UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22334
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Exact name of registrant as specified in charter)
620 Eighth
Avenue, 47th Floor, New York, NY 10018
(Address of principal executive offices) (Zip code)
George P. Hoyt.
Franklin Templeton
100
First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-888-777-0102
Date of fiscal year end: October 31
Date of reporting period: October 31, 2023
| ITEM 1. |
REPORT TO STOCKHOLDERS. |
The Annual Report to Stockholders is filed herewith.
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| Annual Report |
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October 31, 2023 |
WESTERN ASSET
GLOBAL CORPORATE DEFINED OPPORTUNITY FUND INC. (GDO)
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INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
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Fund objectives
The Fund’s primary investment objective is to provide current income and then to liquidate and distribute substantially all of the Fund’s net assets to
stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek capital appreciation. There can be no assurance the Fund will achieve its investment objectives.
The Fund seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its managed assets in a portfolio of U.S. and foreign
corporate fixed-income securities of varying maturities.
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| II |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
Letter from the chairman
Dear Shareholder,
We are pleased to provide the annual report of Western Asset Global Corporate Defined Opportunity Fund Inc. for the twelve-month reporting period ended October 31,
2023. Please read on for a detailed look at prevailing economic and market conditions during the Fund’s reporting period and to learn how those conditions have affected Fund performance.
As always, we remain committed to providing you with excellent service and a full spectrum of investment choices. We also remain committed to supplementing the support
you receive from your financial advisor. One way we accomplish this is through our website, www.franklintempleton.com. Here you can gain immediate access to market and investment information, including:
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Fund prices and performance, |
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Market insights and commentaries from our portfolio managers, and |
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A host of educational resources. |
We look forward to helping you meet your financial goals.
Sincerely,
Jane Trust, CFA
Chairman, President and Chief Executive Officer
November 30, 2023
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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Fund overview
Q. What is the Fund’s investment strategy?
A. The Fund’s primary investment objective is to provide current income and then to liquidate and distribute substantially all of the Fund’s net assets
to stockholders on or about December 2, 2024. As a secondary objective, the Fund will seek capital appreciation. There can be no assurance the Fund will achieve its investment objectives.
The Fund seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its managed assets in a portfolio of U.S. and foreign
corporate fixed income securities of varying maturities. Under normal market conditions, the Fund will invest at least 40% of its managed assets in fixed income securities of foreign issuers organized or having a principal place of business outside
the United States, including in emerging market countries. In addition, the Fund may invest up to 35% of its managed assets in fixed income securities of below investment grade quality. Below investment grade fixed income securities are commonly
known as “high yield” or “junk” bonds. “Managed assets” means the net assets of the Fund plus the amount of any borrowings and assets attributable to any preferred stock that may be outstanding.
Under normal market conditions, the Fund expects to maintain, on an ongoing basis, a dollar-weighted average credit quality of portfolio holdings of investment grade
quality. When choosing investments, Western Asset Management Company, LLC (“Western Asset”), the Fund’s subadviser, focuses on corporate securities that exhibit pricing inefficiencies, improving credit conditions that offer income
opportunities and the potential for high real yields.
At Western Asset, we utilize a fixed income team approach, with decisions derived from interaction among
various investment management sector specialists. The sector teams are comprised of Western Asset’s senior portfolio management personnel, research analysts and an in-house economist. Under this team
approach, management of client fixed income portfolios will reflect a consensus of interdisciplinary views within the Western Asset organization. The individuals responsible for development of investment strategy,
day-to-day portfolio management, oversight and coordination of the Fund are S. Kenneth Leech, Michael C. Buchanan, Christopher F. Kilpatrick, Chia-Liang (CL) Lian and Annabel Rudebeck.
Q. What were the overall market conditions during the Fund’s reporting period?
A. The overall U.S. fixed income market experienced periods of volatility and generated a modest gain over the twelve-month reporting period ended
October 31, 2023. The market was driven by several factors, including elevated and persistent inflation, aggressive Federal Reserve Board (the “Fed”) monetary policy tightening, repercussions from the war in Ukraine, unrest in the
banking industry, and several geopolitical issues.
Short-term U.S. Treasury yields moved higher as the Fed aggressively raised interest rates in an attempt to rein
in elevated inflation. The yield for the two-year Treasury note began the reporting period at 4.51% and ended the period at 5.07%. The low of 3.75% occurred on May 4, 2023 and the peak of 5.19% took place
on October 17 and 18, 2023. Long-term
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
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Fund overview (cont’d)
U.S. Treasury yields also moved higher given stubbornly high inflation and Fed monetary policy
tightening. The yield for the ten-year Treasury note began the reporting period at 4.10% and ended the period at 4.88%. The low of 3.30% occurred on April 5 and 6, 2023 and the peak of 4.98% took place on
October 19, 2023.
All told, the Bloomberg U.S. Aggregate Indexi returned 0.36% for the twelve months ended
October 31, 2023. For comparison purposes, riskier fixed income securities, including high yield bonds and emerging market debt, produced stronger results. Over the fiscal year, the Bloomberg U.S. Corporate High Yield — 2% Issuer Cap Indexii and the JP Morgan Emerging Markets Bond Index Globaliii returned 6.23% and 6.94%,
respectively.
Q. How did we respond to these changing market conditions?
A. A number of adjustments were made to the Fund’s portfolio during the reporting period. We increased the Fund’s exposure to
investment-grade rated floating rate bank loans given attractive valuations and the uncertain interest rate environment. We marginally reduced the Fund’s emerging market overweight position.
From a sector/industry perspective, the Fund’s consumer cyclical1 exposure increased relative to the previous
reporting period given the positive returns generated from reopening areas such as lodging and gaming. We added investment-grade rated financials, increasing the Fund’s overweight position, given better valuations in the space post the regional
banking stress and Union Bank of Switzerland’s (“UBS”) merger with Credit Suisse. We maintained the Fund’s overweight exposure to the energy sector given its outperformance, as elevated commodity prices sent spreads tighter.
From a ratings perspective, the quality of the portfolio increased during the reporting period due to several upgrades from high yield to investment-grade. We saw
upgrades mainly in the Fund’s energy and communication services exposure. Using the higher ratings, we estimate we ended the reporting period with over 67% of the portfolio in securities rated investment-grade. Among our high yield allocation,
the vast majority of the Fund’s exposure is in securities rated single B and BB.
The use of leverage was tactically managed during the reporting period. We
ended the period with leverage at roughly 32% of the total assets of the Fund, versus roughly 34% at the beginning of the period. Overall, the use of leverage was positive for performance during the twelve months ended October 31, 2023.
Currency forwards, which were used to manage the Fund’s currency exposure, contributed to performance.
Performance review
For the twelve months ended October 31, 2023, Western Asset Global Corporate Defined Opportunity Fund Inc. returned 3.65% based on its net asset
value (“NAV”)iv and 6.98% based on its New York Stock Exchange (“NYSE”) market price per share. The Fund’s
| 1 |
Cyclical consists of the following industries: automotive, entertainment, gaming, home construction, lodging, retailers,
restaurants, textiles and other consumer services. |
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
unmanaged benchmark, the Bloomberg Global Aggregate
Corporate Indexv, returned 5.15% for the same period.
The Fund has a practice of seeking to maintain a
relatively stable level of distributions to shareholders. This practice has no impact on the Fund’s investment strategy and may reduce the Fund’s NAV. The Fund’s manager believes the practice helps maintain the Fund’s
competitiveness and may benefit the Fund’s market price and premium/discount to the Fund’s NAV.
During the twelve-month period, the Fund made
distributions to shareholders totaling $1.21 per share of which $0.36 will be treated as a return of capital for tax purposes.* The performance table shows the Fund’s twelve-month total return based on its NAV and market price as of
October 31, 2023. Past performance is no guarantee of future results.
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| Performance Snapshot as of October 31, 2023 |
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| Price Per Share |
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12-Month
Total Return** |
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| $11.92 (NAV) |
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3.65 |
%† |
| $11.36 (Market Price) |
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6.98 |
%‡ |
All figures represent past performance and are not a guarantee of future results.
** Total returns are based on changes in NAV or market price, respectively. Returns reflect the deduction of all Fund expenses, including management fees, operating
expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares.
† Total return assumes the reinvestment of all distributions, including returns of capital, at NAV.
‡ Total return assumes the reinvestment of all distributions, including returns of capital, in additional shares in accordance with the Fund’s Dividend
Reinvestment Plan.
Q. What were the leading contributors to performance?
A. The largest contributor to the Fund’s absolute performance during the reporting period was our issuer selection.
Within the Fund’s developed market high yield allocation, several positions were rewarded during the reporting period. The Fund’s issuers in the transportation
space and a handful of the Fund’s European issuers are examples of outperformers. Global Aircraft Leasing, Carnival, Norwegian Cruise Lines (NCL), Delta Airlines, and United Airlines are examples of issuers that posted positive fundamental
results and performed well. We felt these issuers would benefit from pent-up demand post the COVID-19 pandemic. An example of a European overweight exposure that
performed well was the Fund’s Italian money center bank Intesa Sanpaolo SpA. Intesa also posted stable fundamental results and their subordinated debt performed well.
| * |
For the tax character of distributions paid during the fiscal year ended October 31, 2023, please refer to page 47 of
this report. |
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
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Fund overview (cont’d)
Within the Fund’s emerging markets allocation, the Fund’s overweight to Mexican local
sovereign debt was beneficial. Mexico could benefit longer-term from a shift away from China for manufacturing given heightened geopolitical uncertainty. The Fund’s Macau and Singapore gaming positions performed well given improved fundamental
results in the sector, including Las Vegas Sands. The Fund’s overweight in Wynn Macau was also rewarded. Elsewhere, Teva Pharmaceuticals, a global pharmaceutical company that specializes in generic drugs, was additive to results. The company
continues to post stable fundamental results.
Within the Fund’s investment-grade allocation, several individual issuers posted positive fundamental results and
the Fund’s positioning was rewarded. An example of this was the Fund’s overweight position to aircraft manufacturer Boeing. Additionally, several global bank overweights performed well, such as Barclays and HSBC Holdings.
Q. What were the leading detractors from performance?
A. The Fund’s long-term returns continue to outperform its benchmark. The largest detractor to performance during the reporting period was the Fund’s
overweight to Swiss global money center bank Credit Suisse Group AG. During the first half of the reporting period, the financial markets were experiencing stress in the banking system, both globally and in the reginal banking system in the U.S. The
Swiss government and the Swiss banking regulator forced a merger with Credit Suisse and UBS.
Within the Fund’s U.S. high yield allocation, overweight positions
in a few issuers were not rewarded. Examples of detractors were regional airline Spirit Airlines and several communications overweights, including U.S. cable company CSC Holdings (Cablevision) and wireless and satellite operator DISH Communications;
Spirit Airlines posted weaker fundamental results versus expectations and the market doubted their recent merger and acquisition (M&A) transaction with Jet Blue Airlines would be completed. Against this backdrop, Spirit Airlines’ bonds
underperformed. Cablevision posted weaker fundamental results during the reporting period, sending bonds lower. It is worth mentioning their results improved toward the end of the reporting period. DISH Communications posted weaker results versus
expectations. Investors questioned the company’s liquidity position versus their wireless buildout aspirations, which caused the company’s debt to perform poorly. In response, DISH Communications initiated a deleveraging M&A
transaction with EchoStar, which is expected to close in the near-term.
Looking for additional information?
The Fund is traded under the symbol “GDO” and its closing market price is available in most newspapers under the NYSE listings. The daily NAV is available
online under the symbol “XGDOX” on most financial websites. Barron’s and The Wall Street Journal’s Monday edition both carry closed-end fund tables that provide additional
information. In addition, the Fund issues a quarterly press release that can be found on most major financial websites as well as www.franklintempleton.com.
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
In a continuing effort to provide information
concerning the Fund, shareholders may call 1-888-777-0102 (toll free), Monday through Friday from 8:00 a.m. to 5:30 p.m. Eastern
Time, for the Fund’s current NAV, market price and other information.
Thank you for your investment in the Western Asset Global Corporate Defined Opportunity
Fund Inc. As always, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.
Sincerely,
Western Asset Management Company, LLC
November 15, 2023
RISKS: The Fund is a non-diversified,
closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty
inherent in all investments, there can be no assurance that the Fund will achieve its investment objective. The Fund’s common stock is traded on the New York Stock Exchange. Similar to stocks, the Fund’s share price will fluctuate with
market conditions and, at the time of sale, may be worth more or less than the original investment. Shares of closed-end funds often trade at a discount to their net asset value. Because the Fund is non-diversified, it may be more susceptible to economic, political or regulatory events than a diversified fund. The Fund’s investments are subject to a number of risks, such as credit risk, inflation risk,
call risk and interest rate risk. As interest rates rise, bond prices fall, reducing the value of the Fund’s holdings. The Fund may invest in lower-rated high yield bonds, known as “junk bonds,” which are subject to greater credit
risk (risk of default) than higher-rated obligations. The Fund’s investments in foreign securities involve risks, including the possibility of losses due to changes in currency exchange rates and negative developments in the political, social,
economic or regulatory structure of specific countries or regions. These risks are magnified in emerging markets. Emerging market countries tend to have economic, political, and legal systems that are less developed and less stable than those of
more developed countries. The Fund may make significant investments in derivative instruments. Derivative instruments can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Leverage may
result in greater volatility of NAV and the market price of common shares and increases a shareholder’s risk of loss. The market values of securities or other assets will fluctuate, sometimes sharply and unpredictably, due to changes in general
market conditions, overall economic trends or events, governmental actions or intervention, actions taken by the U.S. Federal Reserve or foreign central banks, market disruptions caused by trade disputes or other factors, political developments,
armed conflicts, economic sanctions and countermeasures in response to sanctions, major cybersecurity events, investor sentiment, the global and domestic effects of a pandemic, and other factors that may or may not be related to the issuer of the
security or other asset. The Fund may also invest in money market funds, including funds affiliated with the Fund’s manager and subadvisers. For more information on Fund risks, see Summary of information regarding the Fund — Principal Risk
Factors in this report.
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Fund overview (cont’d)
The mention of sector breakdowns is for informational purposes only and should not be construed as
a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing
in any securities or investment strategies discussed should consult their financial professional. The Fund’s top five sector holdings (as a percentage of net assets) as of October 31, 2023 were: financials (37.0%), consumer discretionary
(19.6%), energy (18.8%), industrials (18.0%) and communication services (15.6%). The Fund’s portfolio composition is subject to change at any time.
All
investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest
directly in an index.
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views
expressed may differ from those of the firm as a whole.
| i |
The Bloomberg U.S. Aggregate Index is a broad-based bond index comprised of government, corporate, mortgage-and
asset-backed issues, rated investment grade or higher, and having at least one year to maturity. |
| ii |
The Bloomberg U.S. Corporate High Yield — 2% Issuer Cap Index is an index of the 2% Issuer Cap component of the
Bloomberg U.S. Corporate High Yield Index, which covers the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market. |
| iii |
The JPMorgan Emerging Markets Bond Index Global tracks total returns for U.S. dollar-denominated debt instruments issued
by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds and local market instruments. |
| iv |
Net asset value (“NAV”) is calculated by subtracting total liabilities, including liabilities associated with
financial leverage (if any), from the closing value of all securities held by the Fund (plus all other assets) and dividing the result (total net assets) by the total number of the common shares outstanding. The NAV fluctuates with changes in the
market prices of securities in which the Fund has invested. However, the price at which an investor may buy or sell shares of the Fund is the Fund’s market price as determined by supply of and demand for the Fund’s shares.
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The Bloomberg Global Aggregate Corporate Index is the corporate component of the Bloomberg Global Aggregate Index, which
is comprised of several other Bloomberg indices that measure fixed income performance of regions around the world. |
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Fund at a glance† (unaudited)
Investment breakdown (%) as a percent of total investments
| † |
The bar graph above represents the composition of the Fund’s investments as of October 31, 2023 and
October 31, 2022 and does not include derivatives, such as forward foreign currency contracts. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time. |
| ‡ |
Represents less than 0.1%. |
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
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7 |
Fund performance (unaudited)
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| Net Asset Value |
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| Average annual total returns1 |
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| Twelve Months Ended 10/31/23 |
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3.65 |
% |
| Five Years Ended 10/31/23 |
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|
-0.00 |
† |
| Ten Years Ended 10/31/23 |
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1.98 |
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| Cumulative total returns1 |
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| 10/31/13 through 10/31/23 |
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21.60 |
% |
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| Market Price |
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| Average annual total returns2 |
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| Twelve Months Ended 10/31/23 |
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6.98 |
% |
| Five Years Ended 10/31/23 |
|
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2.03 |
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| Ten Years Ended 10/31/23 |
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3.19 |
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| Cumulative total returns2 |
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| 10/31/13 through 10/31/23 |
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36.88 |
% |
All figures represent past performance and are not a guarantee of future results. Returns reflect the deduction of all Fund expenses,
including management fees, operating expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares.
| 1 |
Assumes the reinvestment of all distributions, including returns of capital, if any, at net asset value.
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| 2 |
Assumes the reinvestment of all distributions, including returns of capital, if any, in additional shares in accordance
with the Fund’s Dividend Reinvestment Plan. |
| † |
Amount represents less than 0.005%. |
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Historical performance
Value of $10,000 invested in
Western Asset Global Corporate Defined Opportunity Fund Inc. vs. Bloomberg Global Aggregate Corporate Index† — October 2013 - October 2023
All figures represent past performance and are not a guarantee of future results. Returns reflect the deduction of all Fund
expenses, including management fees, operating expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares.
| † |
Hypothetical illustration of $10,000 invested in Western Asset Global Corporate Defined Opportunity Fund Inc. on
October 31, 2013, assuming the reinvestment of all distributions, including returns of capital, if any, at net asset value and also assuming the reinvestment of all distributions, including returns of capital, if any, in additional shares in
accordance with the Fund’s Dividend Reinvestment Plan through October 31, 2023. The hypothetical illustration also assumes a $10,000 investment in the Bloomberg Global Aggregate Corporate Index. The Bloomberg Global Aggregate Corporate
Index (the “Index”) is the corporate component of the Bloomberg Global Aggregate Index, which is comprised of several other Bloomberg indices that measure fixed income performance of regions around the world. The Index is unmanaged. Please
note that an investor cannot invest directly in an index. |
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
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9 |
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Schedule of investments
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
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| Security |
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Rate |
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Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
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| Corporate Bonds & Notes — 123.8% |
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| Communication Services — 14.5% |
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| Diversified Telecommunication Services
— 4.5% |
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|
|
|
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| Altice Financing SA, Senior Secured Notes |
|
|
5.000 |
% |
|
|
1/15/28 |
|
|
|
700,000 |
|
|
$ |
569,857 |
(a) |
| Altice Financing SA, Senior Secured Notes |
|
|
5.750 |
% |
|
|
8/15/29 |
|
|
|
650,000 |
|
|
|
503,359 |
(a) |
| Altice France Holding SA, Senior Notes |
|
|
6.000 |
% |
|
|
2/15/28 |
|
|
|
240,000 |
|
|
|
105,479 |
(a) |
| Altice France Holding SA, Senior Secured Notes |
|
|
8.000 |
% |
|
|
5/15/27 |
|
|
|
360,000 |
EUR |
|
|
208,528 |
(b) |
| Altice France Holding SA, Senior Secured Notes |
|
|
10.500 |
% |
|
|
5/15/27 |
|
|
|
810,000 |
|
|
|
441,345 |
(a) |
| Altice France SA, Senior Secured Notes |
|
|
5.500 |
% |
|
|
1/15/28 |
|
|
|
360,000 |
|
|
|
267,826 |
(a) |
| Altice France SA, Senior Secured Notes |
|
|
5.125 |
% |
|
|
7/15/29 |
|
|
|
200,000 |
|
|
|
137,069 |
(a) |
| Lumen Technologies Inc., Senior Notes |
|
|
7.600 |
% |
|
|
9/15/39 |
|
|
|
2,100,000 |
|
|
|
614,880 |
(c) |
| Orange SA, Junior Subordinated Notes (2.375% to 4/15/25 then EUR 5 year Swap Rate +
2.359%) |
|
|
2.375 |
% |
|
|
1/15/25 |
|
|
|
1,200,000 |
EUR |
|
|
1,215,620 |
(b)(d)(e) |
| Telecom Italia Capital SA, Senior Notes |
|
|
6.000 |
% |
|
|
9/30/34 |
|
|
|
430,000 |
|
|
|
354,348 |
|
| Telecom Italia Capital SA, Senior Notes |
|
|
7.200 |
% |
|
|
7/18/36 |
|
|
|
200,000 |
|
|
|
173,126 |
|
| Telecom Italia Capital SA, Senior Notes |
|
|
7.721 |
% |
|
|
6/4/38 |
|
|
|
200,000 |
|
|
|
176,776 |
|
| Telecom Italia SpA, Senior Notes |
|
|
5.303 |
% |
|
|
5/30/24 |
|
|
|
235,000 |
|
|
|
230,628 |
(a) |
| Telefonica Emisiones SA, Senior Notes |
|
|
7.045 |
% |
|
|
6/20/36 |
|
|
|
2,000,000 |
|
|
|
1,997,740 |
|
| Verizon Communications Inc., Senior Notes |
|
|
2.355 |
% |
|
|
3/15/32 |
|
|
|
1,500,000 |
|
|
|
1,122,197 |
|
| Total Diversified
Telecommunication Services |
|
|
|
|
|
|
|
|
|
|
|
8,118,778 |
|
| Entertainment —
0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Banijay Entertainment SASU, Senior Secured Notes |
|
|
8.125 |
% |
|
|
5/1/29 |
|
|
|
490,000 |
|
|
|
478,168 |
(a) |
| Netflix Inc., Senior Notes |
|
|
6.375 |
% |
|
|
5/15/29 |
|
|
|
510,000 |
|
|
|
524,353 |
(c) |
| Total Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,002,521 |
|
| Interactive Media & Services —
0.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Match Group Holdings II LLC, Senior Notes |
|
|
3.625 |
% |
|
|
10/1/31 |
|
|
|
860,000 |
|
|
|
660,815 |
(a) |
| Media — 4.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CCO Holdings LLC/CCO Holdings Capital Corp., Senior Notes |
|
|
4.250 |
% |
|
|
1/15/34 |
|
|
|
1,020,000 |
|
|
|
737,600 |
(a)(c) |
| Charter Communications Operating LLC/ Charter Communications Operating Capital Corp.,
Senior Secured Notes |
|
|
6.384 |
% |
|
|
10/23/35 |
|
|
|
720,000 |
|
|
|
651,068 |
|
| Charter Communications Operating LLC/ Charter Communications Operating Capital Corp.,
Senior Secured Notes |
|
|
6.484 |
% |
|
|
10/23/45 |
|
|
|
2,660,000 |
|
|
|
2,237,666 |
(c) |
| DirecTV Financing LLC/DirecTV Financing Co-Obligor
Inc., Senior Secured Notes |
|
|
5.875 |
% |
|
|
8/15/27 |
|
|
|
1,260,000 |
|
|
|
1,105,234 |
(a)(c) |
See Notes to Financial
Statements.
|
|
|
|
|
| 10 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Media — continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DISH DBS Corp., Senior Notes |
|
|
5.875 |
% |
|
|
11/15/24 |
|
|
|
370,000 |
|
|
$ |
339,973 |
(c) |
| DISH DBS Corp., Senior Notes |
|
|
7.375 |
% |
|
|
7/1/28 |
|
|
|
760,000 |
|
|
|
429,987 |
|
| DISH DBS Corp., Senior Notes |
|
|
5.125 |
% |
|
|
6/1/29 |
|
|
|
1,500,000 |
|
|
|
774,278 |
|
| Grupo Televisa SAB, Senior Notes |
|
|
6.625 |
% |
|
|
1/15/40 |
|
|
|
1,730,000 |
|
|
|
1,635,730 |
|
| UPC Holding BV, Senior Secured Notes |
|
|
5.500 |
% |
|
|
1/15/28 |
|
|
|
230,000 |
|
|
|
200,883 |
(a) |
| Total Media |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,112,419 |
|
| Wireless Telecommunication Services —
4.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| America Movil SAB de CV, Senior Notes |
|
|
6.125 |
% |
|
|
3/30/40 |
|
|
|
650,000 |
|
|
|
619,357 |
|
| CSC Holdings LLC, Senior Notes |
|
|
11.250 |
% |
|
|
5/15/28 |
|
|
|
910,000 |
|
|
|
868,995 |
(a) |
| CSC Holdings LLC, Senior Notes |
|
|
5.750 |
% |
|
|
1/15/30 |
|
|
|
1,250,000 |
|
|
|
655,937 |
(a) |
| CSC Holdings LLC, Senior Notes |
|
|
4.625 |
% |
|
|
12/1/30 |
|
|
|
2,560,000 |
|
|
|
1,300,063 |
(a)(c) |
| CSC Holdings LLC, Senior Notes |
|
|
5.000 |
% |
|
|
11/15/31 |
|
|
|
410,000 |
|
|
|
209,973 |
(a)(c) |
| Millicom International Cellular SA, Senior Notes |
|
|
4.500 |
% |
|
|
4/27/31 |
|
|
|
1,000,000 |
|
|
|
755,000 |
(a) |
| Sprint Capital Corp., Senior Notes |
|
|
8.750 |
% |
|
|
3/15/32 |
|
|
|
90,000 |
|
|
|
101,421 |
(c) |
| T-Mobile USA Inc., Senior Notes |
|
|
3.500 |
% |
|
|
4/15/31 |
|
|
|
2,860,000 |
|
|
|
2,376,124 |
(c) |
| Vmed O2 UK Financing I PLC, Senior Secured Notes |
|
|
4.500 |
% |
|
|
7/15/31 |
|
|
|
800,000 |
GBP |
|
|
760,919 |
(a) |
| Vmed O2 UK Financing I PLC, Senior Secured Notes |
|
|
4.750 |
% |
|
|
7/15/31 |
|
|
|
400,000 |
|
|
|
322,326 |
(a) |
| Total Wireless Telecommunication
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,970,115 |
|
| Total Communication Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,864,648 |
|
| Consumer Discretionary — 18.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automobile Components —
3.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adient Global Holdings Ltd., Senior Notes |
|
|
4.875 |
% |
|
|
8/15/26 |
|
|
|
850,000 |
|
|
|
792,557 |
(a) |
| American Axle & Manufacturing Inc., Senior Notes |
|
|
6.500 |
% |
|
|
4/1/27 |
|
|
|
1,521,000 |
|
|
|
1,435,245 |
(c) |
| American Axle & Manufacturing Inc., Senior Notes |
|
|
5.000 |
% |
|
|
10/1/29 |
|
|
|
650,000 |
|
|
|
514,218 |
|
| JB Poindexter & Co. Inc., Senior Notes |
|
|
7.125 |
% |
|
|
4/15/26 |
|
|
|
2,140,000 |
|
|
|
2,042,462 |
(a)(c) |
| ZF North America Capital Inc., Senior Notes |
|
|
6.875 |
% |
|
|
4/14/28 |
|
|
|
400,000 |
|
|
|
388,061 |
(a) |
| ZF North America Capital Inc., Senior Notes |
|
|
7.125 |
% |
|
|
4/14/30 |
|
|
|
430,000 |
|
|
|
417,658 |
(a) |
| Total Automobile
Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,590,201 |
|
| Automobiles — 2.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ford Motor Credit Co. LLC, Senior Notes |
|
|
7.350 |
% |
|
|
3/6/30 |
|
|
|
750,000 |
|
|
|
754,089 |
(c) |
| Ford Motor Credit Co. LLC, Senior Notes |
|
|
3.625 |
% |
|
|
6/17/31 |
|
|
|
1,700,000 |
|
|
|
1,344,786 |
(c) |
| General Motors Co., Senior Notes |
|
|
6.125 |
% |
|
|
10/1/25 |
|
|
|
220,000 |
|
|
|
219,696 |
(c) |
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
11 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Automobiles —
continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General Motors Co., Senior Notes |
|
|
6.600 |
% |
|
|
4/1/36 |
|
|
|
720,000 |
|
|
$ |
677,418 |
(c) |
| Nissan Motor Acceptance Co. LLC, Senior Notes |
|
|
2.750 |
% |
|
|
3/9/28 |
|
|
|
1,520,000 |
|
|
|
1,259,692 |
(a)(c) |
| Total Automobiles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,255,681 |
|
| Broadline Retail —
0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Marks & Spencer PLC, Senior Notes |
|
|
7.125 |
% |
|
|
12/1/37 |
|
|
|
1,000,000 |
|
|
|
912,563 |
(a) |
| Distributors — 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ritchie Bros Holdings Inc., Senior Notes |
|
|
7.750 |
% |
|
|
3/15/31 |
|
|
|
930,000 |
|
|
|
933,488 |
(a) |
| Diversified Consumer Services —
2.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| APCOA Parking Holdings GmbH, Senior Secured Notes |
|
|
4.625 |
% |
|
|
1/15/27 |
|
|
|
210,000 |
EUR |
|
|
198,988 |
(b) |
| APCOA Parking Holdings GmbH, Senior Secured Notes |
|
|
4.625 |
% |
|
|
1/15/27 |
|
|
|
1,830,000 |
EUR |
|
|
1,734,043 |
(a) |
| Carriage Services Inc., Senior Notes |
|
|
4.250 |
% |
|
|
5/15/29 |
|
|
|
470,000 |
|
|
|
384,918 |
(a) |
| StoneMor Inc., Senior Secured Notes |
|
|
8.500 |
% |
|
|
5/15/29 |
|
|
|
1,340,000 |
|
|
|
1,071,518 |
(a) |
| WW International Inc., Senior Secured Notes |
|
|
4.500 |
% |
|
|
4/15/29 |
|
|
|
750,000 |
|
|
|
469,399 |
(a) |
| Total Diversified Consumer
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,858,866 |
|
| Hotels, Restaurants & Leisure
— 9.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1011778 BC ULC/New Red Finance Inc., Senior Secured Notes |
|
|
5.750 |
% |
|
|
4/15/25 |
|
|
|
400,000 |
|
|
|
397,108 |
(a) |
| Carnival Corp., Senior Notes |
|
|
7.625 |
% |
|
|
3/1/26 |
|
|
|
460,000 |
|
|
|
447,664 |
(a) |
| Carnival Holdings Bermuda Ltd., Senior Notes |
|
|
10.375 |
% |
|
|
5/1/28 |
|
|
|
40,000 |
|
|
|
42,683 |
(a) |
| Carnival PLC, Senior Notes |
|
|
1.000 |
% |
|
|
10/28/29 |
|
|
|
1,150,000 |
EUR |
|
|
753,719 |
|
| Carrols Restaurant Group Inc., Senior Notes |
|
|
5.875 |
% |
|
|
7/1/29 |
|
|
|
100,000 |
|
|
|
81,257 |
(a) |
| IRB Holding Corp., Senior Secured Notes |
|
|
7.000 |
% |
|
|
6/15/25 |
|
|
|
690,000 |
|
|
|
685,477 |
(a) |
| Las Vegas Sands Corp., Senior Notes |
|
|
3.900 |
% |
|
|
8/8/29 |
|
|
|
4,630,000 |
|
|
|
4,003,308 |
(c) |
| Marston’s Issuer PLC, Secured Notes (SONIA + 2.669%) |
|
|
7.889 |
% |
|
|
7/16/35 |
|
|
|
1,768,000 |
GBP |
|
|
1,579,534 |
(b)(e) |
| Mitchells & Butlers Finance PLC, Secured Notes |
|
|
5.965 |
% |
|
|
12/15/23 |
|
|
|
13,048 |
GBP |
|
|
15,664 |
(b) |
| NCL Corp. Ltd., Senior Notes |
|
|
3.625 |
% |
|
|
12/15/24 |
|
|
|
762,000 |
|
|
|
721,402 |
(a)(c) |
| NCL Corp. Ltd., Senior Notes |
|
|
5.875 |
% |
|
|
3/15/26 |
|
|
|
500,000 |
|
|
|
449,195 |
(a)(c) |
| NCL Corp. Ltd., Senior Notes |
|
|
7.750 |
% |
|
|
2/15/29 |
|
|
|
490,000 |
|
|
|
428,052 |
(a)(c) |
| NCL Corp. Ltd., Senior Secured Notes |
|
|
8.125 |
% |
|
|
1/15/29 |
|
|
|
180,000 |
|
|
|
176,051 |
(a) |
| NCL Finance Ltd., Senior Notes |
|
|
6.125 |
% |
|
|
3/15/28 |
|
|
|
960,000 |
|
|
|
803,599 |
(a) |
| Royal Caribbean Cruises Ltd., Senior Notes |
|
|
5.375 |
% |
|
|
7/15/27 |
|
|
|
1,030,000 |
|
|
|
950,253 |
(a)(c) |
| Royal Caribbean Cruises Ltd., Senior Notes |
|
|
5.500 |
% |
|
|
4/1/28 |
|
|
|
610,000 |
|
|
|
556,772 |
(a)(c) |
| Saga PLC, Senior Notes |
|
|
3.375 |
% |
|
|
5/12/24 |
|
|
|
210,000 |
GBP |
|
|
245,354 |
(b) |
| Saga PLC, Senior Notes |
|
|
5.500 |
% |
|
|
7/15/26 |
|
|
|
430,000 |
GBP |
|
|
420,728 |
(b) |
See Notes to Financial
Statements.
