore, all three funds have averaged over 300% total leverage, which is meaningfully above the 1940 Act 200% total leverage threshold. Even during periods of economic stress, ClearBridge has shown its ability to manage leverage effectively. In KBRA’s view, ClearBridge’s ability to withstand such a significant market dislocation demonstrates the strength of the Fund Advisor and the resiliency of its capital structure.

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Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Forms located here.

Information on the meaning of each rating category can be located here.

This credit rating is endorsed by Kroll Bond Rating Agency Europe Limited for use in the European Union. Information on a credit rating’s endorsement status is available on its rating page at KBRA.com.

Further disclosures relating to this rating action are available in the Information Disclosure Forms referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.

Contacts

Analytical Contacts

Rachel Notkin, Associate (Lead Analyst)
+1 (646) 731-1242
rachel.notkin@kbra.com

David Dicker, CFA, Associate Director
+1 (646) 731-2449
ddicker@kbra.com

William Cox, Senior Managing Director (Rating Committee Chair)
+1 (646) 731-2472
wcox@kbra.com

Business Development Contact

Sted Dowd, Managing Director
+1 (646) 731-2479
sdowd@kbra.com

Contacts

Analytical Contacts

Rachel Notkin, Associate (Lead Analyst)
+1 (646) 731-1242
rachel.notkin@kbra.com

David Dicker, CFA, Associate Director
+1 (646) 731-2449
ddicker@kbra.com

William Cox, Senior Managing Director (Rating Committee Chair)
+1 (646) 731-2472
wcox@kbra.com

Business Development Contact

Sted Dowd, Managing Director
+1 (646) 731-2479
sdowd@kbra.com