UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-07362

 

Western Asset Municipal Partners Fund Inc.

(Exact name of registrant as specified in charter)

 

620 Eighth Avenue, 49th Floor, New York, NY

 

10018

(Address of principal executive offices)

 

(Zip code)

 

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(888) 777-0102

 

 

Date of fiscal year end:

November 30

 

 

Date of reporting period:

February 28, 2013

 

 



 

ITEM 1.          SCHEDULE OF INVESTMENTS.

 



 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

FORM N-Q

FEBRUARY 28, 2013


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited)

February 28, 2013

 

SECURITY

 

RATE

 

MATURITY
DATE

 

FACE
AMOUNT

 

VALUE

 

MUNICIPAL BONDS — 148.5%

 

 

 

 

 

 

 

 

 

Alaska — 1.5%

 

 

 

 

 

 

 

 

 

Valdez, AK, Marine Terminal Revenue, BP Pipelines Inc. Project

 

5.000%

 

1/1/21

 

$

2,000,000

 

$

2,429,180

 

Arizona — 1.9%

 

 

 

 

 

 

 

 

 

Glendale, AZ, Transportation Excise Tax Revenue, NATL

 

5.000%

 

7/1/28

 

2,855,000

 

3,136,988

 

California — 26.7%

 

 

 

 

 

 

 

 

 

Bay Area Toll Authority, CA, Toll Bridge Revenue, San Francisco Bay Area

 

1.210%

 

4/1/24

 

3,000,000

 

3,002,670

(a)(b)

California Health Facilities Financing Authority Revenue:

 

 

 

 

 

 

 

 

 

Catholic Healthcare West

 

5.250%

 

3/1/24

 

2,500,000

 

2,720,925

 

Catholic Healthcare West

 

5.625%

 

7/1/32

 

5,000,000

 

5,434,100

 

California State PCFA, Water Furnishing Revenue

 

5.000%

 

11/21/45

 

2,500,000

 

2,588,150

 

California State, GO

 

5.000%

 

2/1/26

 

5,000,000

 

5,952,750

 

California Statewide CDA Revenue, Insured Health Facility L.A., Jewish Home, CA, Mortgage Insurance

 

5.000%

 

11/15/28

 

1,500,000

 

1,566,060

 

Los Angeles County, CA, Public Works Financing Authority, Lease Revenue, Multiple Capital Projects II

 

5.000%

 

8/1/30

 

2,500,000

 

2,907,050

 

Los Angeles, CA, Department of Water & Power Revenue, Power Systems, Subordinated, AGM

 

5.000%

 

7/1/35

 

2,500,000

 

2,706,675

 

Lower Tule River, CA, Irrigation District Revenue, COP

 

5.000%

 

8/1/40

 

1,000,000

 

1,043,310

 

M-S-R Energy Authority, CA, Gas Revenue

 

7.000%

 

11/1/34

 

2,490,000

 

3,565,207

 

M-S-R Energy Authority, CA, Gas Revenue

 

6.500%

 

11/1/39

 

3,000,000

 

4,191,330

 

Turlock, CA, Irrigation District Revenue

 

5.000%

 

1/1/35

 

2,500,000

 

2,720,975

 

Turlock, CA, Public Financing Authority, Tax Allocation Revenue, AGM

 

5.000%

 

9/1/30

 

2,500,000

 

2,566,725

 

University of California Revenues, AMBAC

 

5.000%

 

5/15/36

 

2,620,000

 

2,638,549

(c)

Total California

 

 

 

 

 

 

 

43,604,476

 

Colorado — 8.0%

 

 

 

 

 

 

 

 

 

Colorado Health Facilities Authority Revenue:

 

 

 

 

 

 

 

 

 

Poudre Valley Health Care

 

5.000%

 

3/1/25

 

2,850,000

 

2,985,147

 

Sisters of Charity Leavenworth Health System Inc.

 

5.250%

 

1/1/25

 

3,500,000

 

4,033,715

 

Public Authority for Colorado Energy, Natural Gas Purchase Revenue

 

5.750%

 

11/15/18

 

385,000

 

440,675

 

Public Authority for Colorado Energy, Natural Gas Purchase Revenue

 

6.500%

 

11/15/38

 

4,000,000

 

5,555,760

 

Total Colorado

 

 

 

 

 

 

 

13,015,297

 

Florida — 3.4%

 

 

 

 

 

 

 

 

 

Miami-Dade County, FL, GO, Seaport

 

5.000%

 

10/1/23

 

2,315,000

 

2,702,624

 

Orlando & Orange County, FL, Expressway Authority Revenue

 

5.000%

 

7/1/30

 

2,000,000

 

2,286,540

 

Seminole Tribe Florida Special Obligation Revenue

 

5.250%

 

10/1/27

 

500,000

 

541,275

(d)

Total Florida

 

 

 

 

 

 

 

5,530,439

 

Illinois — 15.8%

 

 

 

 

 

 

 

 

 

Chicago, IL, Midway Airport Revenue:

 

 

 

 

 

 

 

 

 

NATL

 

5.500%

 

1/1/29

 

2,000,000

 

2,005,100

 

NATL

 

5.625%

 

1/1/29

 

3,750,000

 

3,756,000

(e)

Chicago, IL, Park District, GO, Refunding, FGIC

 

5.000%

 

1/1/29

 

5,000,000

 

5,484,600

 

 

See Notes to Schedule of Investments.

