Company: EMD
Filing Date: 2025-02-27
Form Type: N-CSR
Source: 0001133228-25-001572
Chunk: 5

Company: WESTERN ASSET EMERGING MARKETS DEBT FUND INC.
Filing Date: 2025-02-27
Form: N-CSR
Chunk 5
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49 of this report. Western Asset Emerging Markets Debt Fund Inc. 2024 Annual Report 3

Fund overview (cont’d)

environment. Additionally, Miley was successful in shifting Argentina from a trade deficit to a surplus by exporting greater amounts of energy and grains. The rating agencies have
recognized the progress as well, upgrading Argentina in early 2025 (after the reporting period ended). There is still more work to do in Argentina with unemployment still relatively high, capital controls still in place, and mid-term elections scheduled for late 2025. From a sector/industry perspective our positioning in energy, communication services and banking were rewarded. In the energy space, overweight positions in Mexico’s Petroleos Mexicanos, Brazilian producer Petrobras and Argentina’s YPF Sociedad Anonima outperformed. In general, these issuers posted stable fundamental results and benefited from elevated energy prices. In the industrials sector, BB-rated Latin American wireless tower operator ATP Tower Holdings performed well. The company continued to grow topline and earnings before interest, taxes, depreciation and amortization (EBITDA) in 2024, and after the reporting period ended, in early 2025, they were able to access the market to refinance and extend maturity hurdles sending bond prices even higher. Lastly, our BB-rated Mexican bank overweight to U.S. dollar-denominated Banco Mercantil de Norte bonds moved higher last year. The bank posted stable fundamental results. While global currencies and local bonds generally struggled in 2024 due to a persistently stronger U.S. dollar, a few of our positions performed well as hedges. Our currency shorts on the Chinese yuan we had into the U.S. elections performed well and our euro short hedge versus the U.S. dollar outperformed as well. Q. What were the leading detractors from performance? A. The Fund significantly outperformed its benchmark on a gross basis over the reporting period. As such, there were few material detractors during the reporting period. A handful of our local bonds and currency positions were headwinds for returns. A specific example of detractors was our overweight positioning in sovereign investment-grade rated local bonds, Mexican bonds and BB-rated Brazilian local bonds Notas do Tesouro Nacional. Higher-quality Mexico bonds and the Mexican peso generally underperformed on global trade and immigration uncertainty. In terms of Brazil, President Lula continues to battle high inflation and ended up bucking the global trend of easing and decided to hike interest rates in 2024. Our overweight underper