|
|
|
|
|
| 12 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Hotels, Restaurants & Leisure
— continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sands China Ltd., Senior Notes |
|
|
3.100 |
% |
|
|
3/8/29 |
|
|
|
2,380,000 |
|
|
$ |
1,923,075 |
|
| Sands China Ltd., Senior Notes |
|
|
4.875 |
% |
|
|
6/18/30 |
|
|
|
390,000 |
|
|
|
327,641 |
|
| Sands China Ltd., Senior Notes |
|
|
3.500 |
% |
|
|
8/8/31 |
|
|
|
500,000 |
|
|
|
379,335 |
|
| Wheel Bidco Ltd., Senior Secured Notes |
|
|
6.750 |
% |
|
|
7/15/26 |
|
|
|
400,000 |
GBP |
|
|
408,734 |
(a) |
| Wynn Macau Ltd., Senior Notes |
|
|
5.625 |
% |
|
|
8/26/28 |
|
|
|
520,000 |
|
|
|
436,716 |
(a) |
| Wynn Macau Ltd., Senior Notes |
|
|
5.125 |
% |
|
|
12/15/29 |
|
|
|
590,000 |
|
|
|
463,771 |
(a) |
| Total Hotels, Restaurants &
Leisure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,697,092 |
|
| Household Durables —
0.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Lennar Corp., Senior Notes |
|
|
5.000 |
% |
|
|
6/15/27 |
|
|
|
738,000 |
|
|
|
712,534 |
(c) |
| Specialty Retail —
0.0%†† |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Michaels Cos. Inc., Senior Notes |
|
|
7.875 |
% |
|
|
5/1/29 |
|
|
|
120,000 |
|
|
|
67,039 |
(a) |
| Total Consumer Discretionary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,027,464 |
|
| Consumer Staples — 3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Beverages — 1.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide Inc., Senior Notes |
|
|
4.700 |
% |
|
|
2/1/36 |
|
|
|
2,630,000 |
|
|
|
2,315,904 |
(c) |
| Anheuser-Busch InBev Worldwide Inc., Senior Notes |
|
|
4.750 |
% |
|
|
1/23/29 |
|
|
|
60,000 |
|
|
|
57,927 |
|
| Total Beverages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,373,831 |
|
| Food Products —
1.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bellis Acquisition Co. PLC, Senior Secured Notes |
|
|
3.250 |
% |
|
|
2/16/26 |
|
|
|
660,000 |
GBP |
|
|
697,686 |
(b) |
| FAGE International SA/FAGE USA Dairy Industry Inc., Senior Notes |
|
|
5.625 |
% |
|
|
8/15/26 |
|
|
|
500,000 |
|
|
|
478,012 |
(a) |
| JBS USA LUX SA/JBS USA Food Co./JBS USA Finance Inc., Senior Notes |
|
|
3.750 |
% |
|
|
12/1/31 |
|
|
|
1,000,000 |
|
|
|
777,932 |
|
| Kraft Heinz Foods Co., Senior Notes |
|
|
4.250 |
% |
|
|
3/1/31 |
|
|
|
180,000 |
|
|
|
159,173 |
(c) |
| Kraft Heinz Foods Co., Senior Notes |
|
|
5.200 |
% |
|
|
7/15/45 |
|
|
|
400,000 |
|
|
|
330,793 |
(c) |
| Kraft Heinz Foods Co., Senior Notes |
|
|
5.500 |
% |
|
|
6/1/50 |
|
|
|
550,000 |
|
|
|
472,393 |
(c) |
| Total Food Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,915,989 |
|
| Tobacco — 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Altria Group Inc., Senior Notes |
|
|
2.450 |
% |
|
|
2/4/32 |
|
|
|
550,000 |
|
|
|
401,631 |
|
| Reynolds American Inc., Senior Notes |
|
|
5.850 |
% |
|
|
8/15/45 |
|
|
|
540,000 |
|
|
|
422,460 |
|
| Total Tobacco |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
824,091 |
|
| Total Consumer Staples |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,113,911 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
13 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Energy — 18.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Energy Equipment & Services —
0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noble Finance II LLC, Senior Notes |
|
|
8.000 |
% |
|
|
4/15/30 |
|
|
|
430,000 |
|
|
$ |
430,191 |
(a) |
| Sunnova Energy Corp., Senior Notes |
|
|
5.875 |
% |
|
|
9/1/26 |
|
|
|
700,000 |
|
|
|
567,630 |
(a) |
| Total Energy Equipment &
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
997,821 |
|
| Oil, Gas & Consumable Fuels —
18.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cheniere Energy Partners LP, Senior Notes |
|
|
4.000 |
% |
|
|
3/1/31 |
|
|
|
750,000 |
|
|
|
628,688 |
|
| Continental Resources Inc., Senior Notes |
|
|
3.800 |
% |
|
|
6/1/24 |
|
|
|
1,060,000 |
|
|
|
1,044,147 |
(c) |
| Continental Resources Inc., Senior Notes |
|
|
4.375 |
% |
|
|
1/15/28 |
|
|
|
640,000 |
|
|
|
589,916 |
(c) |
| Diamondback Energy Inc., Senior Notes |
|
|
3.500 |
% |
|
|
12/1/29 |
|
|
|
1,120,000 |
|
|
|
980,214 |
(c) |
| Ecopetrol SA, Senior Notes |
|
|
4.625 |
% |
|
|
11/2/31 |
|
|
|
1,250,000 |
|
|
|
938,697 |
|
| Ecopetrol SA, Senior Notes |
|
|
5.875 |
% |
|
|
5/28/45 |
|
|
|
3,000,000 |
|
|
|
1,958,204 |
(f) |
| Ecopetrol SA, Senior Notes |
|
|
5.875 |
% |
|
|
11/2/51 |
|
|
|
1,760,000 |
|
|
|
1,104,739 |
|
| Energy Transfer LP, Junior Subordinated Notes (6.625% to 2/15/28 then 3 mo. USD LIBOR +
4.155%) |
|
|
6.625 |
% |
|
|
2/15/28 |
|
|
|
1,210,000 |
|
|
|
939,262 |
(d)(e) |
| EQM Midstream Partners LP, Senior Notes |
|
|
4.500 |
% |
|
|
1/15/29 |
|
|
|
410,000 |
|
|
|
359,958 |
(a) |
| EQM Midstream Partners LP, Senior Notes |
|
|
7.500 |
% |
|
|
6/1/30 |
|
|
|
420,000 |
|
|
|
412,520 |
(a) |
| EQT Corp., Senior Notes |
|
|
3.900 |
% |
|
|
10/1/27 |
|
|
|
1,300,000 |
|
|
|
1,197,430 |
(c) |
| EQT Corp., Senior Notes |
|
|
5.000 |
% |
|
|
1/15/29 |
|
|
|
2,720,000 |
|
|
|
2,538,926 |
(c) |
| KazMunayGas National Co. JSC, Senior Notes |
|
|
3.500 |
% |
|
|
4/14/33 |
|
|
|
2,130,000 |
|
|
|
1,557,850 |
(a) |
| NGPL PipeCo LLC, Senior Notes |
|
|
7.768 |
% |
|
|
12/15/37 |
|
|
|
800,000 |
|
|
|
801,076 |
(a) |
| Occidental Petroleum Corp., Senior Notes |
|
|
4.400 |
% |
|
|
8/15/49 |
|
|
|
1,060,000 |
|
|
|
694,152 |
(c) |
| Petrobras Global Finance BV, Senior Notes |
|
|
6.750 |
% |
|
|
1/27/41 |
|
|
|
160,000 |
|
|
|
146,705 |
|
| Petroleos del Peru SA, Senior Notes |
|
|
4.750 |
% |
|
|
6/19/32 |
|
|
|
2,230,000 |
|
|
|
1,495,646 |
(a) |
| Petroleos Mexicanos, Senior Notes |
|
|
6.500 |
% |
|
|
6/2/41 |
|
|
|
750,000 |
|
|
|
444,186 |
|
| Petroleos Mexicanos, Senior Notes |
|
|
5.500 |
% |
|
|
6/27/44 |
|
|
|
540,000 |
|
|
|
289,959 |
|
| Range Resources Corp., Senior Notes |
|
|
4.875 |
% |
|
|
5/15/25 |
|
|
|
290,000 |
|
|
|
282,305 |
(c) |
| Range Resources Corp., Senior Notes |
|
|
8.250 |
% |
|
|
1/15/29 |
|
|
|
480,000 |
|
|
|
490,674 |
(c) |
| Rockies Express Pipeline LLC, Senior Notes |
|
|
7.500 |
% |
|
|
7/15/38 |
|
|
|
330,000 |
|
|
|
305,403 |
(a) |
| Sabine Pass Liquefaction LLC, Senior Secured Notes |
|
|
5.750 |
% |
|
|
5/15/24 |
|
|
|
138,000 |
|
|
|
137,797 |
|
| Sabine Pass Liquefaction LLC, Senior Secured Notes |
|
|
5.000 |
% |
|
|
3/15/27 |
|
|
|
1,940,000 |
|
|
|
1,869,021 |
|
| Southern Natural Gas Co. LLC, Senior Notes |
|
|
4.800 |
% |
|
|
3/15/47 |
|
|
|
1,200,000 |
|
|
|
873,996 |
(a) |
| Summit Midstream Holdings LLC/Summit Midstream Finance Corp., Secured Notes |
|
|
9.000 |
% |
|
|
10/15/26 |
|
|
|
440,000 |
|
|
|
422,833 |
(a) |
| Targa Resources Partners LP/Targa Resources Partners Finance Corp., Senior Notes |
|
|
6.500 |
% |
|
|
7/15/27 |
|
|
|
430,000 |
|
|
|
425,367 |
|
| Transcontinental Gas Pipe Line Co. LLC, Senior Notes |
|
|
7.850 |
% |
|
|
2/1/26 |
|
|
|
1,000,000 |
|
|
|
1,032,683 |
|
See Notes to Financial
Statements.
|
|
|
|
|
| 14 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Oil, Gas & Consumable Fuels —
continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transportadora de Gas del Peru SA, Senior Notes |
|
|
4.250 |
% |
|
|
4/30/28 |
|
|
|
1,500,000 |
|
|
$ |
1,418,602 |
(a)(c) |
| Western Midstream Operating LP, Senior Notes |
|
|
4.050 |
% |
|
|
2/1/30 |
|
|
|
3,655,000 |
|
|
|
3,172,086 |
(c) |
| Western Midstream Operating LP, Senior Notes |
|
|
5.300 |
% |
|
|
3/1/48 |
|
|
|
250,000 |
|
|
|
187,021 |
|
| Western Midstream Operating LP, Senior Notes |
|
|
5.250 |
% |
|
|
2/1/50 |
|
|
|
2,770,000 |
|
|
|
2,049,745 |
(c) |
| Williams Cos. Inc., Senior Notes |
|
|
4.550 |
% |
|
|
6/24/24 |
|
|
|
540,000 |
|
|
|
534,478 |
|
| Williams Cos. Inc., Senior Notes |
|
|
7.500 |
% |
|
|
1/15/31 |
|
|
|
340,000 |
|
|
|
353,835 |
|
| Williams Cos. Inc., Senior Notes |
|
|
5.750 |
% |
|
|
6/24/44 |
|
|
|
450,000 |
|
|
|
392,679 |
|
| YPF SA, Senior Notes |
|
|
8.500 |
% |
|
|
7/28/25 |
|
|
|
120,000 |
|
|
|
110,666 |
(a) |
| YPF SA, Senior Notes |
|
|
6.950 |
% |
|
|
7/21/27 |
|
|
|
400,000 |
|
|
|
302,698 |
(a) |
| Total Oil, Gas & Consumable
Fuels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,484,164 |
|
| Total Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,481,985 |
|
| Financials — 35.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Banks — 25.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Banco Mercantil del Norte SA, Junior Subordinated Notes (6.625% to 1/24/32 then
10 year Treasury Constant Maturity Rate + 5.034%) |
|
|
6.625 |
% |
|
|
1/24/32 |
|
|
|
1,810,000 |
|
|
|
1,362,882 |
(a)(d)(e) |
| Bank of America Corp., Junior Subordinated Notes (5.875% to 3/15/28 then 3 mo. Term SOFR +
3.193%) |
|
|
5.875 |
% |
|
|
3/15/28 |
|
|
|
3,910,000 |
|
|
|
3,371,398 |
(c)(d)(e) |
| Bank of America Corp., Subordinated Notes |
|
|
4.250 |
% |
|
|
10/22/26 |
|
|
|
500,000 |
|
|
|
472,013 |
(c) |
| Barclays PLC, Junior Subordinated Notes (8.000% to 6/15/24 then 5 year Treasury Constant
Maturity Rate + 5.672%) |
|
|
8.000 |
% |
|
|
6/15/24 |
|
|
|
1,390,000 |
|
|
|
1,362,957 |
(c)(d)(e) |
| Barclays PLC, Subordinated Notes |
|
|
5.200 |
% |
|
|
5/12/26 |
|
|
|
3,000,000 |
|
|
|
2,865,935 |
(c) |
| Barclays PLC, Subordinated Notes (5.088% to 6/20/29 then 3 mo. USD LIBOR +
3.054%) |
|
|
5.088 |
% |
|
|
6/20/30 |
|
|
|
680,000 |
|
|
|
589,476 |
(c)(e) |
| BBVA Bancomer SA, Subordinated Notes (5.125% to 1/17/28 then 5 year Treasury
Constant Maturity Rate + 2.650%) |
|
|
5.125 |
% |
|
|
1/18/33 |
|
|
|
540,000 |
|
|
|
457,328 |
(a)(e) |
| Citigroup Inc., Junior Subordinated Notes (5.950% to 5/15/25 then 3 mo. Term SOFR +
4.167%) |
|
|
5.950 |
% |
|
|
5/15/25 |
|
|
|
2,100,000 |
|
|
|
1,999,202 |
(c)(d)(e) |
| Citigroup Inc., Subordinated Notes |
|
|
4.125 |
% |
|
|
7/25/28 |
|
|
|
2,000,000 |
|
|
|
1,796,122 |
(c) |
| Comerica Bank, Senior Notes |
|
|
2.500 |
% |
|
|
7/23/24 |
|
|
|
720,000 |
|
|
|
691,935 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
15 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Banks — continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit Agricole SA, Junior Subordinated Notes (8.125% to 12/23/25 then USD 5 year ICE
Swap Rate + 6.185%) |
|
|
8.125 |
% |
|
|
12/23/25 |
|
|
|
560,000 |
|
|
$ |
554,750 |
(a)(d)(e) |
| Credit Agricole SA, Subordinated Notes (4.000% to 1/10/28 then USD 5 year ICE Swap Rate +
1.644%) |
|
|
4.000 |
% |
|
|
1/10/33 |
|
|
|
2,000,000 |
|
|
|
1,741,817 |
(a)(e) |
| HSBC Holdings PLC, Junior Subordinated Notes (6.500% to 3/23/28 then USD 5 year ICE
Swap Rate + 3.606%) |
|
|
6.500 |
% |
|
|
3/23/28 |
|
|
|
2,820,000 |
|
|
|
2,485,523 |
(c)(d)(e) |
| HSBC Holdings PLC, Senior Notes (3.973% to 5/22/29 then 3 mo. Term SOFR + 1.872%) |
|
|
3.973 |
% |
|
|
5/22/30 |
|
|
|
2,870,000 |
|
|
|
2,480,535 |
(c)(e) |
| Intesa Sanpaolo SpA, Subordinated Notes |
|
|
5.017 |
% |
|
|
6/26/24 |
|
|
|
2,180,000 |
|
|
|
2,136,692 |
(a) |
| Intesa Sanpaolo SpA, Subordinated Notes |
|
|
5.710 |
% |
|
|
1/15/26 |
|
|
|
1,940,000 |
|
|
|
1,840,988 |
(a) |
| Intesa Sanpaolo SpA, Subordinated Notes (4.198% to 6/1/31 then 1 year Treasury Constant
Maturity Rate + 2.600%) |
|
|
4.198 |
% |
|
|
6/1/32 |
|
|
|
2,360,000 |
|
|
|
1,679,065 |
(a)(e) |
| JPMorgan Chase & Co., Junior Subordinated Notes (3 mo. Term SOFR +
3.562%) |
|
|
8.939 |
% |
|
|
2/1/24 |
|
|
|
4,890,000 |
|
|
|
4,909,003 |
(c)(d)(e) |
| JPMorgan Chase & Co., Junior Subordinated Notes (6.100% to 10/1/24 then 3 mo.
Term SOFR + 3.592%) |
|
|
6.100 |
% |
|
|
10/1/24 |
|
|
|
750,000 |
|
|
|
740,250 |
(c)(d)(e) |
| Lloyds Banking Group PLC, Junior Subordinated Notes (7.500% to 9/27/25 then USD 5 year ICE
Swap Rate + 4.496%) |
|
|
7.500 |
% |
|
|
9/27/25 |
|
|
|
500,000 |
|
|
|
465,150 |
(d)(e) |
| Lloyds Banking Group PLC, Junior Subordinated Notes (8.000% to 3/27/30 then 5 year
Treasury Constant Maturity Rate + 3.913%) |
|
|
8.000 |
% |
|
|
9/27/29 |
|
|
|
1,150,000 |
|
|
|
1,012,698 |
(d)(e) |
| Lloyds Banking Group PLC, Subordinated Notes |
|
|
4.650 |
% |
|
|
3/24/26 |
|
|
|
2,700,000 |
|
|
|
2,557,822 |
(c) |
| NatWest Group PLC, Subordinated Notes |
|
|
6.000 |
% |
|
|
12/19/23 |
|
|
|
1,000,000 |
|
|
|
999,263 |
|
| PNC Financial Services Group Inc., Senior Notes |
|
|
2.550 |
% |
|
|
1/22/30 |
|
|
|
750,000 |
|
|
|
596,036 |
|
| PNC Financial Services Group Inc., Senior Notes (5.812% to 6/12/25 then SOFR +
1.322%) |
|
|
5.812 |
% |
|
|
6/12/26 |
|
|
|
1,250,000 |
|
|
|
1,233,793 |
(c)(e) |
| Santander UK PLC, Subordinated Notes |
|
|
5.000 |
% |
|
|
11/7/23 |
|
|
|
394,000 |
|
|
|
393,896 |
(a) |
| UniCredit SpA, Subordinated Notes (2.000% to 9/23/24 then EUR 5 year Swap Rate +
2.400%) |
|
|
2.000 |
% |
|
|
9/23/29 |
|
|
|
600,000 |
EUR |
|
|
606,757 |
(b)(e) |
| UniCredit SpA, Subordinated Notes (7.296% to 4/2/29 then USD 5 year ICE Swap Rate +
4.914%) |
|
|
7.296 |
% |
|
|
4/2/34 |
|
|
|
1,420,000 |
|
|
|
1,318,131 |
(a)(e) |
See Notes to Financial
Statements.
|
|
|
|
|
| 16 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Banks — continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Wells Fargo & Co., Junior Subordinated Notes |
|
|
5.900 |
% |
|
|
6/15/24 |
|
|
|
1,830,000 |
|
|
$ |
1,804,024 |
(c)(d)(e) |
| Wells Fargo & Co., Junior Subordinated Notes |
|
|
5.875 |
% |
|
|
6/15/25 |
|
|
|
110,000 |
|
|
|
107,146 |
(d)(e) |
| Total Banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,632,587 |
|
| Capital Markets —
5.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Charles Schwab Corp., Junior Subordinated Notes (4.000% to 12/1/30 then 10 year Treasury
Constant Maturity Rate + 3.079%) |
|
|
4.000 |
% |
|
|
12/1/30 |
|
|
|
2,000,000 |
|
|
|
1,367,336 |
(c)(d)(e) |
| Credit Suisse AG AT1 Claim |
|
|
— |
|
|
|
— |
|
|
|
3,900,000 |
|
|
|
429,000 |
*(g) |
| Credit Suisse AG, Senior Notes |
|
|
7.500 |
% |
|
|
2/15/28 |
|
|
|
1,300,000 |
|
|
|
1,350,369 |
(c) |
| Goldman Sachs Group Inc., Senior Notes (2.640% to 2/24/27 then SOFR + 1.114%) |
|
|
2.640 |
% |
|
|
2/24/28 |
|
|
|
2,500,000 |
|
|
|
2,215,247 |
(c)(e) |
| UBS Group AG, Junior Subordinated Notes (6.875% to 8/7/25 then USD 5 year ICE Swap Rate +
4.590%) |
|
|
6.875 |
% |
|
|
8/7/25 |
|
|
|
860,000 |
|
|
|
813,031 |
(b)(d)(e) |
| UBS Group AG, Junior Subordinated Notes (7.000% to 1/31/24 then USD 5 year ICE Swap Rate +
4.344%) |
|
|
7.000 |
% |
|
|
1/31/24 |
|
|
|
1,040,000 |
|
|
|
1,033,848 |
(a)(d)(e) |
| UBS Group AG, Senior Notes |
|
|
4.875 |
% |
|
|
5/15/45 |
|
|
|
470,000 |
|
|
|
374,727 |
|
| UBS Group AG, Senior Notes (6.537% to 8/12/32 then SOFR + 3.920%) |
|
|
6.537 |
% |
|
|
8/12/33 |
|
|
|
1,290,000 |
|
|
|
1,240,235 |
(a)(e) |
| Total Capital Markets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,823,793 |
|
| Financial Services —
4.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, Senior Notes |
|
|
3.400 |
% |
|
|
10/29/33 |
|
|
|
3,500,000 |
|
|
|
2,618,978 |
(c) |
| GE Capital International Funding Co. Unlimited Co., Senior Notes |
|
|
3.373 |
% |
|
|
11/15/25 |
|
|
|
1,250,000 |
|
|
|
1,189,428 |
(c) |
| Global Aircraft Leasing Co. Ltd., Senior Notes (6.500% Cash or 7.250% PIK) |
|
|
6.500 |
% |
|
|
9/15/24 |
|
|
|
4,199,560 |
|
|
|
3,800,602 |
(a)(h) |
| GTCR W-2 Merger Sub LLC, Senior Secured
Notes |
|
|
7.500 |
% |
|
|
1/15/31 |
|
|
|
340,000 |
|
|
|
336,005 |
(a) |
| GTCR W-2 Merger Sub LLC/GTCR W Dutch Finance Sub
BV, Senior Secured Notes |
|
|
8.500 |
% |
|
|
1/15/31 |
|
|
|
100,000 |
GBP |
|
|
122,304 |
(a) |
| Park Aerospace Holdings Ltd., Senior Notes |
|
|
5.500 |
% |
|
|
2/15/24 |
|
|
|
600,000 |
|
|
|
595,905 |
(a) |
| Total Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,663,222 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
17 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Insurance — 0.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Farmers Insurance Exchange, Subordinated Notes |
|
|
8.625 |
% |
|
|
5/1/24 |
|
|
|
1,295,000 |
|
|
$ |
1,306,253 |
(a)(c) |
| MetLife Capital Trust IV, Junior Subordinated Notes |
|
|
7.875 |
% |
|
|
12/15/37 |
|
|
|
300,000 |
|
|
|
306,229 |
(a) |
| Total Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,612,482 |
|
| Total Financials |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,732,084 |
|
| Health Care — 6.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Health Care Providers & Services
— 4.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Centene Corp., Senior Notes |
|
|
3.375 |
% |
|
|
2/15/30 |
|
|
|
3,360,000 |
|
|
|
2,781,237 |
(c) |
| CVS Health Corp., Senior Notes |
|
|
3.750 |
% |
|
|
4/1/30 |
|
|
|
2,000,000 |
|
|
|
1,740,702 |
(c) |
| HCA Inc., Senior Notes |
|
|
4.500 |
% |
|
|
2/15/27 |
|
|
|
1,000,000 |
|
|
|
946,101 |
(c) |
| HCA Inc., Senior Notes |
|
|
3.500 |
% |
|
|
9/1/30 |
|
|
|
750,000 |
|
|
|
620,976 |
|
| Legacy LifePoint Health LLC, Senior Secured Notes |
|
|
4.375 |
% |
|
|
2/15/27 |
|
|
|
580,000 |
|
|
|
480,141 |
(a) |
| Tenet Healthcare Corp., Secured Notes |
|
|
6.250 |
% |
|
|
2/1/27 |
|
|
|
480,000 |
|
|
|
460,751 |
(c) |
| Tenet Healthcare Corp., Senior Notes |
|
|
6.125 |
% |
|
|
10/1/28 |
|
|
|
440,000 |
|
|
|
408,487 |
(c) |
| Total Health Care Providers &
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,438,395 |
|
| Pharmaceuticals —
2.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bausch Health Cos. Inc., Senior Notes |
|
|
5.250 |
% |
|
|
1/30/30 |
|
|
|
150,000 |
|
|
|
52,100 |
(a) |
| Par Pharmaceutical Inc., Senior Secured Notes |
|
|
7.500 |
% |
|
|
4/1/27 |
|
|
|
500,000 |
|
|
|
339,527 |
*(a)(i) |
| Teva Pharmaceutical Finance Netherlands III BV, Senior Notes |
|
|
6.000 |
% |
|
|
4/15/24 |
|
|
|
1,380,000 |
|
|
|
1,371,539 |
|
| Teva Pharmaceutical Finance Netherlands III BV, Senior Notes |
|
|
3.150 |
% |
|
|
10/1/26 |
|
|
|
1,690,000 |
|
|
|
1,489,498 |
|
| Teva Pharmaceutical Finance Netherlands III BV, Senior Notes |
|
|
5.125 |
% |
|
|
5/9/29 |
|
|
|
1,530,000 |
|
|
|
1,336,899 |
|
| Total Pharmaceuticals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,589,563 |
|
| Total Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,027,958 |
|
| Industrials — 16.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aerospace & Defense —
4.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Avolon Holdings Funding Ltd., Senior Notes |
|
|
3.250 |
% |
|
|
2/15/27 |
|
|
|
1,250,000 |
|
|
|
1,101,104 |
(a) |
| Avolon Holdings Funding Ltd., Senior Notes |
|
|
2.750 |
% |
|
|
2/21/28 |
|
|
|
1,000,000 |
|
|
|
837,298 |
(a) |
| Boeing Co., Senior Notes |
|
|
3.625 |
% |
|
|
2/1/31 |
|
|
|
7,450,000 |
|
|
|
6,282,120 |
(c) |
| Bombardier Inc., Senior Notes |
|
|
7.500 |
% |
|
|
2/1/29 |
|
|
|
320,000 |
|
|
|
296,737 |
(a) |
| Total Aerospace &
Defense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,517,259 |
|
| Building Products —
2.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GUSAP LP, Senior Notes |
|
|
7.250 |
% |
|
|
4/16/44 |
|
|
|
1,220,000 |
|
|
|
1,211,787 |
(a)(c) |
See Notes to Financial
Statements.
