CORRESP Filing
WESTERN ASSET MUNICIPAL HIGH INCOME FUND INC.
Date: May 30, 2025 · CIK: 0000830487 · Accession: 0001193125-25-131864
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 811-02351, 811-04052, 811-04254, 811-05497, 811-06110, 811-06310, 811-06444, 811-06506, 811-06629, 811-06740, 811-07920, 811-10603, 811-21128, 811-21337, 811-21343, 811-21403, 811-21467, 811-21477, 811-22294, 811-22334, 811-22338, 811-22369, 811-22444, 811-22491, 811-22546
Letter
VIA EDGAR Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, DC 20549 Attention: David Manion, CPA, CAIA Re: The Registrants (the “Registrants”) and Funds (the “Funds”) Listed in Annex A
Dear Mr. Manion:
On behalf of the Registrants,1 we are filing this letter to respond to the comments you delivered by telephone on April 15, 2025 on behalf of the Staff (the “Staff”) of the Securities and Exchange Commission after the Staff’s review of certain filings made by the Funds, in each case with respect to the fiscal year listed beside the name of the applicable Fund in Annex A hereto. For convenience of reference, summaries of the comments of the Staff have been included herein.2
1. Comment (Western Asset Premier Bond Fund): As of December 31, 2024, the Fund held several CLO positions that were valued at par. Given the prevailing interest rate environment and the credit profile of the underlying investments, please explain why the fair value of these securities should be their par value, and what factors and inputs led to the reported valuations.
Response: The Registrant notes that the Fund held five CLOs that were valued at par as of December 31, 2024. Each security was valued in accordance with applicable Rule 2a-5 valuation procedures. The Registrant notes that four of these securities were externally priced by an approved pricing vendor at par, and the fifth was fair valued at cost based on recent trade at par pending vendor coverage. Accordingly, the Registrant believes that such CLOs were valued appropriately.
2. Comment (Western Asset Intermediate Muni Fund): Please confirm whether the Rule 17a-7 transactions executed by the Fund during the reporting period resulted in any realized gains or losses. Please provide details of any gains or losses generated by these types of transactions in future financial statements.
When used in the responses below, term “Fund” refers to the applicable Fund and the term “Registrant” refers to the applicable Registrant listed beside the name of such Fund in Annex A.
Unless otherwise indicated, any reference to a “Section” or a “Rule” relates, as applicable, to a section of the Investment Company Act of 1940, as amended, or to a rule thereunder.
Response: The Registrant advises the Staff that the identified transactions were related to variable rate demand notes and did not result in any realized gains or losses. The Registrant will provide details regarding any gains and losses generated by these types of transactions in future financial statements.
3. Comment (Funds that engaged in dollar roll and TBA transactions, e.g., Western Asset Mortgage Total Return Fund and Western Asset Total Return Unconstrained Fund): Please consider breaking out receivables and/or payables related to dollar roll or TBA transactions separately from other liabilities in the statement of assets and liabilities.
Response: The Registrant advises the Staff that it will break out receivables and payables, as applicable, relating to dollar roll and TBA transactions separately from other liabilities in the statement of assets and liabilities in future reports.
4. Comment (BrandywineGLOBAL – Flexible Bond Fund): As of December 31, 2024, the Fund held common stock of New Fortress Energy Inc. that had an assigned cost of $0. Please explain how the Fund acquired these shares and why no cost was assigned to them. Please include a discussion of how cost basis is assigned to securities received as a result of corporate actions and/or credit events, and cite relevant U.S. Generally Accepted Accounting Principles (GAAP).
Response: The Registrant advises the Staff that common shares in New Fortress Energy were received as a form of consent payment to supporting bond holders in late 2024 when the company exchanged multiple tranches of then outstanding notes for new notes. The Registrant believes the transaction was treated as a debt extinguishment under ASC 470 by the borrower, and the common shares received were a form of non-cash consideration under the same standard. Under ASC 310-20, the Registrant believes the cost of common shares received should have been set to fair value on the date of the transaction and in accordance with the terms of the exchange, with the fair value of non-cash consideration received included in gain/loss on the extinguishment of the original notes. The Registrant notes that the non-cash consideration is not material to the Fund.
5. Comment (Funds that hold senior loans, e.g., BrandywineGLOBAL – Global Opportunities Bond Fund and Western Asset Global Corporate Opportunity Fund Inc.): Please confirm whether the Funds have any unfunded loan commitments. If so, briefly describe the accounting treatment for such unfunded commitments and refer to any applicable U.S.GAAP.
