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KBRA Affirms Ratings on Senior Notes and MRPS Issued by ClearBridge Energy Midstream Opportunity Fund Inc. and Assigns 'A' Ratings to MRPS Series S, Series T and Series U

  • KBRA affirms the 'AAA' rating for EMO Senior Notes & the 'A' rating for Mandatory Redeemable Preferred Shares (MRPS), with a Stable Outlook for all.
  • KBRA assigns new 'A' ratings with Stable Outlooks to EMO MRPS Series S, Series T, & Series U.
  • Ratings are supported by asset coverage, liquidity, & the management experience of Franklin Templeton Fund Adviser & ClearBridge Investments.
  • As of September 30, 2026 (pro forma for new Series S, T, & U), senior asset coverage was 670% & total asset coverage was 427%.
  • EMO is a non-diversified closed-end fund registered under the '40 Act that invests primarily in energy midstream equity securities.
  • '40 Act regulations require minimum asset coverage of 300% for senior debt & 200% for total leverage to issue securities or pay dividends.
  • Financial covenants prohibit common shareholder distributions unless total asset coverage exceeds 225%.
  • The Fund maintains high liquidity as 80% of assets are in energy midstream entities, with up to 20% in other issuers.
  • EMO can invest up to 30% in unregistered or restricted securities, though holdings were zero as of September 30, 2026.
  • The Fund faces idiosyncratic risk due to its non-diversified focus on the energy midstream sector.
  • ClearBridge Investments manages EMO with approximately $208.6 billion in assets under management as of June 30, 2026.
  • KBRA notes that ClearBridge's investment team experience is concentrated & relies heavily on key personnel.
  • Negative rating changes could occur if asset coverage falls below '40 Act requirements or if the manager fails to cure within 30 days.
  • Industry consolidation in energy midstream could increase performance correlations & trigger negative rating adjustments.