|
|
|
|
|
| 18 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Building Products —
continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Standard Industries Inc., Senior Notes |
|
|
5.000 |
% |
|
|
2/15/27 |
|
|
|
1,575,000 |
|
|
$ |
1,457,563 |
(a)(c) |
| Standard Industries Inc., Senior Notes |
|
|
4.375 |
% |
|
|
7/15/30 |
|
|
|
1,200,000 |
|
|
|
981,579 |
(a)(c) |
| Total Building Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,650,929 |
|
| Commercial Services & Supplies
— 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CoreCivic Inc., Senior Notes |
|
|
8.250 |
% |
|
|
4/15/26 |
|
|
|
460,000 |
|
|
|
466,131 |
(c) |
| CoreCivic Inc., Senior Notes |
|
|
4.750 |
% |
|
|
10/15/27 |
|
|
|
430,000 |
|
|
|
373,947 |
(c) |
| Total Commercial Services &
Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
840,078 |
|
| Machinery — 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cellnex Finance Co. SA, Senior Notes |
|
|
2.000 |
% |
|
|
2/15/33 |
|
|
|
2,000,000 |
EUR |
|
|
1,614,621 |
(b) |
| Titan International Inc., Senior Secured Notes |
|
|
7.000 |
% |
|
|
4/30/28 |
|
|
|
300,000 |
|
|
|
274,414 |
|
| Total Machinery |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,889,035 |
|
| Passenger Airlines —
7.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| American Airlines Group Inc., Senior Notes |
|
|
3.750 |
% |
|
|
3/1/25 |
|
|
|
2,410,000 |
|
|
|
2,250,800 |
(a)(c) |
| American Airlines Inc./AAdvantage Loyalty IP Ltd., Senior Secured Notes |
|
|
5.500 |
% |
|
|
4/20/26 |
|
|
|
358,333 |
|
|
|
348,814 |
(a)(c) |
| American Airlines Inc./AAdvantage Loyalty IP Ltd., Senior Secured Notes |
|
|
5.750 |
% |
|
|
4/20/29 |
|
|
|
1,630,000 |
|
|
|
1,471,938 |
(a)(c) |
| Delta Air Lines Inc., Senior Notes |
|
|
2.900 |
% |
|
|
10/28/24 |
|
|
|
500,000 |
|
|
|
480,506 |
(c) |
| Delta Air Lines Inc., Senior Notes |
|
|
7.375 |
% |
|
|
1/15/26 |
|
|
|
410,000 |
|
|
|
414,504 |
(c) |
| Delta Air Lines Inc., Senior Secured Notes |
|
|
7.000 |
% |
|
|
5/1/25 |
|
|
|
2,490,000 |
|
|
|
2,501,417 |
(a)(f) |
| Delta Air Lines Inc./SkyMiles IP Ltd., Senior Secured Notes |
|
|
4.750 |
% |
|
|
10/20/28 |
|
|
|
450,000 |
|
|
|
423,184 |
(a)(c) |
| Mileage Plus Holdings LLC/Mileage Plus Intellectual Property Assets Ltd., Senior Secured
Notes |
|
|
6.500 |
% |
|
|
6/20/27 |
|
|
|
1,110,000 |
|
|
|
1,097,399 |
(a)(c) |
| Spirit Loyalty Cayman Ltd./Spirit IP Cayman Ltd., Senior Secured Notes |
|
|
8.000 |
% |
|
|
9/20/25 |
|
|
|
1,979,999 |
|
|
|
1,462,982 |
(a) |
| Spirit Loyalty Cayman Ltd./Spirit IP Cayman Ltd., Senior Secured Notes |
|
|
8.000 |
% |
|
|
9/20/25 |
|
|
|
990,000 |
|
|
|
731,491 |
(a) |
| United Airlines Holdings Inc., Senior Notes |
|
|
5.000 |
% |
|
|
2/1/24 |
|
|
|
780,000 |
|
|
|
773,849 |
(c) |
| United Airlines Pass-Through Trust |
|
|
4.875 |
% |
|
|
1/15/26 |
|
|
|
924,160 |
|
|
|
886,266 |
(c) |
| Total Passenger Airlines |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,843,150 |
|
| Trading Companies & Distributors
— 0.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ashtead Capital Inc., Senior Notes |
|
|
2.450 |
% |
|
|
8/12/31 |
|
|
|
610,000 |
|
|
|
450,525 |
(a) |
| H&E Equipment Services Inc., Senior Notes |
|
|
3.875 |
% |
|
|
12/15/28 |
|
|
|
940,000 |
|
|
|
797,238 |
(a) |
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
19 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Trading Companies & Distributors
— continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| United Rentals North America Inc., Senior Notes |
|
|
5.500 |
% |
|
|
5/15/27 |
|
|
|
147,000 |
|
|
$ |
142,174 |
|
| United Rentals North America Inc., Senior Notes |
|
|
4.875 |
% |
|
|
1/15/28 |
|
|
|
140,000 |
|
|
|
130,028 |
|
| Total Trading Companies &
Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,519,965 |
|
| Total Industrials |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,260,416 |
|
| Information Technology — 2.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Communications Equipment —
0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CommScope Inc., Senior Notes |
|
|
7.125 |
% |
|
|
7/1/28 |
|
|
|
20,000 |
|
|
|
7,519 |
(a)(c) |
| CommScope Inc., Senior Secured Notes |
|
|
4.750 |
% |
|
|
9/1/29 |
|
|
|
40,000 |
|
|
|
27,357 |
(a) |
| CommScope Technologies LLC, Senior Notes |
|
|
5.000 |
% |
|
|
3/15/27 |
|
|
|
220,000 |
|
|
|
81,183 |
(a) |
| Viasat Inc., Senior Notes |
|
|
7.500 |
% |
|
|
5/30/31 |
|
|
|
400,000 |
|
|
|
262,320 |
(a) |
| Total Communications
Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
378,379 |
|
| Technology Hardware,
Storage & Peripherals — 1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Seagate HDD Cayman, Senior Notes |
|
|
4.750 |
% |
|
|
1/1/25 |
|
|
|
2,330,000 |
|
|
|
2,281,638 |
|
| Seagate HDD Cayman, Senior Notes |
|
|
4.875 |
% |
|
|
6/1/27 |
|
|
|
520,000 |
|
|
|
488,910 |
|
| Western Digital Corp., Senior Notes |
|
|
4.750 |
% |
|
|
2/15/26 |
|
|
|
670,000 |
|
|
|
628,909 |
(c) |
| Total Technology Hardware,
Storage & Peripherals |
|
|
|
|
|
|
|
|
|
|
|
3,399,457 |
|
| Total Information Technology |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,777,836 |
|
| Materials — 4.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Chemicals — 1.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Braskem Netherlands Finance BV, Senior Notes |
|
|
4.500 |
% |
|
|
1/10/28 |
|
|
|
820,000 |
|
|
|
692,416 |
(a) |
| Sasol Financing USA LLC, Senior Notes |
|
|
8.750 |
% |
|
|
5/3/29 |
|
|
|
1,070,000 |
|
|
|
1,017,484 |
(a)(c) |
| Total Chemicals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,709,900 |
|
| Metals & Mining —
2.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ArcelorMittal SA, Senior Notes |
|
|
7.000 |
% |
|
|
10/15/39 |
|
|
|
750,000 |
|
|
|
713,808 |
|
| First Quantum Minerals Ltd., Senior Notes |
|
|
8.625 |
% |
|
|
6/1/31 |
|
|
|
580,000 |
|
|
|
490,304 |
(a) |
| Freeport-McMoRan Inc., Senior Notes |
|
|
5.400 |
% |
|
|
11/14/34 |
|
|
|
120,000 |
|
|
|
106,331 |
(c) |
| Freeport-McMoRan Inc., Senior Notes |
|
|
5.450 |
% |
|
|
3/15/43 |
|
|
|
60,000 |
|
|
|
49,448 |
(c) |
| Southern Copper Corp., Senior Notes |
|
|
5.250 |
% |
|
|
11/8/42 |
|
|
|
1,850,000 |
|
|
|
1,549,201 |
(c) |
| Teck Resources Ltd., Senior Notes |
|
|
6.000 |
% |
|
|
8/15/40 |
|
|
|
600,000 |
|
|
|
521,454 |
|
| Vale Overseas Ltd., Senior Notes |
|
|
6.875 |
% |
|
|
11/21/36 |
|
|
|
340,000 |
|
|
|
335,924 |
|
| Vale Overseas Ltd., Senior Notes |
|
|
6.875 |
% |
|
|
11/10/39 |
|
|
|
750,000 |
|
|
|
736,998 |
|
| Total Metals &
Mining |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,503,468 |
|
| Paper & Forest Products —
0.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Suzano Austria GmbH, Senior Notes |
|
|
5.750 |
% |
|
|
7/14/26 |
|
|
|
400,000 |
|
|
|
391,848 |
(a) |
| Suzano Austria GmbH, Senior Notes |
|
|
3.750 |
% |
|
|
1/15/31 |
|
|
|
1,600,000 |
|
|
|
1,299,278 |
|
| Total Paper & Forest
Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,691,126 |
|
| Total Materials |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,904,494 |
|
See Notes to Financial
Statements.
|
|
|
|
|
| 20 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Real Estate — 1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Health Care REITs —
0.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diversified Healthcare Trust, Senior Notes |
|
|
4.375 |
% |
|
|
3/1/31 |
|
|
|
120,000 |
|
|
$ |
82,703 |
|
| Hotel & Resort REITs —
0.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service Properties Trust, Senior Notes |
|
|
5.500 |
% |
|
|
12/15/27 |
|
|
|
500,000 |
|
|
|
422,631 |
|
| Service Properties Trust, Senior Notes |
|
|
4.375 |
% |
|
|
2/15/30 |
|
|
|
400,000 |
|
|
|
276,342 |
|
| Total Hotel & Resort
REITs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
698,973 |
|
| Real Estate Management &
Development — 0.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| China Aoyuan Group Ltd., Senior Secured Notes |
|
|
7.950 |
% |
|
|
2/19/24 |
|
|
|
300,000 |
|
|
|
6,750 |
*(b)(i) |
| China Aoyuan Group Ltd., Senior Secured Notes |
|
|
7.950 |
% |
|
|
6/21/24 |
|
|
|
500,000 |
|
|
|
8,750 |
*(b)(i) |
| Country Garden Holdings Co. Ltd., Senior Secured Notes |
|
|
8.000 |
% |
|
|
1/27/24 |
|
|
|
750,000 |
|
|
|
41,723 |
*(b)(i) |
| Cushman & Wakefield US Borrower LLC, Senior Secured Notes |
|
|
8.875 |
% |
|
|
9/1/31 |
|
|
|
210,000 |
|
|
|
199,299 |
(a) |
| Heimstaden AB, Senior Notes |
|
|
4.250 |
% |
|
|
3/9/26 |
|
|
|
400,000 |
EUR |
|
|
181,481 |
(b) |
| Samhallsbyggnadsbolaget i Norden AB, Senior Notes |
|
|
2.375 |
% |
|
|
9/4/26 |
|
|
|
1,100,000 |
EUR |
|
|
843,647 |
(b) |
| Total Real Estate
Management & Development |
|
|
|
|
|
|
|
|
|
|
|
1,281,650 |
|
| Total Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,063,326 |
|
| Utilities — 1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Electric Utilities —
1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| FirstEnergy Corp., Senior Notes |
|
|
7.375 |
% |
|
|
11/15/31 |
|
|
|
1,330,000 |
|
|
|
1,435,800 |
(c) |
| Vistra Operations Co. LLC, Senior Notes |
|
|
7.750 |
% |
|
|
10/15/31 |
|
|
|
460,000 |
|
|
|
444,555 |
(a) |
| Total Electric Utilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,880,355 |
|
| Gas Utilities —
0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Suburban Propane Partners LP/Suburban Energy Finance Corp., Senior Notes |
|
|
5.875 |
% |
|
|
3/1/27 |
|
|
|
860,000 |
|
|
|
815,723 |
|
| Independent Power and Renewable
Electricity Producers — 0.3% |
|
|
|
|
|
|
|
|
|
| Minejesa Capital BV, Senior Secured Notes |
|
|
4.625 |
% |
|
|
8/10/30 |
|
|
|
650,000 |
|
|
|
582,147 |
(a) |
| Total Utilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,278,225 |
|
| Total Corporate Bonds & Notes (Cost —
$229,480,347) |
|
|
|
|
|
|
|
|
|
|
|
220,532,347 |
|
| Sovereign Bonds — 12.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Angola — 0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Angolan Government International Bond, Senior Notes |
|
|
8.000 |
% |
|
|
11/26/29 |
|
|
|
1,400,000 |
|
|
|
1,120,343 |
(a) |
| Argentina — 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Argentine Republic Government International Bond, Senior Notes, Step bond (3.625% to
7/9/24 then 4.125%) |
|
|
3.625 |
% |
|
|
7/9/35 |
|
|
|
52,555 |
|
|
|
13,118 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
21 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Argentina —
continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provincia de Cordoba, Senior Notes |
|
|
6.875 |
% |
|
|
12/10/25 |
|
|
|
500,004 |
|
|
$ |
417,503 |
(b) |
| Provincia de Cordoba, Senior Notes |
|
|
6.990 |
% |
|
|
6/1/27 |
|
|
|
680,000 |
|
|
|
513,400 |
(a) |
| Total Argentina |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
944,021 |
|
| Colombia — 0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Colombia Government International Bond, Senior Notes |
|
|
3.250 |
% |
|
|
4/22/32 |
|
|
|
1,500,000 |
|
|
|
1,078,014 |
|
| Dominican Republic —
0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dominican Republic International Bond, Senior Notes |
|
|
4.875 |
% |
|
|
9/23/32 |
|
|
|
610,000 |
|
|
|
495,219 |
(a) |
| Indonesia — 1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Indonesia Government International Bond, Senior Notes |
|
|
3.850 |
% |
|
|
7/18/27 |
|
|
|
600,000 |
|
|
|
566,730 |
(a) |
| Indonesia Government International Bond, Senior Notes |
|
|
3.500 |
% |
|
|
1/11/28 |
|
|
|
3,110,000 |
|
|
|
2,869,292 |
(c) |
| Total Indonesia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,436,022 |
|
| Jordan — 0.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jordan Government International Bond, Senior Notes |
|
|
7.750 |
% |
|
|
1/15/28 |
|
|
|
250,000 |
|
|
|
238,750 |
(a) |
| Mexico — 3.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mexican Bonos, Bonds |
|
|
7.750 |
% |
|
|
5/29/31 |
|
|
|
101,520,000 |
MXN |
|
|
4,908,987 |
|
| Mexico Government International Bond, Senior Notes |
|
|
3.750 |
% |
|
|
1/11/28 |
|
|
|
600,000 |
|
|
|
554,312 |
|
| Mexico Government International Bond, Senior Notes |
|
|
2.659 |
% |
|
|
5/24/31 |
|
|
|
1,530,000 |
|
|
|
1,195,603 |
|
| Total Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,658,902 |
|
| Panama — 1.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Panama Government International Bond, Senior Notes |
|
|
4.500 |
% |
|
|
5/15/47 |
|
|
|
4,060,000 |
|
|
|
2,651,184 |
|
| Peru — 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Peruvian Government International Bond, Senior Notes |
|
|
2.783 |
% |
|
|
1/23/31 |
|
|
|
2,460,000 |
|
|
|
1,975,482 |
(c) |
| Poland — 1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Republic of Poland Government Bond |
|
|
1.250 |
% |
|
|
10/25/30 |
|
|
|
11,800,000 |
PLN |
|
|
2,144,392 |
|
| Romania — 0.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Romanian Government International Bond, Senior Notes |
|
|
3.875 |
% |
|
|
10/29/35 |
|
|
|
1,500,000 |
EUR |
|
|
1,246,429 |
(b) |
| Total Sovereign Bonds (Cost —
$22,474,543) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,988,758 |
|
See Notes to Financial
Statements.
|
|
|
|
|
| 22 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Senior Loans — 4.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consumer Discretionary — 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diversified Consumer Services —
0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WW International Inc., Initial Term Loan (1 mo. Term SOFR + 3.614%) |
|
|
8.939 |
% |
|
|
4/13/28 |
|
|
|
1,250,000 |
|
|
$ |
893,750 |
(e)(j)(k) |
| Hotels, Restaurants & Leisure
— 0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Scientific Games International Inc., Initial Term Loan B (1 mo. Term SOFR +
3.100%) |
|
|
8.435 |
% |
|
|
4/13/29 |
|
|
|
992,462 |
|
|
|
992,775 |
(e)(j)(k) |
| Total Consumer Discretionary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,886,525 |
|
| Financials — 1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Services —
1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Citadel Securities LP, Term Loan B (1 mo. Term SOFR + 2.614%) |
|
|
7.939 |
% |
|
|
7/29/30 |
|
|
|
2,232,953 |
|
|
|
2,227,527 |
(e)(j)(k) |
| Industrials — 1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Passenger Airlines —
1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Delta Air Lines Inc., Initial Term Loan (3 mo. Term SOFR + 3.750%) |
|
|
9.166 |
% |
|
|
10/20/27 |
|
|
|
840,000 |
|
|
|
861,659 |
(e)(j)(k) |
| Mileage Plus Holdings LLC, Initial Term Loan (3 mo. Term SOFR + 5.400%) |
|
|
10.798 |
% |
|
|
6/21/27 |
|
|
|
1,312,500 |
|
|
|
1,354,776 |
(e)(j)(k) |
| Total Industrials |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,216,435 |
|
| Materials — 0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Paper & Forest Products —
0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asplundh Tree Expert LLC, 2021 Refinancing Term Loan (1 mo. Term SOFR + 1.850%) |
|
|
7.174 |
% |
|
|
9/7/27 |
|
|
|
992,328 |
|
|
|
994,501 |
(e)(j)(k) |
| Total Senior Loans (Cost — $7,291,392) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,324,988 |
|
| U.S. Government & Agency Obligations — 1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Government Obligations —
1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury Notes |
|
|
2.750 |
% |
|
|
11/15/23 |
|
|
|
550,000 |
|
|
|
549,443 |
|
| U.S. Treasury Notes |
|
|
3.250 |
% |
|
|
8/31/24 |
|
|
|
2,500,000 |
|
|
|
2,454,493 |
|
| U.S. Treasury Notes |
|
|
2.750 |
% |
|
|
5/31/29 |
|
|
|
500,000 |
|
|
|
447,764 |
|
| Total U.S. Government & Agency Obligations
(Cost — $3,460,173) |
|
|
|
|
|
|
|
3,451,700 |
|
| Convertible Bonds & Notes — 1.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Communication Services — 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Media — 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DISH Network Corp., Senior Notes |
|
|
2.375 |
% |
|
|
3/15/24 |
|
|
|
260,000 |
|
|
|
249,600 |
(c) |
| DISH Network Corp., Senior Notes |
|
|
0.000 |
% |
|
|
12/15/25 |
|
|
|
2,310,000 |
|
|
|
1,420,695 |
(c) |
| DISH Network Corp., Senior Notes |
|
|
3.375 |
% |
|
|
8/15/26 |
|
|
|
560,000 |
|
|
|
289,800 |
|
| Total Communication Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,960,095 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
23 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
(Percentages shown based on Fund net assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Rate |
|
|
Maturity
Date |
|
|
Face
Amount† |
|
|
Value |
|
| Industrials — 0.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Passenger Airlines —
0.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Spirit Airlines Inc., Senior Notes |
|
|
1.000 |
% |
|
|
5/15/26 |
|
|
|
1,270,000 |
|
|
$ |
744,055 |
(c) |
| Total Convertible Bonds & Notes (Cost —
$3,570,854) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,704,150 |
|
| Collateralized Mortgage Obligations (l) — 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| JPMorgan Mortgage Trust, 2005-A5 1A2 |
|
|
4.392 |
% |
|
|
8/25/35 |
|
|
|
32,898 |
|
|
|
30,605 |
(e) |
| Morgan Stanley Capital Trust, 2016-BNK2 B |
|
|
3.485 |
% |
|
|
11/15/49 |
|
|
|
610,000 |
|
|
|
449,915 |
|
| UBS Commercial Mortgage Trust, 2018-C15 C |
|
|
5.151 |
% |
|
|
12/15/51 |
|
|
|
405,000 |
|
|
|
317,538 |
(e) |
| Total Collateralized Mortgage Obligations (Cost —
$802,507) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
798,058 |
|
| Total Investments before Short-Term Investments (Cost —
$267,079,816) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
256,800,001 |
|
| Short-Term Investments — 2.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury Bills — 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury Bills (Cost — $1,999,707) |
|
|
2.691 |
% |
|
|
11/2/23 |
|
|
|
2,000,000 |
|
|
|
1,999,709 |
(m) |
|
|
|
|
|
| |
|
|
|
|
|
|
|
Shares |
|
|
|
|
| Money Market Funds — 1.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Western Asset Premier Institutional Government Reserves, Premium Shares
(Cost —
$2,475,438) |
|
|
5.291 |
% |
|
|
|
|
|
|
2,475,438 |
|
|
|
2,475,438 |
(n)(o) |
| Total Short-Term Investments (Cost —
$4,475,145) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,475,147 |
|
| Total Investments — 146.6% (Cost —
$271,554,961) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
261,275,148 |
|
| Liabilities in Excess of Other Assets — (46.6)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(83,062,072 |
) |
| Total Net Assets — 100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
178,213,076 |
|
See Notes to Financial
Statements.
|
|
|
|
|
| 24 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
| † |
Face amount denominated in U.S. dollars, unless otherwise noted. |
| †† |
Represents less than 0.1%. |
| * |
Non-income producing security. |
| (a) |
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in
transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors. |
| (b) |
Security is exempt from registration under Regulation S of the Securities Act of 1933. Regulation S applies to securities
offerings that are made outside of the United States and do not involve direct selling efforts in the United States. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors. |
| (c) |
All or a portion of this security is pledged as collateral pursuant to the loan agreement (Note 5). |
| (d) |
Security has no maturity date. The date shown represents the next call date. |
| (e) |
Variable rate security. Interest rate disclosed is as of the most recent information available. Certain variable rate
securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.
|
| (f) |
All or a portion of this security is held by the counterparty as collateral for open reverse repurchase agreements.
|
| (g) |
Security is valued in good faith in accordance with procedures approved by the Board of Directors (Note 1).
|
| (h) |
Payment-in-kind security for which the
issuer has the option at each interest payment date of making interest payments in cash or additional securities. |
| (i) |
The coupon payment on this security is currently in default as of October 31, 2023. |
| (j) |
Interest rates disclosed represent the effective rates on senior loans. Ranges in interest rates are attributable to
multiple contracts under the same loan. |
| (k) |
Senior loans may be considered restricted in that the Fund ordinarily is contractually obligated to receive approval from
the agent bank and/or borrower prior to the disposition of a senior loan. |
| (l) |
Collateralized mortgage obligations are secured by an underlying pool of mortgages or mortgage pass-through certificates
that are structured to direct payments on underlying collateral to different series or classes of the obligations. The interest rate may change positively or inversely in relation to one or more interest rates, financial indices or other financial
indicators and may be subject to an upper and/or lower limit. |
| (m) |
Rate shown represents yield-to-maturity.
|
| (n) |
Rate shown is one-day yield as of the end of the reporting period.
|
| (o) |
In this instance, as defined in the Investment Company Act of 1940, an “Affiliated Company” represents Fund
ownership of at least 5% of the outstanding voting securities of an issuer, or a company which is under common ownership or control with the Fund. At October 31, 2023, the total market value of investments in Affiliated Companies was $2,475,438
and the cost was $2,475,438 (Note 8). |
See Notes to Financial Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
25 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
|
| Abbreviation(s) used in this
schedule: |
|
|
| EUR |
|
— Euro |
|
|
| GBP |
|
— British Pound |
|
|
| ICE |
|
— Intercontinental Exchange |
|
|
| JSC |
|
— Joint Stock Company |
|
|
| LIBOR |
|
— London Interbank Offered Rate |
|
|
| MXN |
|
— Mexican Peso |
|
|
| PIK |
|
— Payment-In-Kind |
|
|
| PLN |
|
— Polish Zloty |
|
|
| SOFR |
|
— Secured Overnight Financing Rate |
|
|
| SONIA |
|
— Sterling Overnight Index Average |
|
|
| USD |
|
— United States Dollar |
At October 31, 2023, the Fund had the following open reverse repurchase agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Counterparty |
|
Rate |
|
|
Effective
Date |
|
|
Maturity
Date |
|
Face Amount
of Reverse Repurchase
Agreements |
|
|
Asset Class of Collateral* |
|
|
Collateral
Value** |
|
| Goldman Sachs Group Inc. |
|
|
5.720 |
% |
|
|
10/31/2023 |
|
|
12/1/2023 |
|
$ |
2,437,073 |
|
|
|
Corporate Bonds & Notes
Cash |
|
|
$
|
2,588,568
50,675 |
|
| Goldman Sachs Group Inc. |
|
|
6.000 |
% |
|
|
10/20/2023 |
|
|
TBD*** |
|
|
1,554,588 |
|
|
|
Corporate Bonds & Notes
Cash |
|
|
|
2,029,365
32,325 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
$ |
3,991,661 |
|
|
|
|
|
|
$ |
4,700,933 |
|
| * |
Refer to the Schedule of Investments for positions held at the counterparty as collateral for reverse repurchase
agreements. |
| ** |
Including accrued interest. |
| *** |
TBD — To Be Determined; These reverse repurchase agreements have no maturity dates because they are renewed daily and
can be terminated by either the Fund or the counterparty in accordance with the terms of the agreements. The rates for these agreements are variable. The rate disclosed is the rate as of October 31, 2023. |
At October 31, 2023, the Fund had the following open forward foreign currency contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Currency
Purchased |
|
|
Currency
Sold |
|
|
Counterparty |
|
Settlement
Date |
|
|
Unrealized
Appreciation
(Depreciation) |
|
| CAD |
|
|
2,940,570 |
|
|
USD |
|
|
2,158,628 |
|
|
Bank of America N.A. |
|
|
1/19/24 |
|
|
$ |
(35,102) |
|
| EUR |
|
|
21,020,058 |
|
|
USD |
|
|
22,285,491 |
|
|
BNP Paribas SA |
|
|
1/19/24 |
|
|
|
41,177 |
|
| GBP |
|
|
1,554,343 |
|
|
USD |
|
|
1,899,759 |
|
|
BNP Paribas SA |
|
|
1/19/24 |
|
|
|
(9,284) |
|
| USD |
|
|
1,155,820 |
|
|
EUR |
|
|
1,083,387 |
|
|
Morgan Stanley & Co. Inc. |
|
|
1/19/24 |
|
|
|
5,090 |
|
| Net unrealized appreciation on open forward foreign currency contracts |
|
|
$ |
1,881 |
|
See Notes to Financial
Statements.
|
|
|
|
|
| 26 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
|
| Abbreviation(s) used in this
table: |
|
|
| CAD |
|
— Canadian Dollar |
|
|
| EUR |
|
— Euro |
|
|
| GBP |
|
— British Pound |
|
|
| USD |
|
— United States Dollar |
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
27 |
|
Schedule of investments (cont’d)
October 31, 2023
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
|
|
|
| Summary of Investments by Country* (unaudited) |
|
|
|
| United States |
|
|
53.9 |
% |
| United Kingdom |
|
|
8.2 |
|
| Mexico |
|
|
5.0 |
|
| Italy |
|
|
3.3 |
|
| Ireland |
|
|
2.0 |
|
| Colombia |
|
|
1.9 |
|
| Peru |
|
|
1.9 |
|
| Brazil |
|
|
1.8 |
|
| Switzerland |
|
|
1.8 |
|
| France |
|
|
1.7 |
|
| Israel |
|
|
1.6 |
|
| Indonesia |
|
|
1.5 |
|
| Cayman Islands |
|
|
1.5 |
|
| Spain |
|
|
1.4 |
|
| Macau |
|
|
1.4 |
|
| Luxembourg |
|
|
1.2 |
|
| Germany |
|
|
1.0 |
|
| Panama |
|
|
1.0 |
|
| Belgium |
|
|
0.9 |
|
| Canada |
|
|
0.8 |
|
| Poland |
|
|
0.8 |
|
| Kazakhstan |
|
|
0.6 |
|
| Argentina |
|
|
0.5 |
|
| Romania |
|
|
0.5 |
|
| Angola |
|
|
0.4 |
|
| Sweden |
|
|
0.4 |
|
| South Africa |
|
|
0.4 |
|
| Guatemala |
|
|
0.3 |
|
| Dominican Republic |
|
|
0.2 |
|
| Zambia |
|
|
0.2 |
|
| Netherlands |
|
|
0.1 |
|
| Jordan |
|
|
0.1 |
|
| China |
|
|
0.0 |
‡ |
| Short-Term Investments |
|
|
1.7 |
|
| |
|
|
100.0 |
% |
| * |
As a percentage of total investments. Please note that the Fund holdings are as of October 31, 2023 and are subject
to change. |
| ‡ |
Represents less than 0.1%. |
See Notes to Financial Statements.
|
|
|
|
|
| 28 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Statement of assets and liabilities
October 31, 2023
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
| Investments in unaffiliated securities, at value (Cost — $269,079,523) |
|
$ |
258,799,710 |
|
| Investments in affiliated securities, at value (Cost — $2,475,438) |
|
|
2,475,438 |
|
| Foreign currency, at value (Cost — $662,254) |
|
|
612,337 |
|
| Cash |
|
|
45,729 |
|
| Interest receivable |
|
|
3,830,103 |
|
| Receivable for securities sold |
|
|
453,163 |
|
| Deposits with brokers for open reverse repurchase agreements |
|
|
83,000 |
|
| Unrealized appreciation on forward foreign currency contracts |
|
|
46,267 |
|
| Dividends receivable from affiliated investments |
|
|
11,292 |
|
| Prepaid expenses |
|
|
1,533 |
|
| Total Assets |
|
|
266,358,572 |
|
|
|
| Liabilities: |
|
|
|
|
| Loan payable (Note 5) |
|
|
81,000,000 |
|
| Payable for open reverse repurchase agreements (Note 3) |
|
|
3,991,661 |
|
| Distributions payable |
|
|
1,524,815 |
|
| Payable for securities purchased |
|
|
780,413 |
|
| Interest expense payable |
|
|
457,209 |
|
| Investment management fee payable |
|
|
180,997 |
|
| Unrealized depreciation on forward foreign currency contracts |
|
|
44,386 |
|
| Directors’ fees payable |
|
|
3,642 |
|
| Accrued expenses |
|
|
162,373 |
|
| Total Liabilities |
|
|
88,145,496 |
|
| Total Net Assets |
|
$ |
178,213,076 |
|
|
|
| Net Assets: |
|
|
|
|
| Par value ($0.001 par value; 14,949,168 shares issued and outstanding; 100,000,000 shares
authorized) |
|
|
$14,949 |
|
| Paid-in capital in excess of par value |
|
|
253,513,089 |
|
| Total distributable earnings (loss) |
|
|
(75,314,962) |
|
| Total Net Assets |
|
|
$178,213,076 |
|
|
|
| Shares Outstanding |
|
|
14,949,168 |
|
|
|
| Net Asset Value |
|
|
$11.92 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
29 |
|
Statement of operations
For the Year Ended October 31, 2023
|
|
|
|
|
|
|
| Investment Income: |
|
|
|
|
| Interest |
|
$ |
20,940,856 |
|
| Dividends from unaffiliated investments |
|
|
41,428 |
|
| Dividends from affiliated investments |
|
|
74,278 |
|
| Less: Foreign taxes withheld |
|
|
(17,302) |
|
| Total Investment
Income |
|
|
21,039,260 |
|
|
|
| Expenses: |
|
|
|
|
| Interest expense (Notes 3 and 5) |
|
|
5,049,866 |
|
| Investment management fee (Note 2) |
|
|
2,282,909 |
|
| Legal fees |
|
|
147,770 |
|
| Transfer agent fees |
|
|
92,602 |
|
| Directors’ fees |
|
|
62,192 |
|
| Audit and tax fees |
|
|
54,837 |
|
| Fund accounting fees |
|
|
45,538 |
|
| Shareholder reports |
|
|
13,842 |
|
| Commitment fees (Note 5) |
|
|
12,962 |
|
| Stock exchange listing fees |
|
|
12,506 |
|
| Custody fees |
|
|
4,922 |
|
| Insurance |
|
|
2,010 |
|
| Miscellaneous expenses |
|
|
9,651 |
|
| Total Expenses |
|
|
7,791,607 |
|
| Less: Fee waivers and/or expense reimbursements (Note 2) |
|
|
(1,427) |
|
| Net Expenses |
|
|
7,790,180 |
|
| Net Investment Income |
|
|
13,249,080 |
|
|
|
| Realized and Unrealized Gain (Loss) on Investments, Forward Foreign Currency Contracts and Foreign Currency Transactions (Notes 1, 3 and 4): |
|
|
|
|
| Net Realized Gain (Loss) From: |
|
|
|
|
| Investment transactions in unaffiliated securities |
|
|
(14,820,845) |
|
| Forward foreign currency contracts |
|
|
404,543 |
|
| Foreign currency transactions |
|
|
61,727 |
|
| Net Realized Loss |
|
|
(14,354,575) |
|
| Change in Net Unrealized Appreciation (Depreciation) From: |
|
|
|
|
| Investments in unaffiliated securities |
|
|
8,354,011 |
† |
| Forward foreign currency contracts |
|
|
368,119 |
|
| Foreign currencies |
|
|
(81,276) |
|
| Change in Net Unrealized Appreciation
(Depreciation) |
|
|
8,640,854 |
|
| Net Loss on Investments, Forward Foreign Currency Contracts and Foreign Currency Transactions |
|
|
(5,713,721) |
|
| Increase in Net Assets From Operations |
|
$ |
7,535,359 |
|
| † |
Net of change in accrued foreign capital gains tax of $(894). |
See Notes to Financial Statements.
|
|
|
|
|
| 30 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Statements of changes in net assets
|
|
|
|
|
|
|
|
|
| For the Years Ended October 31, |
|
2023 |
|
|
2022 |
|
|
|
|
| Operations: |
|
|
|
|
|
|
|
|
| Net investment income |
|
$ |
13,249,080 |
|
|
$ |
15,483,812 |
|
| Net realized loss |
|
|
(14,354,575) |
|
|
|
(24,531,760) |
|
| Change in net unrealized appreciation (depreciation) |
|
|
8,640,854 |
|
|
|
(53,968,742) |
|
| Increase (Decrease) in Net Assets From
Operations |
|
|
7,535,359 |
|
|
|
(63,016,690) |
|
|
|
|
| Distributions to Shareholders From (Note 1): |
|
|
|
|
|
|
|
|
| Total distributable earnings |
|
|
(12,694,110) |
|
|
|
(8,289,099) |
|
| Return of capital |
|
|
(5,454,180) |
|
|
|
(9,824,327) |
|
| Decrease in Net Assets From Distributions
to Shareholders |
|
|
(18,148,290) |
|
|
|
(18,113,426) |
|
|
|
|
| Fund Share Transactions: |
|
|
|
|
|
|
|
|
| Reinvestment of distributions (0 and 8,259 shares issued, respectively) |
|
|
— |
|
|
|
125,064 |
|
| Increase in Net Assets From Fund Share
Transactions |
|
|
— |
|
|
|
125,064 |
|
| Decrease in Net
Assets |
|
|
(10,612,931) |
|
|
|
(81,005,052) |
|
|
|
|
| Net Assets: |
|
|
|
|
|
|
|
|
| Beginning of year |
|
|
188,826,007 |
|
|
|
269,831,059 |
|
| End of year |
|
$ |
178,213,076 |
|
|
$ |
188,826,007 |
|
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
31 |
|
Statement of cash flows
For the Year Ended October 31, 2023
|
|
|
|
|
|
|
| Increase (Decrease) in Cash: |
|
|
|
|
| Cash Flows from Operating Activities: |
|
|
|
|
| Net increase in net assets resulting from operations |
|
$ |
7,535,359 |
|
| Adjustments to reconcile net increase in net assets resulting from operations to net cash
provided (used) by operating activities: |
|
|
|
|
| Purchases of portfolio securities |
|
|
(101,412,780) |
|
| Sales of portfolio securities |
|
|
129,163,425 |
|
| Net purchases, sales and maturities of short-term investments |
|
|
(4,528,678) |
|
| Net amortization of premium (accretion of discount) |
|
|
(4,631,792) |
|
| Decrease in receivable for securities sold |
|
|
5,470,053 |
|
| Decrease in interest receivable |
|
|
340,427 |
|
| Decrease in prepaid expenses |
|
|
127 |
|
| Increase in dividends receivable from affiliated investments |
|
|
(7,947) |
|
| Decrease in payable for securities purchased |
|
|
(5,014,609) |
|
| Decrease in investment management fee payable |
|
|
(17,428) |
|
| Increase in Directors’ fees payable |
|
|
254 |
|
| Increase in interest expense payable |
|
|
200,514 |
|
| Increase in accrued expenses |
|
|
38,446 |
|
| Net realized loss on investments |
|
|
14,820,845 |
|
| Change in net unrealized appreciation (depreciation) of investments and forward foreign
currency contracts |
|
|
(8,722,130) |
|
| Net Cash Provided in Operating
Activities* |
|
|
33,234,086 |
|
|
|
| Cash Flows from Financing Activities: |
|
|
|
|
| Distributions paid on common stock (net of distributions payable) |
|
|
(18,133,341) |
|
| Repayment of loan facility borrowings |
|
|
(2,000,000) |
|
| Decrease in payable for open reverse repurchase agreements |
|
|
(14,401,676) |
|
| Decrease in payable for closed reverse repurchase agreements |
|
|
(2,002,597) |
|
| Net Cash Used by Financing
Activities |
|
|
(36,537,614) |
|
| Net Decrease in Cash and Restricted Cash |
|
|
(3,303,528) |
|
| Cash and restricted cash at beginning of year |
|
|
4,044,594 |
|
| Cash and restricted cash at end of year |
|
$ |
741,066 |
|
| * |
Included in operating expenses is $4,861,601 paid for interest and commitment fees on borrowings. |
| |
The following table provides a reconciliation of cash (including foreign currency) and restricted cash reported within the
Statement of Assets and Liabilities that sums to the total of such amounts shown on the Statement of Cash Flows. |
|
|
|
|
|
| |
|
October 31, 2023 |
|
| Cash |
|
$ |
658,066 |
|
| Restricted cash |
|
|
83,000 |
|
| Total cash and restricted cash shown in the Statement of Cash Flows |
|
$ |
741,066 |
|
Restricted cash consists of cash that has been segregated to cover the Fund’s collateral or margin obligations for reverse
repurchase agreements. It is separately reported on the Statement of Assets and Liabilities as Deposits with brokers.