Response: The Registrant advises the Staff that the identified Funds did not have any unfunded loan commitments as of the date of the Funds’ financial statements.
6. Comment (Funds that hold senior loans that contributed significantly to performance, e.g., Western Asset Income Fund): Please confirm whether the Funds have any material investments in equity tranches of CLOs. If so, please include a discussion of how income from these investments is accrued and cite applicable U.S. GAAP supporting the accounting treatment.
Response: The Registrant advises the Staff that the Funds do not have any material investments in equity tranches of CLOs. Investments in such securities by other Funds are also not significant (at most, not more than 2-3% of the Fund’s net asset value). Income from such positions has been immaterial, and the Registrant believes it is appropriate to record any such income on a cash basis.
7. Comment: The Funds have an arrangement with their custodian bank whereby a portion of a Fund’s custodian fees are offset by credits earned on the Fund’s cash balances deposited with the custodian. Please discuss the accounting treatment for custodian fees that are partially offset by credits earned on Fund cash balances deposited with the custodian. Also, please confirm that the Funds comply with Regulation S-X Rule 6-07(2)(g). Please discuss the accounting treatment for custodian fees that are partially offset by credits earned on Fund cash balances deposited with the custodian. Also, confirm that the Funds comply with Rule 6-07(g)(2) of Regulation S-X.
Response: The Registrant advises the Staff that when custody credits are determined to be significant, such expense is presented on a gross basis on the income statement with an offsetting line item for fees earned indirectly (via custody credit offsets). However, most Funds have less than 0.001% in custody credits earned and applied, so it is not often that a Fund will report these credits on the income statement in the manner described above.
In addition, the Registrant confirms that the Funds comply with Regulation S-X Rule 6-07(2)(g).
8. Comment: Please explain how the presentation of negative amounts in the statement of operations and the statement of assets and liabilities is appropriate. (Refer to Rule 4-01(c) of Regulation S-X.)
Response: Rule 4-01(c) of Regulation S-X provides that negative amounts shall be shown in a manner that clearly distinguishes its negative attribute. The Registrant notes that negative amounts are shown in parenthesis in the Funds’ statements of operations and statements of assets and liabilities to clearly distinguish their negative attributes, and respectfully submits that such presentation satisfies the requirements of Rule 4-01(c) of Regulation S-X.
9. Comment: In future shareholder reports, please include the frequency of measurement (e.g., daily, monthly, quarterly, etc.) when disclosing average volumes of derivative activity.
Response: The Registrant advises the Staff that it will disclose in future reports the frequency of measurement when disclosing average volumes of derivatives activity.
Please contact the undersigned at 617-951-8267 with any questions or comments you might have regarding the above.
Sincerely,
/s/ Barry N. Hurwitz
Show Raw Text
CORRESP 1 filename1.htm CORRESP Morgan, Lewis & Bockius LLP One Federal Street Boston, MA 02110 May 30, 2025 VIA EDGAR Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, DC 20549 Attention: David Manion, CPA, CAIA Re: The Registrants (the “Registrants”) and Funds (the “Funds”) Listed in Annex A Dear Mr. Manion: On behalf of the Registrants,1 we are filing this letter to respond to the comments you delivered by telephone on April 15, 2025 on behalf of the Staff (the “Staff”) of the Securities and Exchange Commission after the Staff’s review of certain filings made by the Funds, in each case with respect to the fiscal year listed beside the name of the applicable Fund in Annex A hereto. For convenience of reference, summaries of the comments of the Staff have been included herein.2 1. Comment (Western Asset Premier Bond Fund): As of December 31, 2024, the Fund held several CLO positions that were valued at par. Given the prevailing interest rate environment and the credit profile of the underlying investments, please explain why the fair value of these securities should be their par value, and what factors and inputs led to the reported valuations. Response: The Registrant notes that the Fund held five CLOs that were valued at par as of December 31, 2024. Each security was valued in accordance with applicable Rule 2a-5 valuation procedures. The Registrant notes that four of these securities were externally priced by an approved pricing vendor at par, and the fifth was fair valued at cost based on recent trade at par pending vendor coverage. Accordingly, the Registrant believes that such CLOs were valued appropriately. 