Western Asset Emerging Markets Debt Fund Inc. (EMD or “the Fund”; CUSIP: 95766A101) Announces Notification of Sources of Distributions

Rhea-AI Summary

Western Asset Emerging Markets Debt Fund Inc. (EMD) has announced its distribution details for December 2024. The Fund will distribute $0.0845 per share, comprising 86.96% from net investment income and 13.04% from return of capital. For the fiscal year 2024 to date, total distributions were $0.9295 per share, with 72.16% from net investment income and 27.84% from return of capital.

The Fund's performance metrics show a 5-year average annual total return of 1.76% and an annualized distribution rate of 9.73% as of November 30, 2024. The cumulative total return for the fiscal period through November 30, 2024, was 11.48%, with a fiscal year-to-date distribution rate of 8.61%.

Positive

• Maintains high annualized distribution rate of 9.73%
• Strong cumulative total return of 11.48% for the fiscal period
• 86.96% of current distribution comes from net investment income

Negative

• Low 5-year average annual total return of 1.76%
• 27.84% of year-to-date distributions represent return of capital, indicating insufficient earnings to cover distributions
• Current monthly distribution includes 13.04% return of capital

Insights

Financial Analyst

The distribution analysis reveals concerning trends for EMD investors. The fund's managed distribution policy shows 86.96% of December's $0.0845 per share distribution comes from net investment income, while 13.04% is return of capital. Year-to-date, the return of capital portion increases to 27.84% of total distributions, indicating potential sustainability issues.

The fund's 1.76% 5-year average annual total return significantly trails its 9.73% annualized distribution rate, suggesting the high yield may not be sustainable long-term. While the 11.48% cumulative total return for the current fiscal period appears positive, the substantial return of capital component signals the fund may be struggling to generate sufficient income to maintain its distribution policy without eroding investor capital.

For retail investors, it's important to understand that return of capital reduces their cost basis and isn't actual investment performance. The widening gap between distribution rate and total return, combined with increasing return of capital, raises red flags about the fund's long-term distribution sustainability.

NEW YORK--(BUSINESS WIRE)-- Western Asset Emerging Markets Debt Fund Inc. [NYSE: EMD]

Notification of Sources of Distributions
Pursuant to Section 19(a) of the Investment Company Act of 1940

The Fund’s estimated sources of the distribution to be paid on December 31, 2024, and for the fiscal year 2024 year-to-date are as follows:

Estimated Allocations for the December Monthly Distribution as of November 30, 2024:

Distribution Per Share	Net Investment Income	Net Realized Short-Term Capital Gains	Net Realized Long-Term Capital Gains	Return of Capital
$0.0845	$0.0735	$0.0000	$0.0000	$0.0110
100.00%	86.96%	0.00%	0.00%	13.04%

Cumulative Estimated Allocations fiscal year-to-date as of November 30, 2024, for the fiscal year ending December 31, 2024:

Distribution Per Share	Net Investment Income	Net Realized Short-Term Capital Gains	Net Realized Long-Term Capital Gains	Return of Capital
$0.9295	$0.6707	$0.0000	$0.0000	$0.2588
100.00%	72.16%	0.00%	0.00%	27.84%

Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of the current distribution or from the terms of the Plan. EMD estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of the EMD distribution to shareholders may be a return of capital. A return of capital may occur, for example, when some or all of the money that a shareholder invested in a Fund is paid back to them. A return of capital distribution does not necessarily reflect EMD’s investment performance and should not be confused with ‘yield’ or ‘income’. The amounts and sources of distributions reported herein are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send a Form 1099-DIV to shareholders for the calendar year that will describe how to report the Fund’s distributions for federal income tax purposes.

Average Annual Total Return (in relation to the change in net asset value (NAV) for the 5-year period ended on 11/30/2024)1	Annualized Distribution Rate (as a percentage of NAV as of 11/30/2024)2	Cumulative Total Return (in relation to the change in NAV for the fiscal period through 11/30/2024)3	Cumulative Fiscal Year-To-Date Distribution Rate (as a percentage of NAV as of 11/30/2024)4
1.76%	9.73%	11.48%	8.61%

Fund Performance and Distribution Rate Information:

1. Average Annual Total Return in relation to NAV represents the compound average of the Annual NAV Total Returns of the Fund for the five-year period ended through November 30, 2024. Annual NAV Total Return is the percentage change in the Fund’s NAV over a year, assuming reinvestment of distributions paid.
2. The Annualized Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Fund’s NAV as of November 30, 2024.
3. Cumulative Total Return is the percentage change in the Fund’s NAV from December 31, 2023 through November 30, 2024, assuming reinvestment of distributions paid.
4. The Cumulative Fiscal Year-To-Date Distribution Rate is the dollar value of distributions for the fiscal period December 31, 2023 through November 30, 2024, as a percentage of the Fund’s NAV as of November 30, 2024.

This Fund has a managed distribution policy that seeks to deliver the Fund’s long-term total return potential through regular monthly distributions declared at a fixed rate per common share. Distributions may be paid in part or in full from net investment income, realized capital gains and by returning capital, or a combination thereof. Shareholders should note, however, that if a Fund’s aggregate net investment income and net realized capital gains are less than the amount of the distribution level, the difference will be distributed from the Fund’s assets and will constitute a return of the shareholder’s capital. A return of capital is not taxable; rather it reduces a shareholder’s tax basis in his or her shares of the Fund. The Board of Directors of the Fund may terminate or suspend the managed distribution policy at any time, which could have an adverse effect on the market price of the Fund’s shares.

For further information on Western Asset Emerging Markets Debt Fund Inc., please visit our web site at: www.franklintempleton.com/investments/options/closed-end-funds

Data and commentary provided in this press release are for informational purposes only. Franklin Resources and its affiliates do not engage in selling shares of the Funds.

Category: Distribution Related

Source: Franklin Resources, Inc.

Source: Legg Mason Closed End Funds

View source version on businesswire.com: https://www.businesswire.com/news/home/20241231979487/en/

Investor Contact: Fund Investor Services 1-888-777-0102

Source: Franklin Resources, Inc. and Legg Mason Closed End Funds

FAQ

What is EMD's current monthly distribution amount for December 2024?

EMD's monthly distribution for December 2024 is $0.0845 per share.

What is EMD's annualized distribution rate as of November 30, 2024?

EMD's annualized distribution rate is 9.73% as of November 30, 2024.

How much of EMD's fiscal year 2024 distributions are return of capital?

27.84% of EMD's fiscal year 2024 distributions represent return of capital.

What is EMD's 5-year average annual total return as of November 30, 2024?

EMD's 5-year average annual total return is 1.76% as of November 30, 2024.

What percentage of EMD's December 2024 distribution comes from net investment income?

86.96% of EMD's December 2024 distribution comes from net investment income.