See Notes to Financial Statements.
|
|
|
|
|
| 32 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For a share of capital stock outstanding throughout each year ended October 31: |
|
| |
|
20231 |
|
|
20221 |
|
|
20211 |
|
|
20201 |
|
|
20191 |
|
|
|
|
|
|
|
| Net asset value, beginning of year |
|
|
$12.63 |
|
|
|
$18.06 |
|
|
|
$17.91 |
|
|
|
$18.41 |
|
|
|
$17.39 |
|
|
|
|
|
|
|
| Income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net investment income |
|
|
0.89 |
|
|
|
1.04 |
|
|
|
1.07 |
|
|
|
1.03 |
|
|
|
0.99 |
|
| Net realized and unrealized gain (loss) |
|
|
(0.39) |
|
|
|
(5.26) |
|
|
|
0.29 |
|
|
|
(0.32) |
|
|
|
1.24 |
|
| Total income (loss) from
operations |
|
|
0.50 |
|
|
|
(4.22) |
|
|
|
1.36 |
|
|
|
0.71 |
|
|
|
2.23 |
|
|
|
|
|
|
|
| Less distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net investment income |
|
|
(0.85) |
|
|
|
(0.55) |
|
|
|
(0.94) |
|
|
|
(1.01) |
|
|
|
(0.69) |
|
| Return of capital |
|
|
(0.36) |
|
|
|
(0.66) |
|
|
|
(0.27) |
|
|
|
(0.20) |
|
|
|
(0.52) |
|
| Total
distributions |
|
|
(1.21) |
|
|
|
(1.21) |
|
|
|
(1.21) |
|
|
|
(1.21) |
|
|
|
(1.21) |
|
| Anti-dilutive impact of repurchase plan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.00 |
2,3 |
|
|
— |
|
|
|
|
|
|
|
| Net asset value, end of year |
|
|
$11.92 |
|
|
|
$12.63 |
|
|
|
$18.06 |
|
|
|
$17.91 |
|
|
|
$18.41 |
|
|
|
|
|
|
|
| Market price, end of year |
|
|
$11.36 |
|
|
|
$11.70 |
|
|
|
$18.16 |
|
|
|
$16.53 |
|
|
|
$17.37 |
|
| Total return, based on NAV4,5 |
|
|
3.65 |
% |
|
|
(24.14) |
% |
|
|
7.62 |
% |
|
|
4.27 |
% |
|
|
13.30 |
% |
| Total return, based on Market Price6 |
|
|
6.98 |
% |
|
|
(29.96) |
% |
|
|
17.43 |
% |
|
|
2.25 |
% |
|
|
22.89 |
% |
|
|
|
|
|
|
| Net assets, end of year (millions) |
|
|
$178 |
|
|
|
$189 |
|
|
|
$270 |
|
|
|
$268 |
|
|
|
$275 |
|
|
|
|
|
|
|
| Ratios to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross expenses |
|
|
4.01 |
% |
|
|
2.12 |
% |
|
|
1.53 |
% |
|
|
1.94 |
% |
|
|
2.33 |
% |
| Net expenses7 |
|
|
4.01 |
8 |
|
|
2.12 |
8 |
|
|
1.53 |
8 |
|
|
1.93 |
8 |
|
|
2.33 |
|
| Net investment income |
|
|
6.82 |
|
|
|
6.80 |
|
|
|
5.73 |
|
|
|
5.79 |
|
|
|
5.55 |
|
|
|
|
|
|
|
| Portfolio turnover rate |
|
|
37 |
% |
|
|
81 |
% |
|
|
35 |
% |
|
|
50 |
% |
|
|
52 |
% |
|
|
|
|
|
|
| Supplemental data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan Outstanding, End of Year (000s) |
|
|
$81,000 |
|
|
|
$83,000 |
|
|
|
$90,000 |
|
|
|
$90,000 |
|
|
|
$88,000 |
|
| Asset Coverage Ratio for Loan Outstanding9
|
|
|
320 |
% |
|
|
328 |
% |
|
|
400 |
% |
|
|
397 |
% |
|
|
413 |
% |
| Asset Coverage, per $1,000 Principal Amount of Loan Outstanding9 |
|
|
$3,200 |
|
|
|
$3,275 |
|
|
|
$3,998 |
|
|
|
$3,974 |
|
|
|
$4,126 |
|
| Weighted Average Loan (000s) |
|
|
$81,477 |
|
|
|
$86,510 |
|
|
|
$90,000 |
|
|
|
$88,716 |
|
|
|
$88,000 |
|
| Weighted Average Interest Rate on Loan |
|
|
5.56 |
% |
|
|
1.69 |
% |
|
|
0.76 |
% |
|
|
1.75 |
% |
|
|
3.08 |
% |
See Notes to Financial
Statements.
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
33 |
|
Financial highlights (cont’d)
| 1 |
Per share amounts have been calculated using the average shares method. |
| 2 |
Amount represents less than $0.005 or greater than $(0.005) per share. |
| 3 |
The repurchase plan was completed at an average repurchase price of $12.30 for 2,114 shares and $26,011 for the year ended
October 31, 2020. |
| 4 |
Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the
absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. |
| 5 |
The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future
results. |
| 6 |
The total return calculation assumes that distributions are reinvested in accordance with the Fund’s dividend
reinvestment plan. Past performance is no guarantee of future results. |
| 7 |
The manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee
payable in connection with any investment in an affiliated money market fund. |
| 8 |
Reflects fee waivers and/or expense reimbursements. |
| 9 |
Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the
end of the period. |
See Notes to
Financial Statements.
|
|
|
|
|
| 34 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Notes to financial statements
1. Organization and significant accounting policies
Western Asset Global Corporate Defined Opportunity Fund Inc. (the “Fund”) was incorporated in Maryland on September 17, 2009 and is registered as a non-diversified, limited-term, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s
primary investment objective is to provide current income and then to liquidate and distribute substantially all of the Fund’s net assets to stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek
capital appreciation. The Fund seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its managed assets in a portfolio of U.S. and foreign corporate fixed-income securities of varying maturities.
The Fund follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946,
Financial Services — Investment Companies (“ASC 946”). The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles
(“GAAP”), including, but not limited to, ASC 946. Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the
economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.
(a) Investment valuation. The valuations for fixed income securities (which
may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party
pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services typically use inputs that are observable such as issuer details, interest
rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset value per share of each
fund on the day of valuation. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. When the Fund holds securities or
other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if
the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value
has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the
security is
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
35 |
|
Notes to financial statements
(cont’d)
principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the
Fund’s Board of Directors.
Pursuant to policies adopted by the Board of Directors, the Fund’s manager has been designated as the valuation designee and is
responsible for the oversight of the daily valuation process. The Fund’s manager is assisted by the Global Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee is responsible for making fair value
determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Fund’s manager and the Board of Directors. When determining the reliability of third party pricing information for investments owned by the
Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies
include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental
investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s
financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information
regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the
existence of a shelf registration for restricted securities.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of
Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of
Directors quarterly.
The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the
type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount
estimated future cash flows to present value.
|
|
|
|
|
| 36 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used
to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
| • |
|
Level 1 — unadjusted quoted prices in active markets for identical investments |
| • |
|
Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates,
prepayment speeds, credit risk, etc.) |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair
value of investments) |
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing
in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
| Description |
|
Quoted Prices
(Level 1) |
|
|
Other Significant
Observable Inputs (Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
| Long-Term Investments†: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Bonds & Notes |
|
|
— |
|
|
$ |
220,532,347 |
|
|
|
— |
|
|
$ |
220,532,347 |
|
| Sovereign Bonds |
|
|
— |
|
|
|
21,988,758 |
|
|
|
— |
|
|
|
21,988,758 |
|
| Senior Loans |
|
|
— |
|
|
|
7,324,988 |
|
|
|
— |
|
|
|
7,324,988 |
|
| U.S. Government & Agency Obligations |
|
|
— |
|
|
|
3,451,700 |
|
|
|
— |
|
|
|
3,451,700 |
|
| Convertible Bonds & Notes |
|
|
— |
|
|
|
2,704,150 |
|
|
|
— |
|
|
|
2,704,150 |
|
| Collateralized Mortgage Obligations |
|
|
— |
|
|
|
798,058 |
|
|
|
— |
|
|
|
798,058 |
|
| Total Long-Term Investments |
|
|
— |
|
|
|
256,800,001 |
|
|
|
— |
|
|
|
256,800,001 |
|
| Short-Term Investments†: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury Bills |
|
|
— |
|
|
|
1,999,709 |
|
|
|
— |
|
|
|
1,999,709 |
|
| Money Market Funds |
|
$ |
2,475,438 |
|
|
|
— |
|
|
|
— |
|
|
|
2,475,438 |
|
| Total Short-Term Investments |
|
|
2,475,438 |
|
|
|
1,999,709 |
|
|
|
— |
|
|
|
4,475,147 |
|
| Total Investments |
|
$ |
2,475,438 |
|
|
$ |
258,799,710 |
|
|
|
— |
|
|
$ |
261,275,148 |
|
| Other Financial Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Forward Foreign Currency Contracts†† |
|
|
— |
|
|
$ |
46,267 |
|
|
|
— |
|
|
$ |
46,267 |
|
| Total |
|
$ |
2,475,438 |
|
|
$ |
258,845,977 |
|
|
|
— |
|
|
$ |
261,321,415 |
|
|
| LIABILITIES |
|
| Description |
|
Quoted Prices
(Level 1) |
|
|
Other Significant
Observable Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
| Other Financial Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Forward Foreign Currency Contracts†† |
|
|
— |
|
|
$ |
44,386 |
|
|
|
— |
|
|
$ |
44,386 |
|
| † |
See Schedule of Investments for additional detailed categorizations. |
| †† |
Reflects the unrealized appreciation (depreciation) of the instruments. |
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
37 |
|
Notes to financial statements
(cont’d)
(b) Forward foreign currency contracts. The Fund enters into a forward foreign currency contract to hedge against foreign currency exchange rate risk on its non-U.S. dollar denominated securities or to facilitate settlement of a foreign currency denominated portfolio transaction. A forward foreign currency contract is an agreement between two parties to buy and sell a
currency at a set price with delivery and settlement at a future date. The contract is marked-to-market daily and the change in value is recorded by the Fund as an
unrealized gain or loss. When a forward foreign currency contract is closed, through either delivery or offset by entering into another forward foreign currency contract, the Fund recognizes a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value of the contract at the time it is closed.
Forward foreign currency contracts involve
elements of market risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also
arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
(c) Loan participations. The Fund may invest in loans arranged through private negotiation between one or more financial institutions. The Fund’s investment
in any such loan may be in the form of a participation in or an assignment of the loan. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement
related to the loan, or any rights of offset against the borrower and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation.
The Fund assumes the credit risk of the borrower, the lender that is selling the participation and any other persons interpositioned between the Fund and the borrower.
In the event of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower.
(d) Reverse repurchase agreements. The Fund may enter into reverse
repurchase agreements. Under the terms of a typical reverse repurchase agreement, a fund sells a security subject to an obligation to repurchase the security from the buyer at an agreed upon time and price. In the event the buyer of securities under
a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted pending a determination by the counterparty, or its trustee or receiver, whether to enforce the
Fund’s obligation to repurchase the securities. In entering into reverse repurchase agreements, the Fund will pledge cash, U.S. government securities or other liquid debt obligations at least equal in value to its obligations with respect to
reverse repurchase agreements or will take other actions permitted by law to cover its obligations. If the market value of the collateral declines during the period, the Fund may be required to post additional collateral to cover its obligation.
Cash collateral that has been pledged to cover obligations of the Fund under reverse repurchase agreements, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral are noted in the Schedule of
Investments. Interest payments made on reverse
|
|
|
|
|
| 38 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
repurchase agreements are recognized as a component of “Interest expense” on the
Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the counterparty, which may result in interest income to the Fund.
(e) Cash flow information. The Fund invests in securities and distributes
dividends from net investment income and net realized gains, which are paid in cash and may be reinvested at the discretion of shareholders. These activities are reported in the Statements of Changes in Net Assets and additional information on cash
receipts and cash payments is presented in the Statement of Cash Flows.
(f) Foreign currency translation.
Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and
sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized
foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a
result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
(g) Credit and market risk. The Fund invests in high-yield and emerging
market instruments that are subject to certain credit and market risks. The yields of high-yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Fund’s investments in securities rated
below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid
secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Fund. The Fund’s investments in
non-U.S. dollar denominated
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
39 |
|
Notes to financial statements
(cont’d)
securities may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.
Investments in securities that are collateralized by real estate mortgages are subject to certain credit and liquidity risks. When market conditions result in an
increase in default rates of the underlying mortgages and the foreclosure values of underlying real estate properties are materially below the outstanding amount of these underlying mortgages, collection of the full amount of accrued interest and
principal on these investments may be doubtful. Such market conditions may significantly impair the value and liquidity of these investments and may result in a lack of correlation between their credit ratings and values.
(h) Foreign investment risks. The Fund’s investments in foreign
securities may involve risks not present in domestic investments. Since securities may be denominated in foreign currencies, may require settlement in foreign currencies or may pay interest or dividends in foreign currencies, changes in the
relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Fund. Foreign investments may also subject the Fund to foreign government exchange restrictions, expropriation,
taxation or other political, social or economic developments, all of which affect the market and/or credit risk of the investments.
(i) Counterparty risk and credit-risk-related contingent features of derivative instruments. The Fund may invest in certain securities or engage in other
transactions where the Fund is exposed to counterparty credit risk in addition to broader market risks. The Fund may invest in securities of issuers, which may also be considered counterparties as trading partners in other transactions. This may
increase the risk of loss in the event of default or bankruptcy by the counterparty or if the counterparty otherwise fails to meet its contractual obligations. The Fund’s subadviser attempts to mitigate counterparty risk by
(i) periodically assessing the creditworthiness of its trading partners, (ii) monitoring and/or limiting the amount of its net exposure to each individual counterparty based on its assessment and (iii) requiring collateral from the
counterparty for certain transactions. Market events and changes in overall economic conditions may impact the assessment of such counterparty risk by the subadviser. In addition, declines in the values of underlying collateral received may expose
the Fund to increased risk of loss.
With exchange traded and centrally cleared derivatives, there is less counterparty risk to the Fund since the exchange or
clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset
rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default of the clearing broker or clearinghouse.
The Fund has entered into master agreements, such as an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or
similar agreement, with certain of its derivative counterparties that govern over-the-counter (“OTC”) derivatives and provide for general obligations,
representations, agreements,
|
|
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| 40 |
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|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
collateral posting terms, netting provisions in the event of default or termination and credit
related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Fund’s net assets or net asset value per share over a specified period of time. If these credit related contingent
features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.
Under an ISDA Master
Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. However, absent an
event of default by the counterparty or a termination of the agreement, the terms of the ISDA Master Agreements do not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities
across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.
Collateral requirements
differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for OTC traded derivatives. Cash collateral that has been
pledged to cover obligations of the Fund under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of
Investments.
As of October 31, 2023, the Fund held forward foreign currency contracts with credit related contingent features which had a liability position of
$44,386. If a contingent feature in the master agreements would have been triggered, the Fund would have been required to pay this amount to its derivatives counterparties.
(j) Security transactions and investment income. Security transactions are
accounted for on a trade date basis. Interest income (including interest income from payment-in-kind securities) is recorded on the accrual basis. Amortization of
premiums and accretion of discounts on debt securities are recorded to interest income over the lives of the respective securities, except for premiums on certain callable debt securities which are amortized to the earliest call date. Paydown gains
and losses on mortgage- and asset-backed securities are recorded as adjustments to interest income. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Foreign
dividend income is recorded on the ex-dividend date or as soon as practicable after the Fund determines the existence of a dividend declaration after exercising reasonable due diligence. The cost of
investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability
of interest accrued up to the date of default or credit event.
(k) Distributions to shareholders.
Distributions from net investment income of the Fund, if any, are declared quarterly and paid on a monthly basis. Distributions of net realized gains, if any, are declared at least annually. Distributions
to shareholders of the Fund are
|
|
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
41 |
|
Notes to financial statements
(cont’d)
recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(l) Compensating balance arrangements. The Fund has an arrangement with its
custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Fund’s cash on deposit with the bank.
(m) Federal and other taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the
“Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code.
Therefore, no federal or state income tax provision is required in the Fund’s financial statements.
Management has analyzed the Fund’s tax
positions taken on income tax returns for all open tax years and has concluded that as of October 31, 2023, no provision for income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal
excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.
(n) Reclassification. GAAP requires that certain components of net assets
be reclassified to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. During the current year, the following reclassifications have been made:
|
|
|
|
|
|
|
|
|
| |
|
Total Distributable
Earnings (Loss) |
|
|
Paid-in
Capital |
|
| (a) |
|
$ |
220,232 |
|
|
$ |
(220,232) |
|
| (a) |
Reclassifications are due to differences between actual and estimated information for the prior year related to the
Fund’s investments in securities in default. |
2. Investment management agreement and other transactions with
affiliates
Legg Mason Partners Fund Advisor, LLC (“LMPFA”) (effective November 30, 2023, renamed Franklin Templeton Fund Adviser, LLC) is
the Fund’s investment manager. Western Asset Management Company, LLC (“Western Asset”), Western Asset Management Company Pte. Ltd. (“Western Asset Singapore”), Western Asset Management Company Ltd (“Western Asset
Japan”) and Western Asset Management Company Limited (“Western Asset London”) are the Fund’s subadvisers. LMPFA, Western Asset, Western Asset Singapore, Western Asset Japan and Western Asset London are indirect, wholly-owned
subsidiaries of Franklin Resources, Inc. (“Franklin Resources”).
LMPFA provides administrative and certain oversight services to the Fund. The Fund pays
LMPFA an investment management fee, calculated daily and paid monthly, at an annual rate
|
|
|
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| 42 |
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|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
of 0.80% of the Fund’s average daily net assets plus the amount of any borrowings and assets
attributable to any preferred stock that may be outstanding (“managed assets”).
LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. Western Asset Singapore, Western Asset Japan and Western Asset London provide certain subadvisory services to the Fund relating to currency transactions and
investments in non-U.S. dollar denominated debt securities. For its services, LMPFA pays Western Asset a fee monthly, at an annual rate equal to 70% of the net management fee it receives from the Fund. Western
Asset Singapore, Western Asset Japan and Western Asset London do not receive any compensation from the Fund. Western Asset pays Western Asset Singapore, Western Asset Japan and Western Asset London a monthly subadvisory fee in an amount equal to
100% of the management fee paid to Western Asset on the assets that Western Asset allocates to each such non-U.S. subadviser to manage.
During periods in which the Fund utilizes financial leverage, the fees paid to LMPFA will be higher than if the Fund did not utilize leverage because the fees are
calculated as a percentage of the Fund’s assets, including those investments purchased with leverage.
The manager has agreed to waive the Fund’s
management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund (the “affiliated money market fund waiver”).
During the year ended October 31, 2023, fees waived and/or expenses reimbursed amounted to $1,427, all of which was an affiliated money market fund waiver.
All officers and one Director of the Fund are employees of Franklin Resources or its affiliates and do not receive compensation from the Fund.
3. Investments
During the year ended
October 31, 2023, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) and U.S. Government & Agency Obligations were as follows:
|
|
|
|
|
|
|
|
|
| |
|
Investments |
|
|
U.S. Government &
Agency Obligations |
|
| Purchases |
|
$ |
77,562,616 |
|
|
$ |
23,850,164 |
|
| Sales |
|
|
88,891,158 |
|
|
|
40,272,267 |
|
At October 31, 2023, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of
investments for federal income tax purposes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Cost |
|
|
Gross
Unrealized Appreciation |
|
|
Gross
Unrealized Depreciation |
|
|
Net
Unrealized Appreciation (Depreciation) |
|
| Securities |
|
$ |
274,322,721 |
|
|
$ |
4,885,050 |
|
|
$ |
(17,932,623) |
|
|
$ |
(13,047,573) |
|
| Forward foreign currency contracts |
|
|
— |
|
|
|
46,267 |
|
|
|
(44,386) |
|
|
|
1,881 |
|
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
43 |
|
Notes to financial statements
(cont’d)
Transactions in reverse repurchase agreements for the Fund during the year ended October 31, 2023 were as follows:
|
|
|
|
|
Average Daily
Balance* |
|
Weighted Average
Interest Rate* |
|
Maximum Amount
Outstanding |
| $9,543,829 |
|
4.722% |
|
$21,648,050 |
| * |
Averages based on the number of days that the Fund had reverse repurchase agreements outstanding. |
Interest rates on reverse repurchase agreements ranged from 2.910% to 6.000% during the year ended October 31, 2023. Interest expense incurred on reverse repurchase
agreements totaled $456,917.
4. Derivative instruments and hedging activities
Below is a table, grouped by derivative type, that provides information about the fair value and the location of derivatives within the Statement of Assets and
Liabilities at October 31, 2023.
|
|
|
|
|
| ASSET DERIVATIVES1 |
|
| |
|
Foreign
Exchange Risk |
|
| Forward foreign currency contracts |
|
$ |
46,267 |
|
|
|
|
|
|
| LIABILITY DERIVATIVES1 |
|
| |
|
Foreign
Exchange Risk |
|
| Forward foreign currency contracts |
|
$ |
44,386 |
|
| 1 |
Generally, the balance sheet location for asset derivatives is receivables/net unrealized appreciation and for liability
derivatives is payables/net unrealized depreciation. |
The following tables provide information about the effect of derivatives and hedging
activities on the Fund’s Statement of Operations for the year ended October 31, 2023. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table
provides additional information about the change in net unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.
|
|
|
|
|
| AMOUNT OF NET REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED |
|
| |
|
Foreign
Exchange Risk |
|
| Forward foreign currency contracts |
|
$ |
404,543 |
|
|
|
|
|
|
| CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED |
|
| |
|
Foreign
Exchange Risk |
|
| Forward foreign currency contracts |
|
$ |
368,119 |
|
|
|
|
|
|
| 44 |
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|
Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
During the year ended October 31, 2023, the volume of derivative activity for the Fund was as
follows:
|
|
|
|
|
| |
|
Average Market
Value |
|
| Forward foreign currency contracts (to buy) |
|
$ |
28,744,452 |
|
| Forward foreign currency contracts (to sell) |
|
|
2,606,044 |
|
The following table presents the Fund’s OTC derivative assets and liabilities by counterparty net of amounts available for offset
under an ISDA Master Agreement and net of the related collateral pledged (received) by the Fund as of October 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Counterparty |
|
Gross Assets
Subject to Master Agreements1 |
|
|
Gross
Liabilities Subject to Master
Agreements1 |
|
|
Net Assets
(Liabilities) Subject to Master
Agreements |
|
|
Collateral
Pledged (Received) |
|
|
Net
Amount2
|
|
| Bank of America N.A. |
|
|
— |
|
|
$ |
(35,102) |
|
|
$ |
(35,102) |
|
|
|
— |
|
|
$ |
(35,102) |
|
| BNP Paribas SA |
|
$ |
41,177 |
|
|
|
(9,284) |
|
|
|
31,893 |
|
|
|
— |
|
|
|
31,893 |
|
| Morgan Stanley & Co. Inc. |
|
|
5,090 |
|
|
|
— |
|
|
|
5,090 |
|
|
|
— |
|
|
|
5,090 |
|
| Total |
|
$ |
46,267 |
|
|
$ |
(44,386) |
|
|
$ |
1,881 |
|
|
|
— |
|
|
$ |
1,881 |
|
| 1 |
Absent an event of default or early termination, derivative assets and liabilities are presented gross and not offset in
the Statement of Assets and Liabilities. |
| 2 |
Represents the net amount receivable (payable) from (to) the counterparty in the event of default. |
5. Loan
The Fund entered into a Margin Loan and
Security Agreement (the “Credit Agreement”) with Bank of America, N.A. (“BofA”) that allows the Fund to borrow up to an aggregate amount of $90,000,000 and renews daily for a 179-day term
unless notice to the contrary is given to the Fund. The Fund pays interest on borrowings calculated based on SOFR plus applicable margin. The Fund pays a commitment fee on the unutilized portion of the loan commitment amount at an annual rate of
0.20% except that the commitment fee is 0.15% when the aggregate outstanding balance of the loan is equal to or greater than 50% of the maximum commitment amount. To the extent of the borrowing outstanding, the Fund is required to maintain
collateral in a special custody account at the Fund’s custodian on behalf of BofA. The Fund’s Credit Agreement contains customary covenants that, among other things, may limit the Fund’s ability to pay distributions in certain
circumstances, incur additional debt, change its fundamental investment policies and engage in certain transactions, including mergers and consolidations, and require asset coverage ratios in addition to those required by the 1940 Act. In addition,
the Credit Agreement may be subject to early termination under certain conditions and may contain other provisions that could limit the Fund’s ability to utilize borrowing under the agreement. Interest expense related to the Credit Agreement
for the year ended October 31, 2023 was $4,592,878. For the year ended October 31, 2023, the Fund incurred commitment fees in the amount of $12,962. For the year ended October 31, 2023, based on the number of days during the reporting
period that the Fund had a loan balance outstanding, the average daily loan
|
|
|
|
|
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
45 |
|
Notes to financial statements
(cont’d)
balance was $81,476,712 and the weighted average interest rate was 5.56%. At October 31, 2023, the Fund had $81,000,000 of borrowings outstanding per the Credit
Agreement.
6. Distributions subsequent to October 31, 2023
The following distributions have been declared by the and are payable subsequent to the period end of this report:
|
|
|
|
|
|
|
|
|
| Record Date |
|
Payable Date |
|
|
Amount |
|
| 10/24/2023 |
|
|
11/1/2023 |
|
|
$ |
0.1020 |
|
| 11/22/2023 |
|
|
12/1/2023 |
|
|
$ |
0.1020 |
|
| 12/21/2023 |
|
|
12/29/2023 |
|
|
$ |
0.1020 |
|
| 1/24/2024 |
|
|
2/1/2024 |
|
|
$ |
0.1020 |
|
| 2/22/2024 |
|
|
3/1/2024 |
|
|
$ |
0.1020 |
|
7. Stock repurchase program
On March 10, 2014, the Fund announced that the Fund’s Board of Directors (the “Board”) had authorized the Fund to repurchase in the open market up to
1,600,000 shares of the Fund’s outstanding common stock when the Fund’s shares are trading at a discount to the net asset value. The Board directed management of the Fund to repurchase shares of common stock at such times and in such
amounts as management reasonably believes may enhance stockholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts. During the years ended October 31, 2023 and October 31,
2022, the Fund did not repurchase any shares.
Since the Fund’s commencement of the stock repurchase program through October 31, 2023, the Fund repurchased
408,350 shares or 2.66% of its common shares outstanding for the total amount of $7,013,966. The anti-dilutive impact of these share repurchases is included on the Financial Highlights.