2. Comment (Western Asset Intermediate Muni Fund): Please confirm whether the Rule 17a-7 transactions executed by the Fund during the reporting period resulted in any realized gains or losses. Please provide details of any gains or losses generated by these types of transactions in future financial statements. 1 When used in the responses below, term “Fund” refers to the applicable Fund and the term “Registrant” refers to the applicable Registrant listed beside the name of such Fund in Annex A. 2 Unless otherwise indicated, any reference to a “Section” or a “Rule” relates, as applicable, to a section of the Investment Company Act of 1940, as amended, or to a rule thereunder. Response: The Registrant advises the Staff that the identified transactions were related to variable rate demand notes and did not result in any realized gains or losses. The Registrant will provide details regarding any gains and losses generated by these types of transactions in future financial statements. 3. Comment (Funds that engaged in dollar roll and TBA transactions, e.g., Western Asset Mortgage Total Return Fund and Western Asset Total Return Unconstrained Fund): Please consider breaking out receivables and/or payables related to dollar roll or TBA transactions separately from other liabilities in the statement of assets and liabilities. Response: The Registrant advises the Staff that it will break out receivables and payables, as applicable, relating to dollar roll and TBA transactions separately from other liabilities in the statement of assets and liabilities in future reports. 4. Comment (BrandywineGLOBAL – Flexible Bond Fund): As of December 31, 2024, the Fund held common stock of New Fortress Energy Inc. that had an assigned cost of $0. Please explain how the Fund acquired these shares and why no cost was assigned to them. Please include a discussion of how cost basis is assigned to securities received as a result of corporate actions and/or credit events, and cite relevant U.S. Generally Accepted Accounting Principles (GAAP). Response: The Registrant advises the Staff that common shares in New Fortress Energy were received as a form of consent payment to supporting bond holders in late 2024 when the company exchanged multiple tranches of then outstanding notes for new notes. The Registrant believes the transaction was treated as a debt extinguishment under ASC 470 by the borrower, and the common shares received were a form of non-cash consideration under the same standard. Under ASC 310-20, the Registrant believes the cost of common shares received should have been set to fair value on the date of the transaction and in accordance with the terms of the exchange, with the fair value of non-cash consideration received included in gain/loss on the extinguishment of the original notes. The Registrant notes that the non-cash consideration is not material to the Fund. 5. Comment (Funds that hold senior loans, e.g., BrandywineGLOBAL – Global Opportunities Bond Fund and Western Asset Global Corporate Opportunity Fund Inc.): Please confirm whether the Funds have any unfunded loan commitments. If so, briefly describe the accounting treatment for such unfunded commitments and refer to any applicable U.S.GAAP. Response: The Registrant advises the Staff that the identified Funds did not have any unfunded loan commitments as of the date of the Funds’ financial statements. 6. Comment (Funds that hold senior loans that contributed significantly to performance, e.g., Western Asset Income Fund): Please confirm whether the Funds have any material investments in equity tranches of CLOs. If so, please include a discussion of how income from these investments is accrued and cite applicable U.S. GAAP supporting the accounting treatment. Response: The Registrant advises the Staff that the Funds do not have any material investments in equity tranches of CLOs. Investments in such securities by other Funds are also not significant (at most, not more than 2-3% of the Fund’s net asset value). Income from such positions has been immaterial, and the Registrant believes it is appropriate to record any such income on a cash basis. 7. Comment: The Funds have an arrangement with their custodian bank whereby a portion of a Fund’s custodian fees are offset by credits earned on the Fund’s cash balances deposited with the custodian. Please discuss the accounting treatment for custodian fees that are partially offset by credits earned on Fund cash balances deposited with the custodian. Also, please confirm that the Funds comply with Regulation S-X Rule 6-07(2)(g). Please discuss the accounting treatment for custodian fees that are partially offset by credits earned on Fund cash balances deposited with the custodian. Also, confirm that the Funds comply with Rule 6-07(g)(2) of Regulation S-X. Response: The Registrant advises the Staff that when custody credits are determined to be significant, such expense is presented on a gross basis on the income statement with an offsetting line item for fees earned indirectly (via custody credit offsets). However, most Funds have less than 0.001% in custody credits earned and applied, so it is not often that a Fund will report these credits on the income statement in the manner described above. In addition, the Registrant confirms that the Funds comply with Regulation S-X Rule 6-07(2)(g). 8. Comment: Please explain how the presentation of negative amounts in the statement of operations and the statement of assets and liabilities is appropriate. (Refer to Rule 4-01(c) of Regulation S-X.) Response: Rule 4-01(c) of Regulation S-X provides that negative amounts shall be shown in a manner that clearly distinguishes its negative attribute. The Registrant notes that negative amounts are shown in parenthesis in the Funds’ statements of operations and statements of assets and liabilities to clearly distinguish their negative attributes, and respectfully submits that such presentation satisfies the requirements of Rule 4-01(c) of Regulation S-X. 9. Comment: In future shareholder reports, please include the frequency of measurement (e.g., daily, monthly, quarterly, etc.) when disclosing average volumes of derivative activity. Response: The Registrant advises the Staff that it will disclose in future reports the frequency of measurement when disclosing average volumes of derivatives activity. Please contact the undersigned at 617-951-8267 with any questions or comments you might have regarding the above. Sincerely, /s/ Barry N. Hurwitz Annex A Registrant Name File # CIK Series Name Series ID FYE Reviewed BrandywineGLOBAL-Global Income Opportunities Fund Inc 811-22491 0001504545 BrandywineGLOBAL-Global Income Opportunities Fund Inc 10/31/2024 Legg Mason Global Asset Management Trust 811-22338 0001474103 BrandywineGLOBAL - Alternative Credit Fund S000043089 10/31/2024 BrandywineGLOBAL - Global Unconstrained Bond Fund S000031479 10/31/2024 ClearBridge International Growth Fund S000036166 10/31/2024 ClearBridge Small Cap Fund S000036165 10/31/2024 ClearBridge Value Fund S000036164 10/31/2024 Legg Mason Partners Investment Trust 811-06444 0000880366 ClearBridge Appreciation Fund S000016651 10/31/2024 ClearBridge International Value Fund S000016247 10/31/2024 ClearBridge Large Cap Value Fund S000016669 10/31/2024 ClearBridge Mid Cap Fund S000004162 10/31/2024 ClearBridge Mid Cap Growth Fund S000029718 10/31/2024 ClearBridge Select Fund S000039065 10/31/2024 ClearBridge Small Cap Growth Fund S000016663 10/31/2024 ClearBridge Sustainability Leaders Fund S000048737 10/31/2024 ClearBridge Tactical Dividend Income Fund S000016241 10/31/2024 Franklin Global Equity Fund S000016668 10/31/2024 Western Asset Global Corporate Opportunity Fund Inc. 811-22334 0001472341 Western Asset Global Corporate Opportunity Fund Inc. 10/31/2024 Western Asset Municipal High Income Fund Inc. 811-05497 0000830487 Western Asset Municipal High Income Fund Inc. 10/31/2024 ClearBridge Energy Midstream Opportunity Fund Inc. 811-22546 0001517518 ClearBridge Energy Midstream Opportunity Fund Inc. 11/30/2024 Legg Mason Partners Income Trust 811-04254 0000764624 Western Asset Intermediate Maturity New York Municipals Fund S000016625 11/30/2024 Western Asset Massachusetts Municipals Fund S000016629 11/30/2024 ClearBridge Large Cap Growth Fund S000004161 11/30/2024 Franklin U.S. Large Cap Equity Fund S000022091 11/30/2024 LMP Capital & Income Fund Inc. 811-21467 0001270131 LMP CAPITAL & INCOME FUND INC. 11/30/2024 Western Asset Inflation-Linked Income Fund 811-21403 0001254370 WESTERN ASSET INFLATION-LINKED INCOME FUND 11/30/2024 Western Asset Inflation-Linked Opportunities & Income Fund 811-21477 0001267902 WESTERN ASSET INFLATION-LINKED OPPORTUNITIES & INCOME FUND 11/30/2024 Western Asset Intermediate Muni Fund Inc. 811-06506 0000882300 WESTERN