8. Transactions with affiliated company
As
defined by the 1940 Act, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control with the Fund. The following company was considered an affiliated
company for all or some portion of the year ended October 31, 2023. The following transactions were effected in such company for the year ended October 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Affiliate
Value
at
October 31,
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Purchased |
|
|
Sold |
|
| |
|
Cost |
|
|
Shares |
|
|
Proceeds |
|
|
Shares |
|
| Western Asset Premier Institutional Government Reserves, Premium Shares |
|
$ |
2,201,652 |
|
|
$ |
65,328,902 |
|
|
|
65,328,902 |
|
|
$ |
65,055,116 |
|
|
|
65,055,116 |
|
|
|
|
|
|
| 46 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (cont’d) |
|
Realized
Gain (Loss) |
|
|
Dividend
Income |
|
|
Net Increase
(Decrease) in Unrealized Appreciation
(Depreciation) |
|
|
Affiliate
Value at October 31, 2023 |
|
| Western Asset Premier Institutional Government Reserves, Premium Shares |
|
|
— |
|
|
$ |
74,278 |
|
|
|
— |
|
|
$ |
2,475,438 |
|
9. Income tax information and distributions to shareholders
The tax character of distributions paid during the fiscal years ended October 31, was as follows:
|
|
|
|
|
|
|
|
|
| |
|
2023 |
|
|
2022 |
|
| Distributions paid from: |
|
|
|
|
|
|
|
|
| Ordinary income |
|
$ |
12,694,110 |
|
|
$ |
8,289,099 |
|
| Tax return of capital |
|
|
5,454,180 |
|
|
|
9,824,327 |
|
| Total distributions paid |
|
$ |
18,148,290 |
|
|
$ |
18,113,426 |
|
As of October 31, 2023, the components of distributable earnings (loss) on a tax basis were as follows:
|
|
|
|
|
| Deferred capital losses* |
|
$ |
(60,606,741) |
|
| Other book/tax temporary differences(a) |
|
|
(1,600,869) |
|
| Unrealized appreciation (depreciation)(b) |
|
|
(13,107,352) |
|
| Total distributable earnings (loss) — net |
|
$ |
(75,314,962) |
|
| * |
These capital losses have been deferred in the current year as either short-term or long-term losses. The losses will be
deemed to occur on the first day of the next taxable year in the same character as they were originally deferred and will be available to offset future taxable capital gains. |
| (a) |
Other book/tax temporary differences are attributable to the realization for tax purposes of unrealized gains (losses) on
foreign currency contracts, the difference between cash and accrual basis distributions paid and book/tax differences in the timing of the deductibility of various expenses. |
| (b) |
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is attributable to the tax deferral of losses on wash sales, the difference between book and tax amortization methods for premium on fixed income securities and book/tax differences in the accrual of interest income on securities in
default. |
10. Recent accounting pronouncement
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04,
Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021 and December 2022, the FASB issued ASU No. 2021-01 and ASU No. 2022-06, with further amendments to Topic 848. The amendments in the ASUs provide optional temporary accounting recognition and financial reporting relief from the effect of certain types of contract
modifications due to the planned discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank-offered based reference rates as of the end of 2021 for certain LIBOR settings and 2023 for the remainder. The ASUs are effective for
certain reference rate-related contract modifications that occur during the period March 12, 2020
|
|
|
|
|
|
|
| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
|
|
|
|
47 |
|
Notes to financial statements
(cont’d)
through December 31, 2024. Management has reviewed the requirements and believes the adoption of these ASUs will not have a material impact on the financial
statements.
11. Other matter
The
Fund’s investments, payment obligations, and financing terms may be based on floating rates, such as the London Interbank Offered Rate, or “LIBOR,” which was the offered rate for short-term Eurodollar deposits between major
international banks. In 2017, the U.K. Financial Conduct Authority (“FCA”) announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. In addition, global regulators have announced that,
with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. In connection with the global transition away from LIBOR led by regulators and market participants, LIBOR is no longer published on a representative basis.
Alternative references rates have been established in most major currencies. In March 2022, the U.S. federal government enacted legislation to establish a process for replacing LIBOR in certain existing contracts that do not already provide for the
use of a clearly defined or practicable replacement benchmark rate as described in the legislation. Generally speaking, for contracts that do not contain a fallback provision as described in the legislation, a benchmark replacement recommended by
the Federal Reserve Board effectively automatically replaced the USD LIBOR benchmark in the contract upon LIBOR’s cessation at the end of June 2023. The recommended benchmark replacement is based on the Secured Overnight Financing Rate (SOFR)
published by the Federal Reserve Bank of New York, including certain spread adjustments and benchmark replacement conforming changes. Various industry groups are in the process of facilitating the transition away from LIBOR, but there remains
uncertainty regarding the impact of the transition from LIBOR on the Fund’s transactions and the financial markets generally.
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| 48 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
Report of independent registered public accounting firm
To the Board of Directors and Shareholders of Western Asset Global
Corporate Defined Opportunity Fund Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Western Asset Global Corporate Defined Opportunity Fund
Inc. (the “Fund”) as of October 31, 2023, the related statements of operations and cash flows for the year ended October 31, 2023, the statement of changes in net assets for each of the two years in the period ended
October 31, 2023, including the related notes, and the financial highlights for each of the five years in the period ended October 31, 2023 (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in
the period ended October 31, 2023 and the financial highlights for each of the five years in the period ended October 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are
the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of October 31, 2023 by correspondence with the custodian, agent banks and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our
audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Baltimore, Maryland
December 20, 2023
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
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| Western Asset Global Corporate Defined Opportunity Fund Inc. 2023 Annual Report |
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49 |
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Board approval of management and subadvisory agreements (unaudited)
Background
The Investment Company Act of 1940,
as amended (the “1940 Act”), requires that the Board of Directors (the “Board”) of Western Asset Global Corporate Defined Opportunity Fund Inc. (the “Fund”), including a majority of its members who are not considered to
be “interested persons” under the 1940 Act (the “Independent Directors”) voting separately, approve on an annual basis the continuation of the investment management agreement (the “Management Agreement”) between the
Fund and the Fund’s manager, Legg Mason Partners Fund Advisor, LLC (the “Manager”), and the sub-advisory agreements (individually, a “Sub-Advisory
Agreement,” and collectively, the “Sub-Advisory Agreements”) with the Manager’s affiliates, Western Asset Management Company, LLC (“Western Asset”), Western Asset Management
Company Limited (“Western Asset London”), Western Asset Management Company Pte. Ltd. (“Western Asset Singapore”) and Western Asset Management Company Ltd (“Western Asset Japan,” and together with Western Asset, Western
Asset London and Western Asset Singapore, collectively, the “Sub-Advisers”), with respect to the Fund.
At an in-person meeting (the “Contract Renewal Meeting”) held on May 9-10, 2023, the Board, including the Independent Directors, considered and approved the continuation
of each of the Management Agreement and the Sub-Advisory Agreements for an additional one-year period. To assist in its consideration of the renewal of each of the
Management Agreement and the Sub-Advisory Agreements, the Board received and considered extensive information (together with the information provided at the Contract Renewal Meeting, the “Contract Renewal
Information”) about the Manager and the Sub-Advisers, as well as the management and sub-advisory arrangements for the Fund and the other closed-end funds in the same complex under the Board’s purview (the “Franklin Templeton/Legg Mason Closed-end Funds”), certain portions of which are discussed
below.
A presentation made by the Manager and the Sub-Advisers to the Board at the Contract Renewal Meeting in connection
with the Board’s evaluation of each of the Management Agreement and the Sub-Advisory Agreements encompassed the Fund and other Franklin Templeton/Legg Mason
Closed-end Funds. In addition to the Contract Renewal Information, the Board received performance and other information throughout the year related to the respective services rendered by the Manager and the Sub-Advisers to the Fund. The Board’s evaluation took into account the information received throughout the year and also reflected the knowledge and experience gained as members of the Boards of the Fund and
other Franklin Templeton/Legg Mason Closed-end Funds with respect to the services provided to the Fund by the Manager and the Sub-Advisers. The information received and
considered by the Board (including its various committees) in conjunction with both the Contract Renewal Meeting and throughout the year was both written and oral. The
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| 50 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
contractual arrangements discussed below are the
product of multiple years of review and negotiation and information received and considered by the Board during each of those years.
At a meeting held on
April 18, 2023, the Independent Directors, in preparation for the Contract Renewal Meeting, met in a private session with their independent legal counsel to review the Contract Renewal Information regarding the Franklin Templeton/Legg Mason Closed-end Funds, including the Fund, received to date. No representatives of the Manager or the Sub-Advisers participated in this meeting. Following the April 18, 2023
meeting, the Independent Directors submitted certain questions and requests for additional information to Fund management. The Independent Directors also met in private sessions with their independent legal counsel to consider the Contract Renewal
Information and Fund management’s responses to the Independent Directors’ questions and requests for additional information in advance of and during the Contract Renewal Meeting. The discussion below reflects all of these reviews.
The Manager provides the Fund with investment advisory and administrative services pursuant to the Management Agreement and the
Sub-Advisers together provide the Fund with investment sub-advisory services pursuant to the Sub-Advisory Agreements. The
discussion below covers both the advisory and administrative functions being rendered by the Manager, each such function being encompassed by the Management Agreement, and the investment sub-advisory functions
being rendered by the Sub-Advisers pursuant to the Sub-Advisory Agreements.
Board Approval of Management Agreement and Sub-Advisory Agreements
The Independent Directors
were advised by separate independent legal counsel throughout the process. Prior to voting, the Independent Directors received a memorandum discussing the legal standards for their consideration of the proposed continuation of the Management
Agreement and the Sub-Advisory Agreements. The Independent Directors considered the Management Agreement and each Sub-Advisory Agreement separately during the course of
their review. In doing so, they noted the respective roles of the Manager and the Sub-Advisers in providing services to the Fund.
In approving the continuation of the Management Agreement and Sub-Advisory Agreements, the Board, including the Independent
Directors, considered a variety of factors, including those factors discussed below. No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve the continuation of the Management
Agreement and the Sub-Advisory Agreements. Each Director may have attributed different weight to the various factors in evaluating the Management Agreement and the
Sub-Advisory Agreements.
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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51 |
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Board approval of management and subadvisory agreements (unaudited) (cont’d)
After considering all relevant factors and information, the Board, exercising its reasonable business judgment, determined that the continuation of the Management
Agreement and Sub-Advisory Agreements were in the best interests of the Fund’s shareholders and approved the continuation of each such agreement for an additional
one-year period.
Nature, Extent and Quality of the Services under the Management Agreement and Sub-Advisory Agreements
The Board received and considered Contract Renewal Information regarding the nature, extent,
and quality of services provided to the Fund by the Manager and the Sub-Advisers under the Management Agreement and the Sub-Advisory Agreements, respectively, during the
past year. The Board noted information received at regular meetings throughout the year related to the services provided by the Manager in its management of the Fund’s affairs and the Manager’s role in coordinating the activities of the Sub-Advisers and the Fund’s other service providers. The Board observed that the scope of services provided by the Manager and the Sub-Advisers, and of the undertakings
required of the Manager and Sub-Advisers in connection with those services, including maintaining and monitoring their respective compliance programs as well as the Fund’s compliance programs, had
expanded over time as a result of regulatory, market and other developments. The Board also noted that on a regular basis it received and reviewed information from the Manager and the Sub-Advisers regarding
the Fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the risks borne by the Manager, the
Sub-Advisers and their respective affiliates on behalf of the Fund, including entrepreneurial, operational, reputational, litigation and regulatory risks, as well as the Manager’s and the Sub-Advisers’ risk management processes.
The Board reviewed the qualifications, backgrounds, and responsibilities of the
Manager’s senior personnel and the Sub-Advisers’ portfolio management teams primarily responsible for the day-to-day
portfolio management of the Fund. The Board also considered, based on its knowledge of the Manager and its affiliates, the financial resources of Franklin Resources, Inc., the parent organization of the Manager and the
Sub-Advisers. The Board recognized the importance of having a fund manager with significant resources.
The Board considered
the division of responsibilities between the Manager and the Sub-Advisers under the Management Agreement and the Sub-Advisory Agreements, respectively, including the
Manager’s coordination and oversight of the services provided to the Fund by the Sub-Advisers and other fund service providers and Western Asset’s coordination and oversight of the services provided
to the Fund by Western Asset London, Western Asset Singapore and Western Asset Japan. The Management Agreement permits the Manager to delegate certain of its responsibilities, including its investment advisory duties thereunder, provided that the
Manager, in each case, will supervise the activities of the delegee.
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| 52 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
In reaching its determinations regarding
continuation of the Management Agreement and the Sub-Advisory Agreements, the Board took into account that Fund stockholders, in pursuing their investment goals and objectives, may have purchased their shares
of the Fund based upon the reputation and the investment style, philosophy and strategy of the Manager and the Sub-Advisers, as well as the resources available to the Manager and the Sub-Advisers.
The Board concluded that, overall, the nature, extent, and quality of the management and other services provided
(and expected to be provided) to the Fund under the Management Agreement and the Sub-Advisory Agreements were satisfactory.
Fund Performance
The Board received and considered information regarding Fund performance, including information and analyses (the
“Broadridge Performance Information”) for the Fund, as well as for a group of comparable funds (the “Performance Universe”) selected by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third-party
provider of investment company data. The Board was provided with a description of the methodology Broadridge used to determine the similarity of the Fund with the funds included in the Performance Universe. It was noted that while the Board found
the Broadridge Performance Information generally useful, they recognized its limitations, including that the data may vary depending on the end date selected, and that the results of the performance comparisons may vary depending on the selection of
the peer group and its composition over time. The Board also noted that Board members had received and discussed with the Manager and the Sub-Advisers information throughout the year at periodic intervals
comparing the Fund’s performance against its benchmark and against the Fund’s peers. In addition, the Board considered the Fund’s performance in view of overall financial market conditions.
The Broadridge Performance Information comparing the Fund’s performance to that of its Performance Universe, consisting of the Fund and all leveraged closed-end global income funds classified by Broadridge, regardless of asset size, showed, among other data, that based on net asset value per share, the Fund’s performance was above the median for the 1-, 3-, 5- and 10-year periods ended December 31, 2022. The Board noted the explanations
from the Manager and the Sub-Advisers regarding the Fund’s relative performance versus the Performance Universe for the various periods.
Based on the reviews and discussions of Fund performance and considering other relevant factors, including those noted above, the Board concluded, under the
circumstances, that continuation of the Management Agreement and the Sub-Advisory Agreements for an additional one-year period would be consistent with the interests of
the Fund and its stockholders.
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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53 |
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Board approval of management and subadvisory agreements (unaudited) (cont’d)
Management and Sub-Advisory Fees and Expense Ratios
The Board reviewed and considered the contractual management fee (the “Contractual Management Fee”) and the actual management fee (the “Actual Management
Fee”) payable by the Fund to the Manager under the Management Agreement and the sub-advisory fees (the “Sub-Advisory Fees”) payable by the Manager to the Sub-Advisers under the Sub-Advisory Agreements in view of the nature, extent and overall quality of the management, investment advisory and other services provided by the
Manager and the Sub-Advisers, respectively. The Board noted that the Sub-Advisory Fee payable to Western Asset under its
Sub-Advisory Agreement with the Manager is paid by the Manager, not the Fund, and, accordingly, that the retention of Western Asset does not increase the fees or expenses otherwise incurred by the Fund’s
stockholders. Similarly, the Board noted that the Sub-Advisory Fees payable to Western Asset London, Western Asset Singapore and Western Asset Japan under their respective
Sub-Advisory Agreements with Western Asset are paid by Western Asset, not the Fund, and, accordingly, that the retention of Western Asset London, Western Asset Singapore and Western Asset Japan does not
increase the fees or expenses otherwise incurred by the Fund’s stockholders.
In addition, the Board received and considered information and analyses prepared
by Broadridge (the “Broadridge Expense Information”) comparing the Contractual Management Fee and the Actual Management Fee and the Fund’s total actual expenses with those of funds in an expense group (the “Expense Group”),
as well as a broader group of funds, each selected and provided by Broadridge. The comparison was based upon the constituent funds’ latest fiscal years. It was noted that while the Board found the Broadridge Expense Information generally
useful, they recognized its limitations, including that the data may vary depending on the selection of the peer group.
The Broadridge Expense Information showed
that the Fund’s Contractual Management Fee was below the median. The Broadridge Expense Information also showed that the Fund’s Actual Management Fee was above the median compared on the basis of common share assets and was below the
median compared on the basis of leveraged assets. The Broadridge Expense Information also showed that the Fund’s actual total expenses were below the median on the basis of both common share assets and leveraged assets. The Board took into
account management’s discussion of the Fund’s expenses and noted the limited size of the Expense Group.
The Board also reviewed Contract Renewal
Information regarding fees charged by the Manager and/or the Sub-Advisers to other U.S. clients investing primarily in an asset class similar to that of the Fund, including, where applicable, institutional and
separate accounts. The Manager reviewed with the Board the differences in services provided to these different types of accounts, noting that the Fund is provided with certain administrative services, office facilities, and Fund officers, and that
the Fund is subject not only to
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| 54 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
heightened regulatory requirements relative to
institutional clients but also to requirements for listing on the New York Stock Exchange, and that the Manager coordinates and oversees the provision of services to the Fund by other fund service providers. The Board considered the fee comparisons
in view of the different services provided in managing these other types of clients and funds.
The Board considered the overall management fee, the fees of the Sub-Advisers and the amount of the management fee retained by the Manager after payment of the subadvisory fees in each case in view of the services rendered for those amounts. The Board also received an analysis of
complex-wide management fees provided by the Manager, which, among other things, set out a framework of fees based on asset classes.
Taking all of the above into
consideration, as well as the factors identified below, the Board determined that the management fee and the Sub-Advisory Fees were reasonable in view of the nature, extent and overall quality of the
management, investment advisory and other services provided by the Manager and the Sub-Advisers to the Fund under the Management Agreement and the Sub-Advisory
Agreements, respectively.
Manager Profitability
The Board, as part of the Contract Renewal Information, received an analysis of the profitability to the Manager and its affiliates in providing services to the Fund for
the Manager’s fiscal years ended September 30, 2022 and September 30, 2021. The Board also received profitability information with respect to the Franklin Templeton/Legg Mason fund complex as a whole. In addition, the Board received
Contract Renewal Information with respect to the Manager’s revenue and cost allocation methodologies used in preparing such profitability data. It was noted that the allocation methodologies had been reviewed by an outside consultant. The
profitability to each of the Sub-Advisers was not considered to be a material factor in the Board’s considerations since the Sub-Advisory Fee is paid by the Manager
in the case of Western Asset and by Western Asset in the case of Western Asset London, Western Asset Singapore and Western Asset Japan, not the Fund, although the Board noted the affiliation of the Manager with the
Sub-Advisers. The profitability of the Manager and its affiliates was considered by the Board to be reasonable in view of the nature, extent and quality of services provided to the Fund.
Economies of Scale
The Board received and
discussed Contract Renewal Information concerning whether the Manager realizes economies of scale if the Fund’s assets grow. The Board noted that because the Fund is a closed-end fund it has limited
ability to increase its assets. The Board determined that the management fee structure was appropriate under the circumstances. For similar reasons as stated above with respect to the Sub-Advisers’
profitability and the costs of the Sub-Advisers’ provision of services, the Board did not consider the potential for
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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55 |
|
Board approval of management and subadvisory agreements (unaudited) (cont’d)
economies of scale in the Sub-Advisers’ management of the Fund to be a material factor in the Board’s consideration of
the Sub-Advisory Agreements.
Other Benefits to the Manager and the
Sub-Advisers
The Board considered other benefits received by the Manager, the
Sub-Advisers and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to the Fund’s shareholders. In view of the costs of
providing investment management and other services to the Fund and the ongoing commitment of the Manager and the Sub-Advisers to the Fund, the Board considered that the ancillary benefits that the Manager and
its affiliates, including the Sub-Advisers, were reasonable.
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| 56 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
Additional information (unaudited)
Information about Directors and Officers
The business and affairs of Western Asset Global Corporate Defined Opportunity Fund Inc. (the
“Fund”) are conducted by management under the supervision and subject to the direction of its Board of Directors. The business address of each Director is c/o Jane Trust, Franklin Templeton, 280 Park Avenue, 8th Floor, New York, New York
10017.
Information pertaining to the Directors and officers of the Fund is set forth below. The Fund’s annual proxy statement includes additional information
about Directors and is available, without charge, upon request by calling the Fund at 1-888-777-0102.
|
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| Independent Directors† |
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| Robert D. Agdern |
|
|
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|
| Year of birth |
|
1950 |
| Position(s) held with Fund1 |
|
Director and Member of Nominating, Audit, Compensation and Pricing and Valuation Committees, and Compliance Liaison, Class III |
| Term of office1 and length of time served |
|
Since 2015 |
| Principal occupation(s) during the past five years |
|
Member of the Advisory Committee of the Dispute Resolution Research Center at the Kellogg Graduate School of Business, Northwestern University (2002 to 2016); formerly, Deputy General
Counsel responsible for western hemisphere matters for BP PLC (1999 to 2001); Associate General Counsel at Amoco Corporation responsible for corporate, chemical, and refining and marketing matters and special assignments (1993 to 1998) (Amoco merged
with British Petroleum in 1998 forming BP PLC) |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
18 |
| Other board memberships held by Director during the past five years |
|
None |
|
|
| Carol L. Colman |
|
|
|
|
| Year of birth |
|
1946 |
| Position(s) held with Fund1 |
|
Director and Member of Nominating, Audit and Compensation Committees, and Chair of Pricing and Valuation Committee, Class I |
| Term of office1 and length of time served |
|
Since 2009 |
| Principal occupation(s) during the past five years |
|
President, Colman Consulting Company (consulting) |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
18 |
| Other board memberships held by Director during the past five years |
|
None |
|
|
|
|
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
|
|
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|
57 |
|
Additional information
(unaudited) (cont’d)
Information about Directors and Officers
|
|
|
| Independent Directors† (cont’d) |
|
|
|
|
| Daniel P. Cronin |
|
|
|
|
| Year of birth |
|
1946 |
| Position(s) held with Fund1 |
|
Director and Member of Audit, Compensation and Pricing and Valuation Committees, and Chair of Nominating Committee, Class I |
| Term of office1 and length of time served |
|
Since 2009 |
| Principal occupation(s) during the past five years |
|
Retired; formerly, Associate General Counsel, Pfizer Inc. (prior to and including 2004) |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
18 |
| Other board memberships held by Director during the past five years |
|
None |
|
|
| Paolo M. Cucchi |
|
|
|
|
| Year of birth |
|
1941 |
| Position(s) held with Fund1 |
|
Director and Member of Nominating, Audit, and Pricing and Valuation Committees, and Chair of Compensation Committee, Class I |
| Term of office1 and length of time served |
|
Since 2009 |
| Principal occupation(s) during the past five years |
|
Emeritus Professor of French and Italian (since 2014) and formerly, Vice President and Dean of The College of Liberal Arts (1984 to 2009) and Professor of French and Italian (2009 to 2014)
at Drew University |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
18 |
| Other board memberships held by Director during the past five years |
|
None |
|
|
|
|
|
| 58 |
|
|
|
Western Asset Global Corporate Defined Opportunity Fund Inc. |
|
|
|
| Independent Directors† (cont’d) |
|
|
|
|
| Eileen A. Kamerick |
|
|
|
|
| Year of birth |
|
1958 |
| Position(s) held with Fund1 |
|
Lead Independent Director and Member of Nominating, Compensation, Pricing and Valuation and Audit Committees, Class III |
| Term of office1 and length of time served |
|
Since 2013 |
| Principal occupation(s) during the past five years |
|
Chief Executive Officer, The Governance Partners, LLC (consulting firm) (since 2015); National Association of Corporate Directors Board Leadership Fellow (since 2016, with Directorship
Certification since 2019) and NACD 2022 Directorship 100 honoree; Adjunct Professor, Georgetown University Law Center (since 2021); Adjunct Professor, The University of Chicago Law School (since 2018); Adjunct Professor, University of Iowa College
of Law (since 2007); formerly, Chief Financial Officer, Press Ganey Associates (health care informatics company) (2012 to 2014); Managing Director and Chief Financial Officer, Houlihan Lokey (international investment bank) and President, Houlihan
Lokey Foundation (2010 to 2012) |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
18 |
| Other board memberships held by Director during the past five years |
|
Director, VALIC Company I (since October 2022); Director of ACV Auctions Inc. (since 2021); formerly, Director of Hochschild Mining plc (precious metals company) (2017 to 2023); Director of
Associated Banc-Corp (financial services company) (since 2007); formerly Trustee of AIG Funds and Anchor Series Trust (2018 to 2021) |
|
|
| Nisha Kumar |
|
|
|
|
| Year of birth |
|
1970 |
| Position(s) held with Fund1 |
|
Director and Member of Nominating, Compensation and Pricing and Valuation Committees, and Chair of the Audit Committee, Class II |
| Term of office1 and length of time served |
|
Since 2019 |
| Principal occupation(s) during the past five years |
|
Formerly, Managing Director and the Chief Financial Officer and Chief Compliance Officer of Greenbriar Equity Group, LP (2011 to 2021); formerly, Chief Financial Officer and Chief
Administrative Officer of Rent the Runway, Inc. (2011); Executive Vice President and Chief Financial Officer of AOL LLC, a subsidiary of Time Warner Inc. (2007 to 2009); Member of the Council of Foreign Relations |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
18 |
| Other board memberships held by Director during the past five years |
|
Director of The India Fund, Inc. (since 2016); formerly, Director of Aberdeen Income Credit Strategies Fund (2017 to 2018); and Director of The Asia Tigers Fund, Inc. (2016 to
2018) |
|
|
|
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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59 |
|
Additional information
(unaudited) (cont’d)
Information about Directors and Officers
|
|
|
| Interested Director and Officer |
|
|
|
|
| Jane Trust, CFA2 |
|
|
|
|
| Year of birth |
|
1962 |
| Position(s) held with Fund1 |
|
Director, Chairman, President and Chief Executive Officer, Class II |
| Term of office1 and length of time served |
|
Since 2015 |
| Principal occupation(s) during the past five years |
|
Senior Vice President, Fund Board Management, Franklin Templeton (since 2020); Officer and/or Trustee/Director of 123 funds associated with LMPFA or its affiliates (since 2015); President
and Chief Executive Officer of LMPFA (since 2015); formerly, Senior Managing Director (2018 to 2020) and Managing Director (2016 to 2018) of Legg Mason & Co., LLC (“Legg Mason & Co.”); and Senior Vice President of LMPFA
(2015) |
Number of portfolios in fund complex overseen by Director
(including the Fund) |
|
123 |
| Other board memberships held by Director during the past five years |
|
None |
|
|
|
| Additional Officers |
|
|
|
| Fred Jensen
Franklin
Templeton 280 Park Avenue, 8th Floor, New
York, NY 10017 |
|
|
| Year of birth |
|
1963 |
| Position(s) held with Fund1 |
|
Chief Compliance Officer |
| Term of office1 and length of time served |
|
Since 2020 |
| Principal occupation(s) during the past five years |
|
Director — Global Compliance of Franklin Templeton (since 2020); Managing Director of Legg Mason & Co. (2006 to 2020); Director of Compliance, Legg Mason Office of the Chief
Compliance Officer (2006 to 2020); formerly, Chief Compliance Officer of Legg Mason Global Asset Allocation (prior to 2014); Chief Compliance Officer of Legg Mason Private Portfolio Group (prior to 2013); formerly, Chief Compliance Officer of The
Reserve Funds (investment adviser, funds and broker-dealer) (2004) and Ambac Financial Group (investment adviser, funds and broker-dealer) (2000 to 2003) |
|
| Marc A. De Oliveira
Franklin Templeton 100 First Stamford Place, 6th Floor, Stamford, CT
06902 |
| Year of birth |
|
1971 |
| Position(s) held with Fund1 |
|
Secretary and Chief Legal Officer |
| Term of office1 and length of time served |
|
Since 2023 |
| Principal occupation(s) during the past five years |
|
Associate General Counsel of Franklin Templeton (since 2020); Secretary and Chief Legal Officer of certain funds associated with Legg Mason & Co. or its affiliates since 2020);
Assistant Secretary of certain funds associated with Legg Mason & Co. or its affiliates (since 2006); formerly, Managing Director (2016 to 2020) and Associate General Counsel of Legg Mason & Co. (2005 to 2020) |
|
|
|
|
|
| 60 |
|
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
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| Additional Officers (cont’d) |
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| Thomas C. Mandia
Franklin Templeton 100 First Stamford Place, 6th Floor, Stamford, CT
06902 |
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| Year of birth |
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1962 |
| Position(s) held with Fund1 |
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Senior Vice President |
| Term of office1 and length of time served |
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Since 2022 |
| Principal occupation(s) during the past five years |
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Senior Associate General Counsel of Franklin Templeton (since 2020); Secretary of LMPFA (since 2006); Assistant Secretary of certain funds associated with Legg Mason & Co. or its
affiliates (since 2006); Secretary of LM Asset Services, LLC (“LMAS”) (since 2002) and Legg Mason Fund Asset Management, Inc. (“LMFAM”) (since 2013) (formerly registered investment advisers); formerly, Managing Director and
Deputy General Counsel of Legg Mason & Co. (2005 to 2020) and Assistant Secretary of certain funds in the fund complex (2006 to 2022) |
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| Christopher Berarducci
Franklin Templeton 280 Park Avenue, 8th Floor, New York, NY 10017 |
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| Year of birth |
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1974 |
| Position(s) held with Fund1 |
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Treasurer and Principal Financial Officer |
| Term of office1 and length of time served |
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Since 2019 |
| Principal occupation(s) during the past five years |
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Vice President, Fund Administration and Reporting, Franklin Templeton (since 2020); Treasurer (since 2010) and Principal Financial Officer (since 2019) of certain funds associated with Legg
Mason & Co. or its affiliates; formerly, Managing Director (2020), Director (2015 to 2020), and Vice President (2011 to 2015) of Legg Mason & Co. |
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| Jeanne M. Kelly
Franklin Templeton 280 Park Avenue, 8th Floor, New York, NY 10017 |
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| Year of birth |
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1951 |
| Position(s) held with Fund1 |
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Senior Vice President |
| Term of office1 and length of time served |
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Since 2009 |
| Principal occupation(s) during the past five years |
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U.S. Fund Board Team Manager, Franklin Templeton (since 2020); Senior Vice President of certain funds associated with Legg Mason & Co. or its affiliates (since 2007); Senior Vice
President of LMPFA (since 2006); President and Chief Executive Officer of LMAS and LMFAM (since 2015); formerly, Managing Director of Legg Mason & Co. (2005 to 2020); Senior Vice President of LMFAM (2013 to 2015) |
| † |
Directors who are not “interested persons” of the Fund within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the “1940 Act”). |
| 1 |
The Fund’s Board of Directors is divided into three classes: Class I, Class II and Class III. The
terms of office of the Class I, II and III Directors expire at the Annual Meetings of Stockholders in the year 2026, year 2024 and year 2025, respectively, or thereafter in each case when their respective successors are duly elected and
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Additional information
(unaudited) (cont’d)
Information about Directors and Officers
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qualified. The Fund’s executive officers are chosen each year, to hold office until their successors are duly elected and qualified. |
| 2 |
Ms. Trust is an “interested person” of the Fund as defined in the 1940 Act because Ms. Trust is an
officer of LMPFA and certain of its affiliates. |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
Annual chief executive officer and principal financial officer
certifications (unaudited)
The Fund’s Chief Executive Officer (“CEO”) has submitted to the NYSE the required
annual certification and the Fund also has included the Certifications of the Fund’s CEO and Principal Financial Officer required by Section 302 of the Sarbanes-Oxley Act in the Fund’s Form
N-CSR filed with the SEC for the period of this report.
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Other shareholder communications regarding accounting matters (unaudited)
The Fund’s Audit Committee has established guidelines and procedures regarding the receipt, retention and treatment of complaints regarding accounting, internal
accounting controls or auditing matters (collectively, “Accounting Matters”). Persons with complaints or concerns regarding Accounting Matters may submit their complaints to the Chief Compliance Officer (“CCO”). Persons who are
uncomfortable submitting complaints to the CCO, including complaints involving the CCO, may submit complaints directly to the Fund’s Audit Committee Chair. Complaints may be submitted on an anonymous basis.
The CCO may be contacted at:
Franklin Resources Inc.
Compliance Department
280 Park Ave, 8th Floor
New York, NY 10017
Complaints may also be submitted by telephone at 1-800-742-5274. Complaints submitted through this number will be received by the CCO.
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Summary of information regarding the Fund (unaudited)
Investment Objectives
The Fund’s primary
investment objective is to provide current income and then to liquidate and distribute substantially all of the Fund’s net assets to stockholders on or about December 2, 2024. As a secondary investment objective, the Fund will seek capital
appreciation.
Principal Investment Policies and Strategies
The Fund seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its managed assets in a portfolio of U.S. and foreign
corporate fixed income securities of varying maturities. “Fixed income securities” include bonds, debentures, notes, commercial paper and other similar types of debt instruments, as well as preferred stock, convertible securities, Senior
Loans, Second Lien Loans, loan participations, payment-in-kind securities, zero-coupon bonds, bank certificates of deposit, fixed
time deposits and bankers’ acceptances. Corporate securities are those securities that are issued or originated by U.S. or foreign public or private corporations and other business entities, and do not include securities issued by governments,
agencies or supranational entities. Certain fixed income instruments, such as convertible securities, may also include the right to participate in equity appreciation, and Western Asset will generally evaluate those instruments based primarily on
their debt characteristics. The Fund is not required to dispose of common stock if, due to a conversion of convertible securities into the underlying shares of common stock, less than 80% of the Fund’s managed assets are invested in corporate
fixed income securities. However, under normal circumstances, the Fund will be restricted from investing in any securities that are not U.S. and foreign corporate fixed income securities until the Fund regains such 80% threshold. While the common
stock issued by the Fund will not be rated by a nationally recognized statistical rating organization, it is expected that, under normal market conditions, the Fund will maintain on an ongoing basis a dollar-weighted average credit quality of
portfolio holdings of at least BBB- or higher by Standard & Poor’s Ratings Services (“S&P”) or Fitch Ratings, Inc. (“Fitch”) or Baa3 or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or comparable quality as determined by Western Asset. The Fund will not include derivative instruments for the purpose of calculating the dollar-weighted average credit quality of the Fund’s portfolio
holdings.
The Fund may invest in derivative instruments, such as options contracts, futures contracts, options on futures contracts, indexed securities, credit
default swaps and other swap agreements for investment, hedging and risk management purposes; provided that the Fund’s exposure to derivative instruments, as measured by the total notional amount of all such instruments, will not exceed 20% of
its managed assets. With respect to this limitation, the Fund may net derivatives with opposite exposure to the same underlying instrument. Notwithstanding the foregoing, the Fund may invest without limitation in derivative instruments related to
currencies, including options contracts, futures contracts,
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options on futures contracts, forward contracts and swap agreements and combinations thereof;
provided that such currency derivatives are used for hedging purposes only. To the extent that the security or index underlying the derivative or synthetic instrument is or is composed of U.S. or foreign corporate fixed income securities, the Fund
will include such derivative and synthetic instruments for the purposes of the Fund’s policy to invest at least 80% of its managed assets in a portfolio of U.S. and foreign corporate fixed income securities.
The Fund’s investments may be denominated in U.S. dollars or in foreign currencies. Under normal market conditions, the Fund will invest at least 40% of its managed
assets in fixed income securities of foreign issuers organized or having a principal place of business outside of the United States, including in emerging market countries. A “foreign issuer” is a company, government or agency which is
organized or has a principal place of business outside of the United States. Western Asset will select securities from a diverse selection of countries around the world, focusing on high real yields, pricing inefficiencies and improving credit
conditions that offer income opportunities. The Fund has no present intention to invest a significant portion of its managed assets in a specific geographical region.
The Fund may invest up to 35% of its managed assets in fixed income securities of below investment grade quality. Below investment grade fixed income securities are
rated below “BBB-” by S&P or Fitch, below “Baa3” by Moody’s or comparably rated by another NRSRO or, if unrated, determined by Western Asset to be of comparable quality. Below
investment grade fixed income securities are commonly referred to as “high-yield” or “junk” bonds and are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and
repay principal. In the event that a security receives different ratings from different NRSROs, the Fund will treat the security as being rated in the highest rating category received from an NRSRO.
If a fixed income security is considered investment grade at the time of investment and is subsequently downgraded below that rating, the Fund will not be required to
dispose of the security. If as a result of downgrades, the Fund’s holdings of below investment grade fixed income securities rises above 35% of the Fund’s managed assets, the Fund would, under normal circumstances, be restricted from
investing in any additional below investment grade securities until the Fund otherwise reduced its holdings below the 35% cap. With respect to securities that are downgraded, Western Asset will consider what action, including the sale of the
security, is in the best interests of the Fund and its stockholders.
The Fund may invest up to 20% of its managed assets in government debt securities, including
those of emerging market issuers or of other non-U.S. issuers.
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The Fund may invest up to 20% of its managed assets
in mortgage-backed and asset-backed securities.
The Fund may invest up to 20% of its managed assets in securities that, at the time of investment, are considered
illiquid. “Illiquid securities” are securities which cannot be sold within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities.
The Fund may enter into various interest rate transactions, such as interest rate swaps and the purchase or sale of interest rate caps and floors. The Fund may enter
into, among other things, fixed-for-floating rate swaps in the same currency,
fixed-for-floating rate swaps in different currencies, floating-for-floating rate swaps
in the same currency, floating-for-floating rate swaps in different currencies, or
fixed-for-fixed rate swaps in different currencies. The Fund may enter into total return swaps. The Fund may enter into these transactions to hedge the value of the
Fund’s portfolio to seek to increase its return, to preserve a return or spread on a particular investment or portion of its portfolio, or for investment purposes.
The Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer and the bank or broker-dealer agrees to repurchase the
security at the Fund’s cost plus interest within a specified time. The Fund may also enter into reverse repurchase agreements, under which the Fund will effectively pledge its assets as collateral to secure a short-term loan.
The Fund may lend its portfolio securities so long as the terms and the structure of such loans are not inconsistent with the requirements of the 1940 Act.
Principal Risk Factors
The Fund is a non-diversified, limited term, closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund is not intended to
be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objectives. Your Common Stock at any point in time may be worth less than you invested,
even after taking into account the reinvestment of Fund dividends and distributions.
Investment and Market Risk. An investment in the Fund is subject to
investment risk, including the possible loss of the entire amount that you invest. Your investment in the Common Stock represents an indirect investment in the fixed income securities and other investments owned by the Fund, most of which could be
purchased directly. The value of the Fund’s portfolio securities may move up or down, sometimes rapidly and unpredictably. At any point in time, your Common Stock may be worth less than your original investment, even after taking into account
the reinvestment of Fund dividends and distributions.
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Fixed Income Securities Risk. Under normal market conditions, the Fund will invest at least
80% of its managed assets in a portfolio of U.S. and foreign corporate fixed income securities of varying maturities. In addition to the risks described elsewhere in this section with respect to valuations and liquidity, fixed income securities,
including high-yield securities, are also subject to certain risks, including:
• Issuer Risk. The value of fixed income securities may decline for a
number of reasons that directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods and services.
• Interest Rate Risk. The market price of the Fund’s investments will change in response to changes in interest rates and other factors. During periods
of declining interest rates, the market price of fixed income securities generally rises. Conversely, during periods of rising interest rates, the market price of such securities generally declines. The magnitude of these fluctuations in the market
price of fixed income securities is generally greater for securities with longer maturities. Fluctuations in the market price of the Fund’s securities will not affect interest income derived from securities already owned by the Fund, but will
be reflected in the Fund’s net asset value. The Fund may utilize certain strategies, including investments in structured notes or interest rate swap or cap transactions, for the purpose of reducing the interest rate sensitivity of the portfolio
and decreasing the Fund’s exposure to interest rate risk, although there is no assurance that it will do so or that such strategies will be successful.
•
Prepayment Risk. During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest the proceeds from such prepayment in lower yielding
securities, which may result in a decline in the Fund’s income and distributions to stockholders. This is known as prepayment or “call” risk. Debt securities frequently have call features that allow the issuer to redeem the security
at dates prior to its stated maturity at a specified price (typically greater than par) only if certain prescribed conditions are met. An issuer may choose to redeem a debt security if, for example, the issuer can refinance the debt at a lower cost
due to declining interest rates or an improvement in the credit standing of the issuer.
• Reinvestment Risk. Reinvestment risk is the risk that income
from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income
could affect the Fund’s Common Stock price, its distributions or its overall return.
Credit Risk. If an issuer or guarantor of a security held by the
Fund or a counterparty to a financial contract with the Fund defaults or its credit is downgraded, or is perceived to be less creditworthy, or if the value of the assets underlying a security declines, the value of
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your investment will typically decline. Changes in
actual or perceived creditworthiness may occur quickly. The Fund could be delayed or hindered in its enforcement of rights against an issuer, guarantor or counterparty. Subordinated securities are more likely to suffer a credit loss than non-subordinated securities of the same issuer and will be disproportionately affected by a default, downgrade or perceived decline in creditworthiness.
Below Investment Grade (High Yield or Junk Bond) Securities Risk. The Fund may invest up to 35% of its managed assets in fixed income securities of below
investment grade quality. High yield debt securities are generally subject to greater credit risks than higher-grade debt securities, including the risk of default on the payment of interest or principal. High yield debt securities are considered
speculative, typically have lower liquidity and are more difficult to value than higher grade bonds. High yield debt securities tend to be volatile and more susceptible to adverse events, credit downgrades and negative sentiments and may be
difficult to sell at a desired price, or at all, during periods of uncertainty or market turmoil.
Foreign Securities and Emerging Markets Risk. A fund that
invests in foreign (non-U.S.) securities may experience more rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies. The securities markets of many foreign
countries are relatively small, with a limited number of companies representing a small number of industries. Investments in foreign securities (including those denominated in U.S. dollars) are subject to economic and political developments in the
countries and regions where the issuers operate or are domiciled, or where the securities are traded, such as changes in economic or monetary policies. Values may also be affected by restrictions on receiving the investment proceeds from a foreign
country. Less information may be publicly available about foreign companies than about U.S. companies. Foreign companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies. In addition,
the Fund’s investments in foreign securities may be subject to the risk of nationalization or expropriation of assets, imposition of currency exchange controls or restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and adverse diplomatic developments. In addition, there may be difficulty in obtaining or enforcing a court judgment abroad. Dividends or interest on, or proceeds from the sale of, foreign securities may be subject
to non-U.S. withholding taxes, and special U.S. tax considerations may apply.
The risks of foreign investment are greater
for investments in emerging markets. The Fund considers a country to be an emerging market country if, at the time of investment, it is represented in the J.P. Morgan Emerging Markets Bond Index Global or categorized by the World Bank in its annual
categorization as middle or low-income. Emerging market countries typically have economic and political systems that are less fully developed, and that can be expected to be less stable, than those of more
advanced countries. Low trading
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volumes may result in a lack of liquidity and in price volatility. Emerging market countries may
have policies that restrict investment by foreigners, that require governmental approval prior to investments by foreign persons, or that prevent foreign investors from withdrawing their money at will. An investment in emerging market securities
should be considered speculative.
Currency Risk. The value of investments in securities denominated in foreign currencies increases or decreases as the rates
of exchange between those currencies and the U.S. dollar change. Currency conversion costs and currency fluctuations could erase investment gains or add to investment losses. Currency exchange rates can be volatile, and are affected by factors such
as general economic conditions, the actions of the U.S. and foreign governments or central banks, the imposition of currency controls and speculation. The Fund may be unable or may choose not to hedge its foreign currency exposure.
Leverage Risk. The Fund may utilize leverage in an amount up to 33 1/3% of the Fund’s managed assets. The value of your investment may be more volatile if
the fund borrows or uses instruments, such as derivatives, that have a leveraging effect on the fund’s portfolio. Other risks described in the Prospectus also will be compounded because leverage generally magnifies the effect of a change in the
value of an asset and creates a risk of loss of value on a larger pool of assets than the fund would otherwise have had. The fund may also have to sell assets at inopportune times to satisfy its obligations created by the use of leverage or
derivatives. The use of leverage is considered to be a speculative investment practice and may result in the loss of a substantial amount, and possibly all, of the fund’s assets. In addition, the fund’s portfolio will be leveraged if it
exercises its right to delay payment on a redemption, and losses will result if the value of the fund’s assets declines between the time a redemption request is deemed to be received by the fund and the time the fund liquidates assets to meet
redemption requests.
Reverse Repurchase Agreements Risk. The Fund’s use of reverse repurchase agreements involves many of the same risks involved in the
Fund’s use of leverage, as the proceeds from reverse repurchase agreements generally will be invested in additional securities. There is a risk that the market value of the securities acquired in the reverse repurchase agreement may decline
below the price of the securities that the Fund has sold but remains obligated to repurchase. In addition, there is a risk that the market value of the securities retained by the Fund may decline. If the buyer of securities under a reverse
repurchase agreement were to file for bankruptcy or experience insolvency, the Fund may be adversely affected. Also, in entering into reverse repurchase agreements, the Fund would bear the risk of loss to the extent that the proceeds of the reverse
repurchase agreement are less than the value of the underlying securities. In addition, due to the interest costs associated with reverse repurchase agreements transactions, the Fund’s net asset value will decline, and, in some cases, the Fund
may be worse off than if it had not used such instruments.
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Repurchase Agreements Risk. Subject to its investment objective and policies, the Fund may invest in repurchase
agreements for leverage or investment purposes. Repurchase agreements typically involve the acquisition by the Fund of debt securities from a selling financial institution such as a bank, savings and loan association or broker-dealer. The agreement
provides that the Fund will sell the securities back to the institution at a fixed time in the future. The Fund does not bear the risk of a decline in the value of the underlying security unless the seller defaults under its repurchase obligation.
In the event of the bankruptcy or other default of a seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying securities and losses, including (1) possible decline in the value of the underlying
security during the period in which the Fund seeks to enforce its rights thereto; (2) possible lack of access to income on the underlying security during this period; and (3) expenses of enforcing its rights. While repurchase agreements
involve certain risks not associated with direct investments in debt securities, the Fund follows procedures approved by the Fund’s Board of Directors that are designed to minimize such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-established financial institutions whose financial condition will be continually monitored by Western Asset. In addition, as described above, the value of the collateral underlying the
repurchase agreement will be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Fund generally will seek to
liquidate such collateral. However, the exercise of the Fund’s right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than
the repurchase price, the Fund could suffer a loss.
Derivatives Risk. The Fund may utilize a variety of derivative instruments such as options, floors, caps
and collars, futures contracts, forward contracts, options on futures contracts and indexed securities. Using derivatives can increase Fund losses and reduce opportunities for gains when market prices, interest rates, currencies, or the derivatives
themselves behave in a way not anticipated by the Fund. Using derivatives also can have a leveraging effect and increase Fund volatility. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.
Derivatives may not be available at the time or price desired, may be difficult to sell, unwind or value, and the counterparty may default on its obligations to the Fund. Derivatives are generally subject to the risks applicable to the assets,
rates, indices or other indicators underlying the derivative. The value of a derivative may fluctuate more than the underlying assets, rates, indices or other indicators to which it relates. Use of derivatives may have different tax consequences for
the Fund than an investment in the underlying security, and those differences may affect the amount, timing and character of income distributed to shareholders. The U.S. government and foreign governments are in the process of adopting and
implementing regulations governing
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derivatives markets, including mandatory clearing of certain derivatives, margin and reporting
requirements. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, otherwise adversely affect their performance or disrupt markets.
Effective August 19, 2022, the Fund began operating under Rule 18f-4 under the 1940 Act which, among other things, governs
the use of derivative investments and certain financing transactions (e.g. reverse repurchase agreements) by registered investment companies. Among other things, Rule 18f-4 requires funds that invest in
derivative instruments beyond a specified limited amount to apply a value at risk (VaR) based limit to their use of certain derivative instruments and financing transactions and to adopt and implement a derivatives risk management program. A fund
that uses derivative instruments in a limited amount is not subject to the full requirements of Rule 18f-4. Compliance with Rule 18f-4 by the Fund could, among other
things, make derivatives more costly, limit their availability or utility, or otherwise adversely affect their performance. Rule 18f-4 may limit the Fund’s ability to use derivatives as part of its
investment strategy.
Credit default swap contracts involve heightened risks and may result in losses to the Fund. Credit default swaps may be illiquid and difficult
to value. When the Fund sells credit protection via a credit default swap, credit risk increases since the Fund has exposure to both the issuer whose credit is the subject of the swap and the counterparty to the swap.
Liquidity Risk. The Fund may invest up to 20% of its managed assets in illiquid securities. The term “illiquid securities” for this purpose means
securities that cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities. Liquidity risk exists when particular investments are difficult to sell. Securities
may become illiquid after purchase by the Fund, particularly during periods of market turmoil. When the Fund holds illiquid investments, the portfolio may be harder to value, especially in changing markets, and if the Fund is forced to sell these
investments in order to segregate assets or for other cash needs, the Fund may suffer a loss.
Management Risk. The Fund is subject to management risk because
it is an actively managed investment portfolio. Western Asset and each individual portfolio manager may not be successful in selecting the best performing securities or investment techniques, and the Fund’s performance may lag behind that of
similar funds.
Credit Crisis Liquidity and Volatility Risk. The markets for credit instruments, including fixed income securities, have experienced periods
of extreme illiquidity and volatility. General market uncertainty and consequent repricing risk have led to market imbalances of sellers and buyers, which in turn have also resulted in significant valuation uncertainties in a variety of debt
securities, including certain fixed income securities. These conditions
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resulted, and in many cases continue to result in
greater volatility, less liquidity, widening credit spreads and a lack of price transparency, with many debt securities remaining illiquid and of uncertain value. During times of reduced market liquidity, the Fund may not be able to sell securities
readily at prices reflecting the values at which the securities are carried on the Fund’s books. Sales of large blocks of securities by market participants, such as the Fund, that are seeking liquidity can further reduce security prices in an
illiquid market. These market conditions may make valuation of some of the Fund’s securities uncertain and/or result in sudden and significant valuation increases or decreases in its holdings. Illiquidity and volatility in the credit markets
may directly and adversely affect the setting of dividend rates on the Common Shares.
LIBOR Risk. The Fund’s investments, payment obligations, and
financing terms may be based on floating rates, such as the London Interbank Offered Rate, or “LIBOR,” which was the offered rate for short-term Eurodollar deposits between major international banks. In 2017, the U.K. Financial Conduct
Authority (“FCA”) announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts
should be entered into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. In March 2022, the U.S. federal government enacted legislation to establish a process for
replacing LIBOR in certain existing contracts that do not already provide for the use of a clearly defined or practicable replacement benchmark rate as described in the legislation. Generally speaking, for contracts that do not contain a fallback
provision as described in the legislation, a benchmark replacement recommended by the Federal Reserve Board effectively automatically replaced the USD LIBOR benchmark in the contract upon LIBOR’s cessation at the end of June 2023. The
recommended benchmark replacement is based on the Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York, including certain spread adjustments and benchmark replacement conforming changes. Various financial
industry groups have been planning for the transition away from LIBOR, but there remains uncertainty regarding the impact of the transition from LIBOR on the Fund’s transactions and the financial markets generally. The transition away from
LIBOR may lead to increased volatility and illiquidity in markets that rely on LIBOR and may adversely affect the Fund’s performance. The transition may also result in a reduction in the value of certain LIBOR-based investments held by the Fund
or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses for the Fund.
Government Intervention in Financial Markets Risk. The instability in the financial markets has led the U.S. government and foreign governments to take a number
of unprecedented actions designed to support certain financial institutions and segments of the financial markets that have experienced extreme volatility, and in some cases a lack of liquidity. U.S.
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federal and state governments and foreign governments, their regulatory agencies or self
regulatory organizations may take additional actions that affect the regulation of the securities in which the Fund invests, or the issuers of such securities, in ways that are unforeseeable. Issuers of corporate fixed income securities might seek
protection under the bankruptcy laws. Legislation or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or preclude the Fund’s ability to achieve its investment objectives.
Western Asset will monitor developments and seek to manage the Fund’s portfolio in a manner consistent with achieving the Fund’s investment objectives, but there can be no assurance that it will be successful in doing so.
Limited Term Risk. Unless the termination date is amended by stockholders in accordance with the Articles, the Fund will be terminated on or about
December 2, 2024. The Fund does not seek to return $20 per share upon termination. As the assets of the Fund will be liquidated in connection with its termination, the Fund may be required to sell portfolio securities when it otherwise would
not, including at times when market conditions are not favorable, which may cause the Fund to lose money. As the Fund approaches its termination date, the portfolio composition of the Fund may change, which may cause the Fund’s returns to
decrease and the market price of the Common Stock to fall. Rather than reinvesting the proceeds of its securities, the Fund may distribute the proceeds in one or more liquidating distributions prior to the final liquidation, which may cause the
Fund’s fixed expenses to increase when expressed as a percentage of net assets attributable to Common Stock, or the Fund may invest the proceeds in lower yielding securities or hold the proceeds in cash or cash equivalents, which may adversely
affect the performance of the Fund. Upon its termination, the Fund will distribute substantially all of its net assets to stockholders which may be more than, equal to or less than $20 per share. In addition, other provisions of the Articles may
permit the Fund (with stockholder approval) to take certain actions that could have the effect of changing the termination date, such as through merger, consolidation or liquidation.
Asset-Backed, Mortgage-Backed or Mortgage-Related Securities Risk. To the extent the Fund invests significantly in asset-backed, mortgage-backed or
mortgage-related securities, its exposure to prepayment and extension risks may be greater than other investments in fixed income securities. Mortgage derivatives held by the Fund may have especially volatile prices and may have a disproportionate
effect on the Fund’s share price. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. In addition, mortgage-related securities are subject to prepayment
risk—the risk that borrowers may pay off their mortgages sooner than expected, particularly when interest rates decline. This can reduce the Fund’s returns because the Fund may have to reinvest that money at lower prevailing interest
rates. The Fund’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities.
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Market Price Discount from Net Asset Value Risk.
Shares of closed-end investment companies frequently trade at a discount from their net asset value. This risk is separate and distinct from the risk that the Fund’s net asset value could decrease as
a result of its investment activities and may be a greater risk to investors expecting to sell their Common Stock in a relatively short period following completion of this offering. Whether investors will realize gains or losses upon the sale of the
Common Stock will depend not upon the Fund’s net asset value but upon whether the market price of the Common Stock at the time of sale is above or below the investor’s purchase price for the Common Stock.
Because the market price of the Common Stock will be determined by factors such as relative supply of and demand for the Common Stock in the market, general market and
economic conditions and other factors beyond the control of the Fund, the Fund cannot predict whether the Common Stock will trade at, above or below net asset value or at, above or below the initial public offering price. The Fund’s Common
Stock is designed primarily for long term investors and you should not view the Fund as a vehicle for trading purposes.
Non-Diversification Risk. The Fund is classified as “non-diversified”
under the 1940 Act. As a result, it can invest a greater portion of its assets in obligations of a single issuer than a “diversified” fund. The Fund may therefore be more susceptible than a diversified fund to being adversely affected by
any single corporate, economic, political or regulatory occurrence. See “The Fund’s Investments.” The Fund intends to qualify for the special tax treatment available to “regulated investment companies” under Subchapter M of
the Code, and thus intends to satisfy the diversification requirements of Subchapter M, including the less stringent diversification requirement that applies to the percent of its total assets that are represented by cash and cash items (including
receivables), U.S. government securities, the securities of other regulated investment companies and certain other securities.
U.S. Government Debt Securities
Risk. Although the U.S. government guarantees principal and interest payments on securities issued by the U.S. government and some of its agencies, such as securities issued by the Government National Mortgage Association, this guarantee does
not apply to losses resulting from declines in the market value of these securities.
Non-U.S. Government Debt Securities
Risk. The Fund intends to invest in Non-U.S. government debt securities. The ability of a government issuer, especially in an emerging market country, to make timely and complete payments on its debt
obligations will be strongly influenced by the government issuer’s balance of payments, including export performance, its access to international credits and investments, fluctuations of interest rates and the extent of its foreign reserves. A
country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities or imports. To the
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extent that a country receives payment for its exports in currencies other than U.S. dollars, its
ability to make debt payments denominated in U.S. dollars could be adversely affected. If a government issuer cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from
foreign governments, commercial banks, and multinational organizations. There are no bankruptcy proceedings similar to those in the United States by which defaulted Non-U.S. government debt may be collected.
Additional factors that may influence a government issuer’s ability or willingness to service debt include, but are not limited to, a country’s cash flow situation, the availability of sufficient foreign exchange on the date a payment is
due, the relative size of its debt service burden to the economy as a whole, and the issuer’s policy towards the International Monetary Fund, the International Bank for Reconstruction and Development and other international agencies to which a
government debtor may be subject.
Senior Loans Risk. The Fund may invest in Senior Loans issued by banks, other financial institutions, and other investors
to corporations, partnerships, limited liability companies and other entities to finance leveraged buyouts, recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings and, to a lesser extent, for general operating and other
purposes. An investment in Senior Loans involves risk that the borrowers under Senior Loans may default on their obligations to pay principal or interest when due. In the event a borrower fails to pay scheduled interest or principal payments on a
Senior Loan held by the Fund, the Fund will experience a reduction in its income and a decline in the market value of the Senior Loan, which will likely reduce dividends and lead to a decline in the net asset value of the Fund. If the Fund acquires
a Senior Loan from another lender, for example, by acquiring a participation, the Fund may also be subject to credit risks with respect to that lender.
The Fund
will generally invest in Senior Loans that are secured with specific collateral. However, there can be no assurance that liquidation of collateral would satisfy the borrower’s obligation in the event of
non-payment or that such collateral could be readily liquidated. In the event of the bankruptcy of a borrower, the Fund could experience delays and limitations on its ability to realize the benefits of the
collateral securing the Senior Loan. Senior Loans are typically structured as floating rate instruments in which the interest rate payable on the obligation fluctuates with interest rate changes. As a result, the yield on Senior Loans will generally
decline in a falling interest rate environment causing the Fund to experience a reduction in the income it receives from a Senior Loan. Senior Loans are generally below investment grade quality and may be unrated at the time of investment; are
generally not registered with the SEC or state securities commissions; and are generally not listed on any securities exchange. In addition, the amount of public information available on Senior Loans is generally less extensive than that available
for other types of assets.
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Second Lien Loans Risk. Second Lien Loans
generally are subject to similar risks as those associated with investments in Senior Loans. Because Second Lien Loans are subordinated or unsecured and thus lower in priority of payment to Senior Loans, they are subject to the additional risk that
the cash flow of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the borrower. This risk is generally higher for subordinated
unsecured loans or debt, which are not backed by a security interest in any specific collateral. Second Lien Loans generally have greater price volatility than Senior Loans and may be less liquid. There is also a possibility that originators will
not be able to sell participations in Second Lien Loans, which would create greater credit risk exposure for the holders of such loans. Second Lien Loans share the same risks as other below investment grade securities.
Loan Participations and Assignments Risk. The Fund may invest in participations in loans or assignments of all or a portion of loans from third parties. In
connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is
selling the participation. In the event of the insolvency of the lender selling a participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the
lender and the borrower. Certain participations may be structured in a manner designed to avoid purchasers of participations being subject to the credit risk of the lender with respect to the participation, but even under such a structure, in the
event of the lender’s insolvency, the lender’s servicing of the participation may be delayed and the assignability of the participation impaired. The Fund will acquire participations only if the lender interpositioned between the Fund and
the borrower is determined by Western Asset to be creditworthy.
Common Stock Risk. The Fund may invest in common stocks and may hold common stocks which
result from a corporate restructuring or stock conversion. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. In addition, the prices of common stocks are sensitive to
general movements in the stock market, and a drop in the stock market may depress the prices of common stocks to which the Fund has exposure. Common stock prices fluctuate for several reasons including changes in investors’ perceptions of the
financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events affecting an issuer occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the
cost of capital rises and borrowing costs increase. The value of the common stocks in which the Fund may invest will be affected by changes in the stock markets generally, which may be the result of domestic or international political or economic
news, changes in interest rates or changing investor sentiment. At times, stock
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Summary of information regarding the Fund (unaudited) (cont’d)
markets can be volatile and stock prices can change substantially. The common stocks of smaller
companies are more sensitive to these changes than those of larger companies. Common stock risk will affect the Fund’s net asset value per share, which will fluctuate as the value of the securities held by the Fund change.
Preferred Stock Risk. The Fund may invest in preferred stock. Preferred stocks are unique securities that combine some of the characteristics of both common
stocks and bonds. Preferred stocks generally pay a fixed rate of return and are sold on the basis of current yield, like bonds. However, because they are equity securities, preferred stock provides equity ownership of a company, and the income is
paid in the form of dividends. Preferred stocks typically have a yield advantage over common stocks as well as comparably-rated fixed income investments. Preferred stocks are typically subordinated to bonds and other debt instruments in a
company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Unlike interest payments on debt securities, preferred stock dividends are payable only if
declared by the issuer’s board of directors. Preferred stocks also may be subject to optional or mandatory redemption provisions. Certain of the preferred stocks in which the Fund may invest may be convertible preferred stocks.
Convertible Securities Risk. The Fund may invest in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security
that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula. Before conversion, convertible securities
have characteristics similar to nonconvertible income securities in that they ordinarily provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers, but lower yields than comparable
nonconvertible securities. Similar to traditional fixed income securities, the market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price
of the common stock underlying a convertible security exceeds the conversion price, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the
convertible security tends to trade increasingly on a yield basis and thus may not decline in price to the same extent as the underlying common stock. The credit standing of the issuer and other factors also may have an effect on the convertible
security’s investment value. Convertible securities rank senior to common stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption
at the option of the issuer at a price established in the convertible security’s governing instrument.
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Short Sales Risk. To the extent the Fund
makes use of short sales for investment and/or risk management purposes, the Fund may be subject to risks associated with selling short. Short sales are transactions in which the Fund sells securities or other instruments that the Fund does not own.
Short sales expose the Fund to the risk that it will be required to cover its short position at a time when the securities have appreciated in value, thus resulting in a loss to the Fund. The Fund may engage in short sales where it does not own or
have the right to acquire the security sold short at no additional cost. The Fund’s loss on a short sale theoretically could be unlimited in a case where the Fund is unable, for whatever reason, to close out its short position. In addition, the
Fund’s short selling strategies may limit its ability to benefit from increases in the markets. If the Fund engages in short sales, it will segregate liquid assets, enter into offsetting transactions or own positions covering its obligations;
however, such segregation and cover requirements will not limit or offset losses on related positions. Short selling also involves a form of financial leverage that may exaggerate any losses realized by the Fund. Also, there is the risk that the
counterparty to a short sale may fail to honor its contractual terms, causing a loss to the Fund.
Risk of Short Economic Exposure Through Derivatives. The
use by the Fund of derivatives such as options, forwards or futures contracts for investment and/or risk management purposes may subject the Fund to risks associated with short economic exposure through such derivatives. Taking a short economic
position through derivatives exposes the Fund to the risk that it will be obligated to make payments to its counterparty if the underlying asset appreciates in value, thus resulting in a loss to the Fund. The Fund’s loss on a short position
using derivatives theoretically could be unlimited.
Counterparty Risk. Changes in the credit quality of the companies that serve as the Fund’s
counterparties with respect to derivatives or other transactions supported by another party’s credit will affect the value of those instruments. Certain entities that have served as counterparties in the markets for these transactions have
recently incurred significant financial hardships including bankruptcy and losses as a result of exposure to sub-prime mortgages and other lower quality credit investments that have experienced recent defaults
or otherwise suffered extreme credit deterioration. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining
any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.