ASSET INTERMEDIATE MUNI FUND INC. 11/30/2024 Western Asset Investment Grade Opportunity Trust Inc. 811-22294 0001462586 Western Asset Investment Grade Opportunity Trust Inc. 11/30/2024 Legg Mason Global Asset Management Trust 811-22338 0001474103 BrandywineGLOBAL - Flexible Bond Fund S000053934 12/31/2024 BrandywineGLOBAL - Global Opportunities Bond Fund S000036894 12/31/2024 Franklin U.S. Small Cap Equity Fund S000036895 12/31/2024 Registrant Name File # CIK Series Name Series ID FYE Reviewed Legg Mason Partners Income Trust 811-04254 0000764624 Western Asset Corporate Bond Fund S000016627 12/31/2024 Western Asset Mortgage Total Return Fund S000016649 12/31/2024 Western Asset Short-Term Bond Fund S000016639 12/31/2024 ClearBridge Dividend Strategy Fund S000016665 12/31/2024 Legg Mason Partners Variable Equity Trust 811-21128 0001176343 ClearBridge Variable Appreciation Portfolio S000017013 12/31/2024 ClearBridge Variable Dividend Strategy Portfolio S000008304 12/31/2024 ClearBridge Variable Growth Portfolio S000016933 12/31/2024 ClearBridge Variable Large Cap Growth Portfolio S000016935 12/31/2024 ClearBridge Variable Large Cap Value Portfolio S000017019 12/31/2024 ClearBridge Variable Mid Cap Portfolio S000016937 12/31/2024 ClearBridge Variable Small Cap Growth Portfolio S000017007 12/31/2024 Franklin Multi-Asset Variable Conservative Growth S000017009 12/31/2024 Franklin Multi-Asset Variable Growth S000017011 12/31/2024 Franklin Multi-Asset Variable Moderate Growth S000017010 12/31/2024 Legg Mason Partners Variable Income Trust 811-06310 0000874835 Western Asset Core Plus VIT Portfolio S000016930 12/31/2024 Western Asset Variable Global High Yield Bond Portfolio S000017004 12/31/2024 Western Asset Emerging Markets Debt Fund Inc. 811-21343 0001227862 WESTERN ASSET EMERGING MARKETS DEBT FUND INC. 12/31/2024 Western Asset Funds Inc 811-06110 0000863520 Western Asset Core Bond Fund S000000713 12/31/2024 Western Asset Core Plus Bond Fund S000000714 12/31/2024 Western Asset Inflation Indexed Plus Bond Fund S000000715 12/31/2024 Western Asset Investment Grade Income Fund Inc. 811-02351 0000075398 Western Asset Investment Grade Income Fund Inc. 12/31/2024 Western Asset Mortgage Opportunity Fund Inc. 811-22369 0001478102 Western Asset Mortgage Opportunity Fund Inc. 12/31/2024 Western Asset Premier Bond Fund 811-10603 0001163792 WESTERN ASSET PREMIER BOND FUND 12/31/2024 Legg Mason Partners Income Trust 811-04254 0000764624 Western Asset Ultra-Short Income Fund S000016624 5/31/2024 Western Asset Funds Inc 811-06110 0000863520 Western Asset High Yield Fund S000000716 5/31/2024 Western Asset Intermediate Bond Fund S000000711 5/31/2024 Western Asset Total Return Unconstrained Fund S000012738 5/31/2024 Western Asset Global High Income Fund Inc. 811-21337 0001228509 WESTERN ASSET GLOBAL HIGH INCOME FUND INC. 5/31/2024 Western Asset High Yield Defined Opportunity Fund Inc. 811-22444 0001497186 Western Asset High Yield Defined Opportunity Fund Inc. 5/31/2024 Western Asset Managed Municipals Fund Inc. 811-06629 0000886043 WESTERN ASSET MANAGED MUNICIPALS FUND INC. 5/31/2024 Legg Mason Partners Income Trust 811-04254 0000764624 Western Asset Income Fund S000008972 7/31/2024 Western Asset Municipal High Income Fund S000008976 7/31/2024 Western Asset Short Duration High Income Fund S000008975 7/31/2024 Registrant Name File # CIK Series Name Series ID FYE Reviewed Legg Mason Partners Institutional Trust 811-06740 0000889512 Western Asset Institutional Government Reserves S000016858 8/31/2024 Western Asset Institutional Liquid Reserves S000008908 8/31/2024 Western Asset Institutional U.S. Treasury Obligations Money Market Fund S000041891 8/31/2024 Western Asset Institutional U.S. Treasury Reserves S000008910 8/31/2024 Western Asset Select Tax Free Reserves S000008909 8/31/2024 Legg Mason Partners Investment Trust 811-06444 0000880366 ClearBridge Growth Fund S000016235 8/31/2024 Legg Mason Partners Money Market Trust 811-04052 0000747576 Western Asset Government Reserves S000016623 8/31/2024 Legg Mason Global Asset Management Trust 811-22338 0001474103 BrandywineGLOBAL - Diversified US Large Cap Value Fund S000029727 9/30/2024 ClearBridge Global Infrastructure Income Fund S000053331 9/30/2024 Franklin International Equity Fund S000036893 9/30/2024 Martin Currie Emerging Markets Fund S000049068 9/30/2024 Legg Mason Partners Investment Trust 811-06444 0000880366 Franklin S&P 500 Index Fund S000004163 9/30/2024 Western Asset High Income Opportunity Fund Inc. 811-07920 0000910068 WESTERN ASSET HIGH INCOME OPPORTUNITY FUND INC. 9/30/2024