Structured Notes and Related Instruments Risk. The Fund may invest in “structured” notes and other related instruments, which are privately negotiated
debt obligations where the principal and/or interest is determined by reference to the performance of a benchmark asset, market or interest rate (an “embedded index”), such as selected securities, an index of securities or specified
interest rates, or the differential performance of two assets or
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markets, such as indexes reflecting bonds. Structured instruments may be issued by corporations,
including banks, as well as by governmental agencies. Structured instruments frequently are assembled in the form of medium-term notes, but a variety of forms are available and may be used in particular circumstances. The terms of such structured
instruments normally provide that their principal and/or interest payments are to be adjusted upwards or downwards (but ordinarily not below zero) to reflect changes in the embedded index while the structured instruments are outstanding. As a
result, the interest and/or principal payments that may be made on a structured product may vary widely, depending on a variety of factors, including the volatility of the embedded index and the effect of changes in the embedded index on principal
and/or interest payments. The rate of return on structured notes may be determined by applying a multiplier to the performance or differential performance of the referenced index(es) or other asset(s). Application of a multiplier involves leverage
that will serve to magnify the potential for gain and the risk of loss.
Inflation/Deflation Risk. Inflation risk is the risk that the value of certain assets
or income from the Fund’s investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Common Stock and distributions on the Common Stock can decline. In addition, during
any periods of rising inflation, the dividend rates or borrowing costs associated with the Fund’s use of leverage would likely increase, which would tend to further reduce returns to stockholders. Deflation risk is the risk that prices
throughout the economy decline over time — the opposite of inflation. Deflation may have an adverse affect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of the
Fund’s portfolio.
When-Issued and Delayed-Delivery Transactions Risk. The Fund may purchase fixed income securities on a when-issued basis, and may
purchase or sell those securities for delayed delivery. When-issued and delayed-delivery transactions occur when securities are purchased or sold by the Fund with payment and delivery taking place in the future to secure an advantageous yield or
price. Securities purchased on a when-issued or delayed-delivery basis may expose the Fund to counterparty risk of default as well as the risk that securities may experience fluctuations in value prior to their actual delivery. The Fund will not
accrue income with respect to a when-issued or delayed-delivery security prior to its stated delivery date. Purchasing securities on a when-issued or delayed-delivery basis can involve the additional risk that the price or yield available in the
market when the delivery takes place may not be as favorable as that obtained in the transaction itself.
Portfolio Turnover Risk. Changes to the investments
of the Fund may be made regardless of the length of time particular investments have been held. A high portfolio turnover rate may result in increased transaction costs for the Fund in the form of increased dealer spreads and other transactional
costs, which may have an adverse impact on the Fund’s
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performance. In addition, high portfolio turnover
may result in the realization of net short-term capital gains by the Fund which, when distributed to stockholders, will be taxable as ordinary income. A high portfolio turnover may increase the Fund’s current and accumulated earnings and
profits, resulting in a greater portion of the Fund’s distributions being treated as a dividend to the Fund’s stockholders. The portfolio turnover rate of the Fund will vary from year to year, as well as within a given year.
Temporary Defensive Strategies Risk. When Western Asset anticipates unusual market or other conditions, the Fund may temporarily depart from its principal
investment strategies as a defensive measure and invest all or a portion of its assets in obligations of the U.S. government, its agencies or instrumentalities; other investment grade debt securities; investment grade commercial paper; certificates
of deposit and bankers’ acceptances; repurchase agreements with respect to any of the foregoing investments or any other fixed income securities that Western Asset considers consistent with this strategy. To the extent that the Fund invests
defensively, it may not achieve its investment objectives.
Anti-Takeover Provisions Risk. The Charter and Bylaws of the Fund include provisions that are
designed to limit the ability of other entities or persons to acquire control of the Fund for short-term objectives, including by converting the Fund to open-end status or changing the composition of the
Board, that may be detrimental to the Fund’s ability to achieve its primary investment objective of seeking high current income. The Bylaws also contain a provision providing that the Board of Directors has adopted a resolution to opt in the
Fund to the provisions of the Maryland Control Share Acquisition Act (“MCSAA”). There can be no assurance, however, that such provisions will be sufficient to deter professional arbitrageurs that seek to cause the Fund to take actions that
may not be consistent with its investment objective or aligned with the interests of long-term shareholders, such as liquidating debt investments prior to maturity, triggering taxable events for shareholders and decreasing the size of the Fund. Such
provisions may limit the ability of shareholders to sell their shares at a premium over prevailing market prices by discouraging an investor from seeking to obtain control of the Fund. There can be no assurance, however, that such provisions will be
sufficient to deter professional investors that seek to cause the Fund to take actions that may not be aligned with the interests of long-term shareholders in order to allow the professional investor to arbitrage the Fund’s market price.
Market Events Risk. The market values of securities or other assets will fluctuate, sometimes sharply and unpredictably, due to factors such as economic events,
governmental actions or intervention, actions taken by the U.S. Federal Reserve or foreign central banks, market disruptions caused by trade disputes or other factors, political developments, armed conflicts, economic sanctions and countermeasures
in response to sanctions, major cybersecurity events, the global and domestic effects of widespread or local health, weather or climate events, and other factors that may or may not be related to
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Summary of information regarding the Fund (unaudited) (cont’d)
the issuer of the security or other asset. Economies and financial markets throughout the world
are increasingly interconnected. Economic, financial or political events, trading and tariff arrangements, public health events, terrorism, wars, natural disasters and other circumstances in one country or region could have profound impacts on
global economies or markets. As a result, whether or not the fund invests in securities of issuers located in or with significant exposure to the countries or markets directly affected, the value and liquidity of the fund’s investments may be
negatively affected. Following Russia’s invasion of Ukraine, Russian stocks lost all, or nearly all, of their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Furthermore, events involving limited liquidity, defaults, non-performance or other adverse developments that affect one industry, such as the financial services industry, or concerns or rumors about any
events of these kinds, have in the past and may in the future lead to market-wide liquidity problems, may spread to other industries, and could negatively affect the value and liquidity of the fund’s investments.
The long-term impact of the COVID-19 pandemic and its subsequent variants on economies, markets, industries and individual
issuers is not known. Some sectors of the economy and individual issuers have experienced or may experience particularly large losses. Periods of extreme volatility in the financial markets, reduced liquidity of many instruments, increased
government debt, inflation, and disruptions to supply chains, consumer demand and employee availability, may continue for some time. The U.S. government and the Federal Reserve, as well as certain foreign governments and central banks, took
extraordinary actions to support local and global economies and the financial markets in response to the COVID-19 pandemic. This and other government intervention into the economy and financial markets may not
work as intended, and have resulted in a large expansion of government deficits and debt, the long term consequences of which are not known. In addition, the COVID-19 pandemic, and measures taken to mitigate
its effects, could result in disruptions to the services provided to the fund by its service providers.
Raising the ceiling on U.S. government debt has become
increasingly politicized. Any failure to increase the total amount that the U.S. government is authorized to borrow could lead to a default on U.S. government obligations, with unpredictable consequences for economies and markets in the U.S. and
elsewhere. Recently, inflation and interest rates have increased and may rise further. These circumstances could adversely affect the value and liquidity of the fund’s investments, impair the fund’s ability to satisfy redemption requests,
and negatively impact the fund’s performance.
The United States and other countries are periodically involved in disputes over trade and other matters, which
may result in tariffs, investment restrictions and adverse impacts on affected companies and securities. For example, the United States has imposed tariffs and other trade barriers on Chinese exports, has restricted sales of certain categories of
goods
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to China, and has established barriers to
investments in China. Trade disputes may adversely affect the economies of the United States and its trading partners, as well as companies directly or indirectly affected and financial markets generally. The United States government has prohibited
U.S. persons from investing in Chinese companies designated as related to the Chinese military. These and possible future restrictions could limit the fund’s opportunities for investment and require the sale of securities at a loss or make them
illiquid. Moreover, the Chinese government is involved in a longstanding dispute with Taiwan that has included threats of invasion. If the political climate between the United States and China does not improve or continues to deteriorate, if China
were to attempt unification of Taiwan by force, or if other geopolitical conflicts develop or get worse, economies, markets and individual securities may be severely affected both regionally and globally, and the value of the fund’s assets may
go down.
Rating Agency Risk. Credit ratings are issued by rating agencies which are private services that provide ratings of the credit quality of debt
obligations, including convertible securities. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risks or the liquidity of securities. Rating agencies may fail to make timely changes in
credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. In addition, in recent years there have been instances in which the initial rating assigned by a rating agency to a security failed to
take account of adverse economic developments which subsequently occurred, leading to losses that were not anticipated based on the initial rating. To the extent that the issuer of a security pays a rating agency for the analysis of its security, an
inherent conflict of interest may exist that could affect the reliability of the rating. The ratings of a debt security may change over time. As a result, debt instruments held by the Fund could receive a higher rating or a lower rating during the
period in which they are held. The Fund will not necessarily sell a security when its rating is reduced below its rating at the time of purchase.
Managed
Distribution Risk. Under a managed distribution policy, the Fund would intend to make monthly distributions to stockholders at a fixed rate per share of Common Stock or a fixed percentage of net asset value that may include periodic
distributions of long-term capital gains. Under a managed distribution policy, if, for any monthly distribution, ordinary income (that is, net investment income and any net short-term capital gain) and net realized capital gains were less than the
amount of the distribution, the difference would be distributed from the Fund’s previously accumulated earnings and profits or cash generated from the sale of Fund assets. If, for any fiscal year, the total distributions exceeded ordinary
income and net realized capital gains (the “Excess”), the Excess would decrease the Fund’s total assets and, as a result, would have the likely effect of increasing the Fund’s expense ratio. There is a risk that the Fund would
not eventually realize capital gains in an amount corresponding to a distribution of the Excess. In addition, in order to make such distributions, the Fund may have to sell a portion of its investment portfolio at a time when
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independent investment judgment might not dictate such action. If the Fund were to issue senior
securities and not be in compliance with the asset coverage requirements of the 1940 Act, the Fund would be required to suspend the managed distribution policy. Pursuant to the requirements of the 1940 Act and other applicable laws, a notice will
accompany each monthly distribution disclosing the sources of the distribution.
Operational Risk. The valuation of the Fund’s investments may be
negatively impacted because of the operational risks arising from factors such as processing errors and human errors, inadequate or failed internal or external processes, failures in systems and technology, changes in personnel, and errors caused by
third party service providers or trading counterparties. It is not possible to identify all of the operational risks that may affect the Fund or to develop processes and controls that completely eliminate or mitigate the occurrence of such failures.
The Fund and its shareholders could be negatively impacted as a result.
Cybersecurity Risk. Cybersecurity incidents, both intentional and unintentional, may
allow an unauthorized party to gain access to Fund assets, Fund or proprietary information, cause the Fund, the Fund’s manager and subadvisers and/or their service providers to suffer data breaches, data corruption or loss of operational
functionality or prevent fund investors from purchasing, redeeming or exchanging shares or receiving distributions. The Fund, manager and subadvisers have limited ability to prevent or mitigate cybersecurity incidents affecting third party service
providers, and such third party service providers may have limited indemnification obligations to the Fund or the manager. Cybersecurity incidents may result in financial losses to the Fund and its shareholders, and substantial costs may be incurred
in an effort to prevent or mitigage future cybersecurity incidents. Issuers of securities in which the Fund invests are also subject to cybersecurity risks, and the value of these securities could decline if the issuers experience cybersecurity
incidents.
More Information
For a complete
list of the Fund’s fundamental investment restrictions and more detailed descriptions of the Fund’s investment policies, strategies and risks, see the Fund’s registration statement on Form N-2
that was declared effective by the SEC on November 23, 2009. The Fund’s fundamental investment restrictions may not be changed without the approval of the holders of a majority of the outstanding voting securities, as defined in the 1940
Act.
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Dividend reinvestment plan (unaudited)
Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain dividends and return
of capital distributions, on your Common Stock will be automatically reinvested by Computershare Trust Company, N.A., as agent for the stockholders (the “Plan Agent”), in additional shares of Common Stock under the Fund’s Dividend
Reinvestment Plan (the “Plan”). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all cash distributions paid by check mailed directly to you by Computershare Trust
Company, N.A., as dividend paying agent.
If you participate in the Plan, the number of shares of Common Stock you will receive will be determined as follows:
(1) If the market price of the Common Stock (plus $0.03 per share commission) on the payment date (or, if the payment date is not a NYSE trading day, the
immediately preceding trading day) is equal to or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date, the Fund will issue new Common Stock at a price equal to the greater of (a) the
net asset value per share at the close of trading on the NYSE on the payment date or (b) 95% of the market price per share of the Common Stock on the payment date.
(2) If the net asset value per share of the Common Stock exceeds the market price of the Common Stock (plus $0.03 per share commission) at the close of
trading on the NYSE on the payment date, the Plan Agent will receive the dividend or distribution in cash and will buy Common Stock in the open market, on the NYSE or elsewhere, for your account as soon as practicable commencing on the trading day
following the payment date and terminating no later than the earlier of (a) 30 days after the dividend or distribution payment date, or (b) the payment date for the next succeeding dividend or distribution to be made to the stockholders; except
when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price (plus $0.03 per share commission) rises so that it equals or exceeds the net asset value per share of the Common
Stock at the close of trading on the NYSE on the payment date before the Plan Agent has completed the open market purchases or (ii) if the Plan Agent is unable to invest the full amount eligible to be reinvested in open market purchases, the
Plan Agent will cease purchasing Common Stock in the open market and the Fund shall issue the remaining Common Stock at a price per share equal to the greater of (a) the net asset value per share at the close of trading on the NYSE on the day
prior to the issuance of shares for reinvestment or (b) 95% of the then current market price per share.
Common Stock in your account will be held by the Plan Agent
in non-certificated form. Any proxy you receive will include all shares of Common Stock you have received under the Plan. You may withdraw from the Plan (i.e., opt-out)
by notifying the Plan Agent in writing at P.O. Box 43006, Providence, RI 02940-3078 or by calling the Plan Agent at
1-888-888-0151. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business
days prior to any dividend or distribution record date; otherwise such
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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85 |
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Dividend reinvestment plan
(unaudited) (cont’d)
withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the
most recently declared dividend or distribution on the Common Stock.
Plan participants who sell their shares will be charged a service charge (currently $5.00 per
transaction) and the Plan Agent is authorized to deduct brokerage charges actually incurred from the proceeds (currently $0.05 per share commission). There is no service charge for reinvestment of your dividends or distributions in Common Stock.
However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional shares of Common
Stock, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Stock over time. Dollar cost averaging is a technique for lowering the average cost per share over time if the
Fund’s net asset value declines. While dollar cost averaging has definite advantages, it cannot assure profit or protect against loss in declining markets.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions. Investors
will be subject to income tax on amounts reinvested under the Plan.
The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of
Directors, the change is warranted. The Plan may be terminated, amended or supplemented by the Fund upon notice in writing mailed to stockholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund
for which the termination or amendment is to be effective. Upon any termination, you will be sent cash for any fractional share of Common Stock in your account. You may elect to notify the Plan Agent in advance of such termination to have the Plan
Agent sell part or all of your Common Stock on your behalf. Additional information about the Plan and your account may be obtained from the Plan Agent at P.O. Box 43006, Providence, RI 02940-3078 or by calling the Plan Agent at 1-888-888-0151.
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| 86 |
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Western Asset Global Corporate Defined Opportunity Fund Inc. |
Important tax information (unaudited)
By mid-February, tax information related to a shareholder’s proportionate share of distributions paid during the preceding
calendar year will be received, if applicable. Please also refer to www.franklintempleton.com for per share tax information related to any distributions paid during the preceding calendar year. Shareholders are advised to consult with their tax
advisors for further information on the treatment of these amounts on their tax returns.
The following tax information for the Fund is required to be furnished to
shareholders with respect to income earned and distributions paid during its fiscal year.
The Fund hereby reports the following amounts, or if subsequently
determined to be different, the maximum allowable amounts, for the fiscal year ended October 31, 2023:
|
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| |
|
Pursuant to: |
|
Amount Reported |
|
| Income Eligible for Dividends Received Deduction (DRD) |
|
§854(b)(1)(A) |
|
|
$41,428 |
|
| Qualified Dividend Income Earned (QDI) |
|
§854(b)(1)(B) |
|
|
$41,428 |
|
| Qualified Net Interest Income (QII) |
|
§871(k)(1)(C) |
|
|
$6,733,355 |
|
| Section 163(j) Interest Earned |
|
§163(j) |
|
|
$20,241,030 |
|
| Interest Earned from Federal Obligations |
|
Note (1) |
|
|
$297,760 |
|
Note (1) — The law varies in each state as to whether and what percentage of dividend income attributable to Federal obligations is
exempt from state income tax. Shareholders are advised to consult with their tax advisors to determine if any portion of the dividends received is exempt from state income taxes.
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| Western Asset Global Corporate Defined Opportunity Fund Inc. |
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87 |
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Western Asset
Global Corporate Defined Opportunity Fund Inc.
Directors
Robert D. Agdern
Carol L. Colman
Daniel P. Cronin
Paolo M. Cucchi
Eileen A. Kamerick
Nisha Kumar
Jane Trust
Chairman
Officers
Jane Trust
President and Chief Executive Officer
Christopher Berarducci
Treasurer and Principal Financial Officer
Fred Jensen
Chief Compliance Officer
Marc A. De Oliveira*
Secretary and Chief Legal Officer
Thomas C. Mandia
Senior Vice President
Jeanne M. Kelly
Senior Vice President
Western Asset Global Corporate Defined
Opportunity Fund Inc.
620 Eighth Avenue
47th Floor
New York, NY 10018
Investment manager
Franklin Templeton Fund Adviser, LLC**
Subadvisers
Western Asset Management Company, LLC
Western Asset Management Company
Limited
Western Asset Management Company Ltd
Western Asset Management Company
Pte. Ltd.
Custodian
The Bank of New York
Mellon
Transfer agent
Computershare Inc.
P.O. Box 43006
Providence, RI 02940-3078
Independent registered public accounting firm
PricewaterhouseCoopers LLP
Baltimore, MD
Legal counsel
Simpson Thacher & Bartlett
LLP
900 G Street NW
Washington, DC 20001
New York Stock Exchange Symbol
GDO
| * |
Effective September 7, 2023, Mr. De Oliveira became Secretary and Chief Legal Officer. |
| ** |
Formerly known as Legg Mason Partners Fund Advisor, LLC. |
Legg Mason Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very
Important to the Legg Mason Funds
This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and
data protection practices with respect to nonpublic personal information the Funds receive. The Legg Mason Funds include the Western Asset Money Market Funds sold by the Funds’ distributor, Franklin Distributors, LLC, as well as Legg
Mason-sponsored closed-end funds. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.
The Type of Nonpublic Personal Information the Funds Collect About You
The Funds collect and maintain nonpublic personal information about you in connection with your
shareholder account. Such information may include, but is not limited to:
| • |
|
Personal information included on applications or other forms; |
| • |
|
Account balances, transactions, and mutual fund holdings and positions; |
| • |
|
Bank account information, legal documents, and identity verification documentation; and |
| • |
|
Online account access user IDs, passwords, security challenge question responses. |
How the Funds Use Nonpublic Personal Information About You
The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, unless you have authorized the
Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have authorized or as permitted or required by law.
The Funds may disclose information about you to:
| • |
|
Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business or
to comply with obligations to government regulators; |
| • |
|
Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business
(such as printing, mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform statistical analysis, market research and marketing services solely
for the Funds; |
| • |
|
Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’
employees, agents and affiliates and service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators; |
| • |
|
The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary
business, or to comply with obligations to government regulators; |
| • |
|
Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.
|
|
| NOT PART OF THE ANNUAL REPORT |
Legg Mason Funds Privacy and Security Notice (cont’d)
Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf,
including those outside the United States, are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to
perform.
The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or
required by applicable law, such as in connection with a law enforcement or regulatory request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to
disclose your nonpublic personal information to third parties. While it is the Funds’ practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain
unchanged.
Keeping You Informed of the Funds’ Privacy and Security Practices
The Funds will notify you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time, they will
notify you promptly if this privacy policy changes.
The Funds’ Security Practices
The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds’ internal data
security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.
Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide or transmit to them,
and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary so you can take appropriate protective steps. If you have consented
to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.
In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your account information is
incomplete, not accurate or not current, if you have questions about the Funds’ privacy practices, or our use of your nonpublic personal information, write the Funds using the contact information on your account statements, email the Funds by
clicking on the Contact Us section of the Funds’ website at www.franklintempleton.com, or contact the Funds at
1-877-721-1926 for the Western Asset Money Market Funds or 1-888-777-0102 for the Legg Mason-sponsored closed-end funds.
Revised
October 2022
|
| NOT PART OF THE ANNUAL REPORT |
Legg Mason Funds Privacy and Security Notice (cont’d)
Legg Mason California Consumer Privacy Act Policy
Although much of the personal information we collect is “nonpublic personal information” subject to federal law, residents of California may, in certain
circumstances, have additional rights under the California Consumer Privacy Act (“CCPA”). For example, if you are a broker, dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the account of any other person(s)
or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your personal information (as defined
by the CCPA).
In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the categories and specific pieces
of personal information we have collected about you.
You also have the right to request the deletion of the personal information collected or maintained by the
Funds.
If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set forth
below. The rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process described
below. We do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.
We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a request
on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or other
applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an agent if
suitable and appropriate proof is not provided.
For the 12-month period prior to the date of this Privacy Policy, the Legg
Mason Funds have not sold any of your personal information; nor do we have any plans to do so in the future.
Contact Information
Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202
Email: DataProtectionOfficer@franklintempleton.com
Phone: 1-800-396-4748
Revised October 2022
|
| NOT PART OF THE ANNUAL REPORT |
Western Asset Global Corporate Defined Opportunity Fund Inc.
Western Asset Global Corporate Defined Opportunity Fund Inc.
620 Eighth Avenue
47th Floor
New York, NY 10018
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase, at market
prices, shares of its stock.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first
and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
To obtain information on Form N-PORT, shareholders can call the Fund at 1-888-777-0102.
Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th
of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling 1-888-777-0102, (2) at www.franklintempleton.com and (3) on the SEC’s website at www.sec.gov.
Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Fund may be found on Franklin Templeton’s website,
which can be accessed at www.franklintempleton.com. Any reference to Franklin Templeton’s website in this report is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate
Franklin Templeton’s website in this report.
This report is transmitted to the shareholders of Western Asset Global Corporate Defined Opportunity Fund Inc. for
their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.
Computershare Inc.
P.O. Box 43006
Providence, RI 02940-3078
WASX013050 12/23 SR23-4784
|
|
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| ITEM 2. |
|
CODE OF ETHICS. |
|
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|
|
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller. |
|
|
| ITEM 3. |
|
AUDIT COMMITTEE FINANCIAL EXPERT. |
|
|
|
|
The Board of Directors of the registrant has determined that Eileen A. Kamerick and Nisha Kumar, are the members of the Board’s Audit Committee, possesses the technical attributes identified in Instruction 2(b) of Item 3 to
Form N-CSR to qualify as an “audit committee financial experts”. |
|
|
| ITEM 4. |
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
|
|
|
|
(a) Audit Fees. The aggregate fees billed in the previous fiscal years ending October 31, 2022 and October 31, 2023 (the “Reporting Periods”) for professional services rendered by the Registrant’s
principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the
Reporting Periods, were $50,837 in October 31, 2022 and $50,837 in October 31, 2023. |
|
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|
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Period for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant’s financial statements were $0
in October 31, 2022 and $0 in October 31, 2023. |
|
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|
|
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $10,000 in October 31,
2022 and $10,000 in October 31, 2023. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding
statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held. |
|
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|
There were no fees billed for tax services by the Auditors to service affiliates during the Reporting Periods that required pre-approval by the Audit Committee. |
|
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(d) All Other Fees. The aggregate fees for other fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item
for the Western Asset Global Corporate Defined Opportunity Fund Inc. were $0 in October 31, 2022 and $0 in October 31, 2023. |
|
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|
|
All Other Fees. There were no other non-audit services rendered by the Auditor to Legg Mason Partners Fund Advisors, LLC (“LMPFA”), and any entity controlling, controlled by or under
common control with LMPFA that provided ongoing services to Western Asset Global Corporate Defined Opportunity Fund Inc. requiring pre-approval by the Audit Committee in the Reporting Period. |
|
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(e) Audit Committee’s pre—approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation
S-X. |
|
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(1) The Charter for the Audit Committee (the “Committee”) of the Board of each registered investment company (the “Fund”) advised by LMPFA or one of their affiliates (each, an “Adviser”) requires
that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be
provided by the Fund’s independent auditors to the Adviser and any Covered Service Providers if the |
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engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee. |
|
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The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter,
permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than
those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related
to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or
investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible. |
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Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund (“Covered Service
Providers”) constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the
Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be
approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and
(iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit. |
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(2) None of the services described in paragraphs (b) through (d) of this Item were performed in reliance on paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
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(f) Not applicable. |
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(g) Non-audit fees billed by the Auditor for services rendered to Western Asset Global Corporate Defined Opportunity Fund Inc., LMPFA and any entity controlling, controlled by, or under
common control with LMPFA that provides ongoing services to Western Asset Global Corporate Defined Opportunity Fund Inc. during the reporting period were $350,359 in October 31, 2022 and $342,635 in October 31, 2023. |
|
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(h) Yes. Western Asset Global Corporate Defined Opportunity Fund Inc.’s Audit Committee has considered whether the provision of non-audit services that were rendered to Service
Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Accountant’s independence. All services provided by
the Auditor to the Western Asset Global Corporate Defined Opportunity Fund Inc. or to Service Affiliates, which were required to be pre-approved, were pre-approved as
required. |
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(i) Not applicable. |
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(j) Not applicable. |
|
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|
| ITEM 5. |
|
AUDIT COMMITTEE OF LISTED REGISTRANTS. |
|
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a) Registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)58(A) of the Exchange Act. The Audit Committee consists of the following Board
members: |
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Robert D. Agdern |
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Carol L. Colman |
|
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Daniel P. Cronin |
|
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Paolo M. Cucchi |
|
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Eileen A. Kamerick |
|
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Nisha Kumar |
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b) Not applicable |
|
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| ITEM 6. |
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SCHEDULE OF INVESTMENTS. |
|
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Included herein under Item 1. |
|
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| ITEM 7. |
|
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Western Asset Management Company, LLC
Proxy Voting Policies and Procedures
NOTE
The policy below relating to proxy
voting and corporate actions is a global policy for Western Asset Management Company, LLC (“Western Asset” or the “Firm”) and all Western Asset affiliates, including Western Asset Management Company Limited (“Western Asset
Limited”), Western Asset Management Company Ltd (“Western Asset Japan”) and Western Asset Management Company Pte. Ltd. (“Western Asset Singapore”), as applicable. As compliance with the policy is monitored by Western Asset,
the policy has been adopted from the US Compliance Manual and all defined terms are those defined in the US Compliance Manual rather than the compliance manual of any other Western Asset affiliate.
BACKGROUND
An investment adviser is
required to adopt and implement policies and procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with fiduciary duties and Rule
206(4)-6 under the Investment Advisers Act of 1940 (“Advisers Act”). The authority to vote the proxies of our clients is established through investment management agreements or comparable documents.
In addition to SEC requirements governing advisers, long-standing fiduciary standards and responsibilities have been established for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of
Labor has determined that the responsibility for these votes lies with the investment manager.
POLICY
As a fixed income only manager, the occasion to vote proxies is very rare. However, the Firm has adopted and implemented policies and
procedures that we believe are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with our fiduciary duties and Rule 206(4)-6 under the Advisers Act. In
addition to SEC requirements governing advisers, our proxy voting policies reflect the long-
standing fiduciary standards and responsibilities for ERISA accounts. Unless a manager of ERISA assets has been expressly precluded from voting proxies, the Department of Labor has determined
that the responsibility for these votes lies with the investment manager.
While the guidelines included in the procedures are intended to
provide a benchmark for voting standards, each vote is ultimately cast on a case-by-case basis, taking into consideration the Firm’s contractual obligations to our
clients and all other relevant facts and circumstances at the time of the vote (such that these guidelines may be overridden to the extent the Firm deems appropriate).
In exercising its voting authority, Western Asset will not consult or enter into agreements with officers, directors or employees of Franklin
Resources (Franklin Resources includes Franklin Resources, Inc. and organizations operating as Franklin Resources) or any of its affiliates (other than Western Asset affiliated companies) regarding the voting of any securities owned by its clients.
Responsibility and Oversight
The Regulatory Affairs Group is responsible for administering and overseeing the proxy voting process. The gathering of proxies is coordinated
through the Corporate Actions area of Investment Operations Group (“Corporate Actions”). Research analysts and portfolio managers are responsible for determining appropriate voting positions on each proxy utilizing any applicable
guidelines contained in these procedures.
Client Authority
The Investment Management Agreement for each client is reviewed at account start-up for proxy voting
instructions. If an agreement is silent on proxy voting, but contains an overall delegation of discretionary authority or if the account represents assets of an ERISA plan, Western Asset will assume responsibility for proxy voting. The Regulatory
Affairs Group maintains a matrix of proxy voting authority.
Proxy Gathering
Registered owners of record, client custodians, client banks and trustees (“Proxy Recipients”) that receive proxy materials on behalf
of clients should forward them to Corporate Actions. Proxy Recipients for new clients (or, if Western Asset becomes aware that the applicable Proxy Recipient for an existing client has changed, the Proxy Recipient for the existing client) are
notified at start-up of appropriate routing to Corporate Actions of proxy materials received and reminded of their responsibility to forward all proxy materials on a timely basis. If Western Asset personnel
other than Corporate Actions receive proxy materials, they should promptly forward the materials to Corporate Actions.
Proxy Voting
Once proxy materials are received by Corporate Actions, they are forwarded to the Regulatory Affairs Group for coordination and the
following actions:
Proxies are reviewed to determine accounts impacted.
Impacted accounts are checked to confirm Western Asset voting authority.
The Regulatory Affairs Group reviews proxy issues to determine any material conflicts of interest. (See Conflicts of Interest section of these
procedures for further information on determining material conflicts of interest.)
If a material conflict of interest exists, (i) to
the extent reasonably practicable and permitted by applicable law, the client is promptly notified, the conflict is disclosed and Western Asset obtains the client’s proxy voting instructions, and (ii) to the extent that it is not
reasonably practicable or permitted by applicable law to notify the client and obtain such instructions (e.g., the client is a mutual fund or other commingled vehicle or is an ERISA plan client), Western Asset seeks voting instructions from an
independent third party.
The Regulatory Affairs Group provides proxy material to the appropriate research analyst or portfolio manager to
obtain their recommended vote. Research analysts and portfolio managers determine votes on a case-by-case basis taking into account the voting guidelines contained in
these procedures. For avoidance of
doubt, depending on the best interest of each individual client, Western Asset may vote the same proxy differently for different clients. The analyst’s or portfolio manager’s basis for
their decision is documented and maintained by the Regulatory Affairs Group.
Portfolio Compliance Group votes the proxy pursuant to the
instructions received in (d) or (e) and returns the voted proxy as indicated in the proxy materials.
Timing
Western Asset’s Legal and Compliance Department personnel act in such a manner to ensure that, absent special circumstances, the proxy
gathering and proxy voting steps noted above can be completed before the applicable deadline for returning proxy votes.
Recordkeeping
Western Asset maintains records of proxies voted pursuant to Rule 204-2 of the Advisers Act
and ERISA DOL Bulletin 94-2. These records include:
| • |
|
A copy of Western Asset’s proxy voting policies and procedures. |
Copies of proxy statements received with respect to securities in client accounts.
A copy of any document created by Western Asset that was material to making a decision how to vote proxies.
Each written client request for proxy voting records and Western Asset’s written response to both verbal and written client requests.
A proxy log including:
| |
2. |
Exchange ticker symbol of the issuer’s shares to be voted; |
| |
3. |
Committee on Uniform Securities Identification Procedures (“CUSIP”) number for the shares to be
voted; |
| |
4. |
A brief identification of the matter voted on; |
| |
5. |
Whether the matter was proposed by the issuer or by a shareholder of the issuer; |
| |
6. |
Whether a vote was cast on the matter; |
| |
7. |
A record of how the vote was cast; and |
| |
8. |
Whether the vote was cast for or against the recommendation of the issuer’s management team.
|
Records are maintained in an easily accessible place for a period of not less than five (5) years with the first
two (2) years in Western Asset’s offices.
Disclosure
Western Asset’s proxy policies and procedures are described in the Firm’s Form ADV Part 2A. Clients are provided with a copy of these
policies and procedures upon request. In addition, clients may receive reports on how their proxies have been voted, upon request.
Conflicts of Interest
All proxies are reviewed by the Regulatory Affairs Group for material conflicts of interest. Issues to be reviewed include, but are not limited
to:
| |
1. |
Whether Western Asset (or, to the extent required to be considered by applicable law, its affiliates) manages
assets for the company or an employee group of the company or otherwise has an interest in the company; |
| |
2. |
Whether Western Asset or an officer or director of Western Asset or the applicable portfolio manager or analyst
responsible for recommending the proxy vote (together, “Voting Persons”) is a close relative of or has a personal or business relationship with an executive, director or person who is a candidate for director of the company or is a
participant in a proxy contest; and |
| |
3. |
Whether there is any other business or personal relationship where a Voting Person has a personal interest in
the outcome of the matter before shareholders. |
Voting Guidelines
Western Asset’s substantive voting decisions are based on the particular facts and circumstances of each proxy vote and are evaluated by
the designated research analyst or portfolio manager. The examples outlined below are meant as guidelines to aid in the decision making process.
Situations can arise in which more than one Western Asset client invests in instruments of the same issuer or in which a single client may
invest in instruments of the same issuer but in multiple accounts or strategies. Multiple clients or the same client in multiple accounts or strategies may have different investment objectives, investment styles, or investment professionals involved
in making decisions. While there may be differences, votes are always cast in the best interests of the client and the investment objectives agreed with Western Asset. As a result, there may be circumstances where Western Asset casts different votes
on behalf of different clients or on behalf of the same client with multiple accounts or strategies.
Guidelines are grouped according to
the types of proposals generally presented to shareholders. Part I deals with proposals which have been approved and are recommended by a company’s board of directors; Part II deals with proposals submitted by shareholders for inclusion in
proxy statements; Part III addresses issues relating to voting shares of investment companies; and Part IV addresses unique considerations pertaining to foreign issuers.
| I. |
Board Approved Proposals |
The vast majority of matters presented to shareholders for a vote involve proposals made by a company itself that have been approved and
recommended by its board of directors. In view of the enhanced corporate governance practices currently being implemented in public companies, Western Asset generally votes in support of decisions reached by independent boards of directors. More
specific guidelines related to certain board-approved proposals are as follows:
| |
1. |
Matters relating to the Board of Directors |
Western Asset votes proxies for the election of the company’s nominees for directors and for board-approved proposals on other matters
relating to the board of directors with the following exceptions:
| |
a. |
Votes are withheld for the entire board of directors if the board does not have a majority of independent
directors or the board does not have nominating, audit and compensation committees composed solely of independent directors. |
| |
b. |
Votes are withheld for any nominee for director who is considered an independent director by the company and
who has received compensation from the company other than for service as a director. |
| |
c. |
Votes are withheld for any nominee for director who attends less than 75% of board and committee meetings
without valid reasons for absences. |
| |
d. |
Votes are cast on a
case-by-case basis in contested elections of directors. |
| |
2. |
Matters relating to Executive Compensation |
Western Asset generally favors compensation programs that relate executive compensation to a company’s long-term performance. Votes are
cast on a case-by-case basis on board-approved proposals relating to executive compensation, except as follows:
| |
a. |
Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for
stock option plans that will result in a minimal annual dilution. |
| |
b. |
Western Asset votes against stock option plans or proposals that permit replacing or repricing of underwater
options. |
| |
c. |
Western Asset votes against stock option plans that permit issuance of options with an exercise price below the
stock’s current market price. |
| |
d. |
Except where the firm is otherwise withholding votes for the entire board of directors, Western Asset votes for
employee stock purchase plans that limit the discount for shares purchased under the plan to no more than 15% of their market value, have an offering period of 27 months or less and result in dilution of 10% or less. |
| |
3. |
Matters relating to Capitalization |
The Management of a company’s capital structure involves a number of important issues, including cash flows, financing needs and market
conditions that are unique to the circumstances of each company. As a result, Western Asset votes on a case-by-case basis on board-approved proposals involving changes
to a company’s capitalization except where Western Asset is otherwise withholding votes for the entire board of directors.
| |
a. |
Western Asset votes for proposals relating to the authorization of additional common stock.
|
| |
b. |
Western Asset votes for proposals to effect stock splits (excluding reverse stock splits).
|
| |
c. |
Western Asset votes for proposals authorizing share repurchase programs. |
| |
4. |
Matters relating to Acquisitions, Mergers, Reorganizations and Other Transactions |
Western Asset votes these issues on a case-by-case basis on
board-approved transactions.
| |
5. |
Matters relating to Anti-Takeover Measures |
Western Asset votes against board-approved proposals to adopt anti-takeover measures except as follows:
| |
a. |
Western Asset votes on a
case-by-case basis on proposals to ratify or approve shareholder rights plans. |
| |
b. |
Western Asset votes on a
case-by-case basis on proposals to adopt fair price provisions. |
| |
6. |
Other Business Matters |
Western Asset votes for board-approved proposals approving such routine business matters such as changing the company’s name, ratifying
the appointment of auditors and procedural matters relating to the shareholder meeting.
| |
a. |
Western Asset votes on a
case-by-case basis on proposals to amend a company’s charter or bylaws. |
| |
b. |
Western Asset votes against authorization to transact other unidentified, substantive business at the meeting.
|
| |
7. |
Reporting of Financially Material Information |
Western Asset generally believes issuers should disclose information that is material to their business. This principle extends to
Environmental, Social and Governance matters. What qualifies as “material” can vary, so votes are cast on a case by case basis but consistent with the overarching principle.
| II. |
Shareholder Proposals |
SEC regulations permit shareholders to submit proposals for inclusion in a company’s proxy statement. These proposals generally seek to
change some aspect of a company’s corporate governance structure or to change some aspect of its business operations. Western Asset votes in accordance with the recommendation of the company’s board of directors on all shareholder
proposals, except as follows:
| |
1. |
Western Asset votes for shareholder proposals to require shareholder approval of shareholder rights plans.
|
| |
2. |
Western Asset votes for shareholder proposals that are consistent with Western Asset’s proxy voting
guidelines for board-approved proposals. |
| |
3. |
Western Asset votes on a
case-by-case basis on other shareholder proposals where the firm is otherwise withholding votes for the entire board of directors. |
Environmental or social issues that are the subject of a proxy vote will be considered on a case by case basis. Constructive proposals that
seek to advance the health of the issuer and the prospect for risk-adjusted returns to Western Assets clients are viewed more favorably than proposals that advance a single issue or limit the ability of management to meet its operating objectives.
| III. |
Voting Shares of Investment Companies |
Western Asset may utilize shares of open or closed-end investment companies to implement its investment
strategies. Shareholder votes for investment companies that fall within the categories listed in Parts I and II above are voted in accordance with those guidelines.
| |
1. |
Western Asset votes on a
case-by-case basis on proposals relating to changes in the investment objectives of an investment company taking into account the original intent of the fund and the
role the fund plays in the clients’ portfolios. |
| |
2. |
Western Asset votes on a
case-by-case basis all proposals that would result in increases in expenses (e.g., proposals to adopt 12b-1 plans, alter
investment advisory arrangements or approve fund mergers) taking into account comparable expenses for similar funds and the services to be provided. |
| IV. |
Voting Shares of Foreign Issuers |
In the event Western Asset is required to vote on securities held in non-U.S. issuers – i.e.
issuers that are incorporated under the laws of a foreign jurisdiction and that are not listed on a U.S. securities exchange or the NASDAQ stock market, the following guidelines are used, which are premised on the existence of a sound corporate
governance and disclosure framework. These guidelines, however, may not be appropriate under some circumstances for foreign issuers and therefore apply only where applicable.
| |
1. |
Western Asset votes for shareholder proposals calling for a majority of the directors to be independent of
management. |
| |
2. |
Western Asset votes for shareholder proposals seeking to increase the independence of board nominating, audit
and compensation committees. |
| |
3. |
Western Asset votes for shareholder proposals that implement corporate governance standards similar to those
established under U.S. federal law and the listing requirements of U.S. stock exchanges, and that do not otherwise violate the laws of the jurisdiction under which the company is incorporated. |
| |
4. |
Western Asset votes on a
case-by-case basis on proposals relating to (1) the issuance of common stock in excess of 20% of a company’s outstanding common stock where shareholders do not
have preemptive rights, or (2) the issuance of common stock in excess of 100% of a company’s outstanding common stock where shareholders have preemptive rights. |
| V. |
Environmental, Social and Governance Matters |
Western Asset considers ESG matters as part of the overall investment process where appropriate. The Firm seeks to identify and consider
material risks to the investment thesis, including material risks presented by ESG factors. While Western Asset is primarily a fixed income manager, opportunities to vote proxies are considered on the investment merits of the instruments and
strategies involved.
As a general proposition, Western Asset votes to encourage disclosure of information material to their business.
This principle extends to ESG matters. What qualifies as “material” can vary, so votes are cast on a case by case basis but consistent with the overarching principle. Western Asset recognizes that objective standards
and criteria may not be available or universally agreed and that there may be different views and subjective analysis regarding factors and their significance.
As a general matter, Western Asset votes to encourage management and governance practices that enhance the strength of the issuer, build value
for investors, and mitigate risks that might threaten their ability to operate and navigate competitive pressures.
Targeted environmental
or social issues that are the subject of a proxy vote will be considered on a case by case basis. Constructive proposals that seek to advance the health of the issuer and the prospect for risk-adjusted returns to Western Assets clients are viewed
more favorably than proposals that advance a single issue or limit the ability of management to meet its operating objectives.
Situations
can arise in which different clients and strategies have explicit ESG objectives beyond generally taking into account material ESG risks. Votes may be cast for such clients with the ESG objectives in mind. Votes involving ESG proposals that are not
otherwise addressed in this policy will be voted on a case-by-case basis consistent with the Firm’s fiduciary duties to its clients, the potential consequences to
the investment thesis for that issuer, and the specific facts and circumstances of each proposal.
Retirement Accounts
For accounts subject to ERISA, as well as other retirement accounts, Western Asset is presumed to have the responsibility to vote proxies for
the client. The Department of Labor has issued a bulletin that states that investment managers have the responsibility to vote proxies on behalf of Retirement Accounts unless the authority to vote proxies has been specifically reserved to another
named fiduciary. Furthermore, unless Western Asset is expressly precluded from voting the proxies, the Department of Labor has determined that the responsibility remains with the investment manager.
In order to comply with the Department of Labor’s position, Western Asset will be presumed to have the obligation to vote proxies for its retirement
accounts unless Western Asset has obtained a specific written instruction indicating that: (a) the right to vote proxies has been reserved to a named fiduciary of the client, and (b) Western Asset is precluded from voting proxies on behalf
of the client. If Western Asset does not receive such an instruction, Western Asset will be responsible for voting proxies in the best interests of the retirement account client and in accordance with any proxy voting guidelines provided by the
client.
|
|
|
| ITEM 8. |
|
INVESTMENT PROFESSIONALS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
|
|
| (a)(1): |
|
As of the date of filing this report: |
|
|
|
|
|
| NAME AND
ADDRESS |
|
LENGTH OF
TIME SERVED |
|
PRINCIPAL OCCUPATION(S) DURING
PAST 5 YEARS |
| S. Kenneth Leech
Western Asset
385 East Colorado Blvd. Pasadena, CA 91101 |
|
Since 2009 |
|
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; Chief Investment Officer of Western Asset
from 1998 to 2008 and since 2014; Senior Advisor/Chief Investment Officer Emeritus of Western Asset from 2008-2013; Co- Chief Investment Officer of Western Asset from 2013-2014. |
|
|
|
| Michael C. Buchanan
Western Asset 385 East Colorado Blvd.
Pasadena, CA 91101 |
|
Since 2009 |
|
Responsible for the day-to-day management with other members of the Fund’s portfolio management team;
Co-Chief Investment Officer of Western Asset since 2023; employed by Western Asset Management as an investment professional for at least the past five years. |
|
|
|
| Christopher Kilpatrick
Western Asset 385 East Colorado Blvd.
Pasadena, CA 91101 |
|
Since 2012 |
|
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; employed by Western Asset Management as an
investment professional for at least the past five years. |
|
|
|
| Annabel Rudebeck
Western Asset 385 East Colorado Blvd.
Pasadena, CA 91101 |
|
Since 2017 |
|
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; Ms. Rudebeck joined Western Asset in
2016 as Head of Non-US Credit. Ms. Rudebeck has over 18 years of investment industry experience. Formerly Ms. Rudebeck was a Senior Partner and Head of Global Investment-Grade Credit for Rogge Global
Partners and also served as a Credit Research Associate at J.P. Morgan Securities. |
|
|
|
|
|
| Chia-Liang Lian
Western Asset
385 East Colorado Blvd. Pasadena, CA 91101 |
|
Since 2014 |
|
Responsible for the day-to-day management with other members of the Fund’s portfolio management team; employed by Western Asset Management as an
investment professional since 2011; Prior to joining Western Asset, Mr. Lian spent approximately six years with the Pacific Investment Management Company (PIMCO), where he served as Head of Emerging Asia Portfolio Management. |
(a)(2): DATA TO BE PROVIDED BY FINANCIAL CONTROL
The following tables set forth certain additional information with respect to the fund’s investment professionals for the fund. Unless noted otherwise,
all information is provided as of October 31, 2023.
Other Accounts Managed by Investment Professionals
The table below identifies the number of accounts (other than the fund) for which the fund’s investment professionals have day-to-day management responsibilities and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment
vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts where fees are based on performance is also indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name of PM |
|
Type of Account |
|
Number of
Accounts
Managed |
|
Total Assets
Managed |
|
|
Number of
Accounts
Managed for
which
Advisory Fee
is
Performance-
Based |
|
Assets
Managed for
which
Advisory Fee
is
Performance-
Based |
|
| S. Kenneth Leech‡ |
|
Other Registered Investment Companies |
|
94 |
|
$ |
118.44 billion |
|
|
None |
|
|
None |
|
|
|
Other Pooled Vehicles |
|
308 |
|
$ |
64.95 billion |
|
|
24 |
|
$ |
2.57 billion |
|
|
|
Other Accounts |
|
643 |
|
$ |
173.60 billion |
|
|
22 |
|
$ |
11.73 billion |
|
| Michael C. Buchanan ‡ |
|
Other Registered Investment Companies |
|
32 |
|
$ |
14.96 billion |
|
|
None |
|
|
None |
|
|
|
Other Pooled Vehicles |
|
60 |
|
$ |
17.15 billion |
|
|
7 |
|
$ |
1.40 billion |
|
|
|
Other Accounts |
|
153 |
|
$ |
52.40 billion |
|
|
6 |
|
$ |
1.47 billion |
|
| Annabel Rudebeck‡ |
|
Other Registered Investment Companies |
|
8 |
|
$ |
5.77 billion |
|
|
None |
|
|
None |
|
|
|
Other Pooled Vehicles |
|
24 |
|
$ |
5.09 billion |
|
|
None |
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Accounts |
|
25 |
|
$ |
7.28 billion |
|
|
1 |
|
$ |
150 million |
|
| Christopher Kilpatrick ‡ |
|
Other Registered Investment Companies |
|
7 |
|
$ |
2.71 billion |
|
|
None |
|
|
None |
|
|
|
Other Pooled Vehicles |
|
6 |
|
$ |
455 million |
|
|
3 |
|
$ |
295 million |
|
|
|
Other Accounts |
|
None |
|
|
None |
|
|
None |
|
|
None |
|
| Chia-Liang Lian‡ |
|
Other Registered Investment Companies |
|
7 |
|
$ |
4.94 billion |
|
|
None |
|
|
None |
|
|
|
Other Pooled Vehicles |
|
21 |
|
$ |
3.64 billion |
|
|
3 |
|
$ |
577 million |
|
|
|
Other Accounts |
|
48 |
|
$ |
5.10 billion |
|
|
1 |
|
$ |
955 million |
|
| ‡ |
The numbers above reflect the overall number of portfolios managed by employees of Western Asset Management
Company (“Western Asset”). Mr. Leech is involved in the management of all the Firm’s portfolios, but they are not solely responsible for particular portfolios. Western Asset’s investment discipline emphasizes a team approach
that combines the efforts of groups of specialists working in different market sectors. He is responsible for overseeing implementation of Western Asset’s overall investment ideas and coordinating the work of the various sector teams. This
structure ensures that client portfolios benefit from a consensus that draws on the expertise of all team members. |
(a)(3):
As of October 31, 2023:
Investment Professional Compensation
Conflicts of Interest
The Subadviser has
adopted compliance policies and procedures to address a wide range of potential conflicts of interest that could directly impact client portfolios. For example, potential conflicts of interest may arise in connection with the management of multiple
portfolios (including portfolios managed in a personal capacity). These could include potential conflicts of interest related to the knowledge and timing of a portfolio’s trades, investment opportunities and broker selection. Portfolio managers
are privy to the size, timing, and possible market impact of a portfolio’s trades.
It is possible that an investment opportunity may
be suitable for both a portfolio and other accounts managed by a portfolio manager, but may not be available in sufficient quantities for both the portfolio and the other accounts to participate fully. Similarly, there may be limited opportunity to
sell an investment held by a portfolio and another account. A conflict may arise where the portfolio manager may have an incentive to treat an account preferentially as compared to a portfolio because the account pays a performance-based fee or the
portfolio manager, the Subadviser or an affiliate has an interest in the account. The Subadviser has adopted procedures for allocation of portfolio transactions and investment opportunities across multiple client accounts on a fair and equitable
basis over time. Eligible accounts that can participate in a trade generally share the same price on a pro-rata allocation basis, taking into account differences based on factors such as cash availability,
investment restrictions and guidelines, and portfolio composition versus strategy.
With respect to securities transactions, the Subadviser determines which broker or dealer to use
to execute each order, consistent with their duty to seek best execution of the transaction. However, with respect to certain other accounts (such as pooled investment vehicles that are not registered investment companies and other accounts managed
for organizations and individuals), the Subadviser may be limited by the client with respect to the selection of brokers or dealers or may be instructed to direct trades through a particular broker or dealer. In these cases, trades for a portfolio
in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the
transaction, or both, to the possible detriment of a portfolio or the other account(s) involved. Additionally, the management of multiple portfolios and/or other accounts may result in a portfolio manager devoting unequal time and attention to the
management of each portfolio and/or other account. The Subadviser’s team approach to portfolio management and block trading approach seeks to limit this potential risk.
The Subadviser also maintains a gift and entertainment policy to address the potential for a business contact to give gifts or host
entertainment events that may influence the business judgment of an employee. Employees are permitted to retain gifts of only a nominal value and are required to make reimbursement for entertainment events above a certain value. All gifts (except
those of a de minimis value) and entertainment events that are given or sponsored by a business contact are required to be reported in a gift and entertainment log which is reviewed on a regular basis for possible issues.
Employees of the Subadviser have access to transactions and holdings information regarding client accounts and the Subadviser’s overall
trading activities. This information represents a potential conflict of interest because employees may take advantage of this information as they trade in their personal accounts. Accordingly, the Subadviser maintains a Code of Ethics that is
compliant with Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act to address personal trading. In addition, the Code of Ethics seeks to establish
broader principles of good conduct and fiduciary responsibility in all aspects of the Subadviser’s business. The Code of Ethics is administered by the Legal and Compliance Department and monitored through the Subadviser’s compliance
monitoring program.
The Subadviser may also face other potential conflicts of interest with respect to managing client assets, and the
description above is not a complete description of every conflict of interest that could be deemed to exist. The Subadviser also maintains a compliance monitoring program and engages independent auditors to conduct a SOC1/ISAE 3402 audit on an
annual basis. These steps help to ensure that potential conflicts of interest have been addressed.
Investment Professional Compensation
With respect to the compensation of the Fund’s investment professionals, the Subadviser’s compensation system assigns each employee a
total compensation range, which is derived from annual market surveys that benchmark each role with its job function and peer universe. This method is designed to reward employees with total compensation reflective of the external market value of
their skills, experience and ability to produce desired results. Standard compensation includes competitive base salaries, generous employee benefits and a retirement plan.
In addition, the Subadviser’s employees are eligible for bonuses. These are structured to closely align the interests of employees with
those of the Subadviser, and are determined by the professional’s job function and pre-tax performance as measured by a formal review process. All bonuses are completely discretionary. The principal
factor considered is an investment professional’s investment performance versus appropriate peer groups and benchmarks (e.g., a securities index and with respect to the Fund, the benchmark set forth in the Fund’s Prospectus to which the
Fund’s average annual total returns are compared or, if none, the benchmark set forth in the Fund’s annual report). Performance is reviewed on a 1, 3 and 5 year basis for compensation—with 3 and 5 years having a larger emphasis. The
Subadviser may also measure an investment professional’s pre-tax investment performance against other benchmarks, as it determines appropriate. Because investment professionals are generally responsible
for multiple accounts (including the Fund) with similar investment strategies, they are generally compensated on the performance of the aggregate group of similar accounts, rather than a specific account. Other factors that may be considered when
making bonus decisions include client service, business development, length of service to the Subadviser, management or supervisory responsibilities, contributions to developing business strategy and overall contributions to the Subadviser’s
business.
Finally, in order to attract and retain top talent, all investment professionals are eligible for additional incentives in
recognition of outstanding performance. These are determined based upon the factors described above and include long-term incentives that vest over a set period of time past the award date.
(a)(4): Investment Professional Securities Ownership
The table below identifies the dollar range of securities beneficially owned by each investment professional as of October 31, 2023.
|
|
|
| Portfolio Manager(s) |
|
Dollar Range of
Portfolio
Securities
Beneficially
Owned |
| S. Kenneth Leech |
|
A |
| Michael C. Buchanan |
|
A |
| Christopher Kilpatrick |
|
C |
| Annabel Rudebeck |
|
A |
| Chia-Liang Lian |
|
A |
Dollar Range
ownership is as follows:
A: none
B: $1 - $10,000
C: 10,001 - $50,000
D: $50,001 - $100,000
E: $100,001 - $500,000
F: $500,001 - $1 million
G: over $1 million
|
|
|
| ITEM 9. |
|
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
|
|
|
|
Not applicable. |
|
|
| ITEM 10. |
|
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
|
|
|
|
Not applicable. |
|
|
| ITEM 11. |
|
CONTROLS AND PROCEDURES. |
|
|
|
|
(a) The registrant’s principal executive officer and principal financial
officer 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 date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule
30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. |
|
|
|
|
(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 period covered by this report that have materially affected, or are likely to materially affect the
registrant’s internal control over financial reporting. |
SIGNATURES
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, there unto duly authorized.
Western Asset Global Corporate Defined Opportunity Fund Inc.
|
|
|
| By: |
|
/s/ Jane Trust |
|
|
Jane Trust |
|
|
Chief Executive Officer |
|
|
| Date: |
|
December 27, 2023 |
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/ Jane Trust |
|
|
Jane Trust |
|
|
Chief Executive Officer |
|
|
| Date: |
|
December 27, 2023 |
|
|
| By: |
|
/s/ Christopher Berarducci |
|
|
Christopher Berarducci |
|
|
Principal Financial Officer |
|
|
| Date: |
|
December 27, 2023 |
Code of Conduct for Principal Executive and Financial Officers (SOX)
Covered Officers and Purpose of the Code
The Funds’
code of ethics (the “Code”) for investment companies within the Legg Mason family of mutual funds (each a “Fund,” and collectively, the “Funds”) applies to each Fund’s Principal Executive Officer, Principal
Financial Officer, and Controller (the “Covered Officers”) for the purpose of promoting:
| • |
|
honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between
personal and professional relationships; |
| • |
|
full, fair, accurate, timely and understandable disclosure in reports and documents a registrant files with, or
submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Funds; |
| • |
|
compliance with applicable laws and governmental rules and regulations; |
| • |
|
prompt internal reporting of Code violations to appropriate persons identified in the Code; and
|
| • |
|
accountability for adherence to the Code. |
Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.
Covered Officers Should Ethically Handle Actual and Apparent Conflicts of Interest
A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, a Fund.
For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with a Fund.
Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in
the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the
purchase or sale of securities or other property) with a Fund because of their status as “affiliated persons” of the Fund. The Funds’ and the investment advisers’ compliance programs and procedures are designed to prevent, or
identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between
a Fund and an investment adviser of which Covered Officers are also officers or employees. As a result, this Code recognizes Covered Officers will, in the normal course of their duties (whether formally for a Fund or for the adviser, or for both),
be involved in establishing policies and
implementing decisions that will have different effects on the adviser and the Funds. The participation of Covered Officers in such activities is inherent in the contractual relationship between
a Fund and an adviser and is consistent with the performance by Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such
activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Boards of Directors/Trustees (“Boards”) that Covered Officers may also be officers or employees of one or more other investment
companies covered by this or other codes and that such service, by itself does not give rise to a conflict of interest.
Other conflicts of interest are
covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers
should keep in mind these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund.
Each Covered Officer must:
| • |
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not use his or her personal influence or personal relationships improperly to influence investment decisions or
financial reporting by a Fund; |
| • |
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not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered
Officer rather than the benefit the Fund; and, |
| • |
|
not use material non-public knowledge of portfolio transactions made or
contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. |
There are some actual or potential conflict of interest situations that, if material, should always be discussed with the Chief Compliance Officer
(“CCO”) or designate that has been appointed by the Board of the Funds. Examples of these include:
| • |
|
service as a director on the board of any public company (other than the Funds or their investment advisers or
any affiliated person thereof); |
| • |
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the receipt of any non-nominal gifts (i.e., in excess of $100);
|
| • |
|
the receipt of any entertainment from any company with which a Fund has current or prospective business dealings
unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; |
| • |
|
any ownership interest in, or any consulting or employment relationship with, any of the Funds’ service
providers (other than their investment advisers, or principal underwriter, or any affiliated person thereof); |
| • |
|
a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for
effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership. |
Disclosure and Compliance
Each Covered Officer should:
| • |
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familiarize him or herself with the disclosure requirements generally applicable to the Funds;
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| • |
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not knowingly misrepresent, or cause others to misrepresent, facts about a Fund to others, whether within or
outside the Fund, including to the Fund’s Directors/Trustees and auditors, and to governmental regulators and self-regulatory organizations; and |
| • |
|
to the extent appropriate within his or her area of responsibility, consult with other officers and employees of
the Funds and the advisers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds.
|
It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws,
rules and regulations.
Reporting and Accountability
Each Covered Officer must:
| • |
|
upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to
the Board that he or she has received, read, and understands the Code; |
| • |
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annually thereafter affirm to the Board that he or she has complied with the requirements of the Code;
|
| • |
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not retaliate against any other Covered Officer or any employee of the Funds or their advisers or any affiliated
persons thereof or service providers of the Funds for reports of potential violations that are made in good faith; |
| • |
|
notify the CCO promptly if he or she knows of any violation of this Code, of which failure to do so is itself a
violation; and |
| • |
|
report at least annually, if necessary, any employment position, including officer or directorships, held by the
Covered Officer or any immediate family member of a Covered Officer with affiliated persons of or Service Providers to the Funds. |
The
CCO is responsible for applying this Code to specific situations in which questions are presented and has the authority to interpret this Code in any particular situation. However, approvals or waivers sought by a Covered Officer will be considered
by the Compliance Committee or Audit Committee, (the “Committee”) responsible for oversight of the Fund’s code of ethics under Rule 17j-1 under the Investment Company Act. If a Covered Officer
seeking an approval or waiver sits on the Committee, the Covered Person shall recuse him or herself from any such deliberations. Any approval or waiver granted by the Committee will be reported promptly to the Chair of the Audit Committees of the
Funds.
The Funds will follow these procedures in investigating and enforcing this Code:
| • |
|
the CCO will take all appropriate action to investigate any potential violations reported to him, which actions
may include the use of internal or external counsel, accountants or other personnel; |
| • |
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if, after such investigation, the CCO believes that no violation has occurred, the CCO is not required to take
any further action; |
| • |
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any matter that the CCO believes is a violation will be reported to the Committee; |
| • |
|
if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate
action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer;
|
| • |
|
the Committee will be responsible for granting waivers, as appropriate; and, |
| • |
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any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.
|
Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable
to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds’ advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of Covered
Officers subject to this Code, they are superseded by this Code to the extent they overlap or conflict with the provisions of this Code. The Funds’ and their investment advisers’ and principal underwriter’s codes of
ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to Covered Officers and others, and are not part of this Code.
Confidentiality
All reports and records prepared or
maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and
Fund counsel, and the board of Directors/Trustees and fund counsel of any other investment company for whom a Covered Officer serves in a similar capacity.
Annual Report
No less than annually, the CCO shall
provide the Board with a written report describing any issues having arisen since the prior year’s report.
Internal Use
This Code is intended solely for the internal use by the Funds and does not constitute an admission by or on behalf of any Fund, as to any fact, circumstance
or legal consideration.
CERTIFICATIONS PURSUANT TO SECTION 302
EX-99.CERT
CERTIFICATIONS
I, Jane Trust, certify that:
| 1. |
I have reviewed this report on Form N-CSR of Western Asset Global
Corporate Defined Opportunity Fund Inc.; |
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report; |
| 4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule
30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared; |
| |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles; |
| |
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| |
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. |
The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
| |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting. |
|
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| Date: December 27, 2023 |
|
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/s/ Jane Trust |
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Jane Trust |
|
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Chief Executive Officer |
CERTIFICATIONS
I, Christopher Berarducci, certify that:
| 1. |
I have reviewed this report on Form N-CSR of Western Asset Global
Corporate Defined Opportunity Fund Inc.; |
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. |
Based on my knowledge, the financial information included in this report, and the financial statements on which
the financial information is based, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the
registrant as of, and for, the periods presented in this report; |
| 4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule
30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared; |
| |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles; |
| |
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| |
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. |
The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
| |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting. |
|
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| Date: December 27, 2023 |
|
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/s/ Christopher Berarducci |
|
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Christopher Berarducci |
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Principal Financial Officer |
CERTIFICATIONS PURSUANT TO SECTION 906
EX-99.906CERT
CERTIFICATION
Jane Trust, Chief
Executive Officer, and Christopher Berarducci, Principal Financial Officer of Western Asset Global Corporate Defined Opportunity Fund Inc. (the “Registrant”), each certify to the best of their knowledge that:
1. The Registrant’s periodic report on Form N-CSR for the period ended
October 31, 2023 (the “Form N-CSR”) fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Form N-CSR fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
|
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|
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|
| Chief Executive Officer |
|
|
|
Principal Financial Officer |
| Western Asset Global Corporate Defined |
|
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|
Western Asset Global Corporate Defined |
| Opportunity Fund Inc. |
|
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Opportunity Fund Inc. |
|
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| /s/ Jane Trust |
|
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/s/ Christopher Berarducci |
| Jane Trust |
|
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|
Christopher Berarducci |
| Date: December 27, 2023 |
|
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|
Date: December 27, 2023 |
This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. § 1350 and
is not being filed as part of the Form N-CSR with the Commission.
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