 

1


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited) (cont’d)

February 28, 2013

 

SECURITY

 

RATE

 

MATURITY
DATE

 

FACE
AMOUNT

 

VALUE

 

Illinois — continued

 

 

 

 

 

 

 

 

 

Chicago, IL, Public Building Commission, Building Revenue, Chicago School Reform, FGIC

 

5.250%

 

12/1/18

 

$

1,000,000

 

$

1,176,540

 

Illinois EFA Revenue, Northwestern University

 

5.500%

 

12/1/13

 

555,000

 

562,443

 

Illinois Health Facilities Authority Revenue:

 

 

 

 

 

 

 

 

 

Refunding, Lutheran General Health System

 

7.000%

 

4/1/14

 

980,000

 

1,007,626

 

Refunding, SSM Health Care, NATL

 

6.550%

 

6/1/13

 

1,850,000

 

1,877,084

(f)

South Suburban Hospital Project

 

7.000%

 

2/15/18

 

380,000

 

446,648

(f)

Illinois Municipal Electric Agency Power Supply, FGIC

 

5.250%

 

2/1/28

 

4,145,000

 

4,613,924

 

Illinois State, GO, First Series, AGM

 

5.500%

 

5/1/16

 

1,500,000

 

1,698,120

 

Metropolitan Pier & Exposition Authority, IL, Dedicated State Tax Revenue, McCormick Place, AGM

 

5.000%

 

6/15/50

 

3,000,000

 

3,238,740

(g)

Total Illinois

 

 

 

 

 

 

 

25,866,825

 

Indiana — 2.1%

 

 

 

 

 

 

 

 

 

Indiana Finance Authority Midwestern Disaster Relief Revenue, Ohio Valley Electric Corp. Project

 

5.000%

 

6/1/39

 

1,000,000

 

1,064,620

 

Indianapolis, IN, Local Public Improvement Bond Bank

 

5.000%

 

6/1/27

 

2,000,000

 

2,302,580

 

Total Indiana

 

 

 

 

 

 

 

3,367,200

 

Maryland — 2.3%

 

 

 

 

 

 

 

 

 

Maryland State EDC, EDR, Transportation Facilities Project

 

5.750%

 

6/1/35

 

1,000,000

 

1,135,950

 

Maryland State Health & Higher EFA Revenue Bonds, Suburban Hospital

 

5.500%

 

7/1/16

 

2,500,000

 

2,656,950

 

Total Maryland

 

 

 

 

 

 

 

3,792,900

 

Massachusetts — 0.9%

 

 

 

 

 

 

 

 

 

Massachusetts State Water Pollution Abatement Trust Revenue, MWRA Program, Unrefunded Balance

 

5.750%

 

8/1/29

 

355,000

 

356,104

 

Massachusetts State Water Resources Authority, NATL

 

5.000%

 

8/1/34

 

1,000,000

 

1,143,140

 

Total Massachusetts

 

 

 

 

 

 

 

1,499,244

 

Michigan — 4.7%

 

 

 

 

 

 

 

 

 

Detroit, MI, GO, District State Aid

 

5.250%

 

11/1/24

 

3,500,000

 

4,019,470

 

Michigan State Hospital Finance Authority Revenue, McLaren Health Care Corp.

 

5.750%

 

5/15/38

 

2,000,000

 

2,261,600

 

Wayne County, MI, Airport Authority Revenue, Detroit Metropolitan Airport

 

5.000%

 

12/1/18

 

1,170,000

 

1,367,672

(e)

Total Michigan

 

 

 

 

 

 

 

7,648,742

 

Missouri — 1.3%

 

 

 

 

 

 

 

 

 

Boone County, MO, Hospital Revenue, Boone Hospital Center

 

5.375%

 

8/1/38

 

2,000,000

 

2,161,680

 

Nevada — 1.4%

 

 

 

 

 

 

 

 

 

Clark County, NV, GO, AMBAC

 

5.000%

 

11/1/21

 

2,000,000

 

2,264,080

 

New Jersey — 3.1%

 

 

 

 

 

 

 

 

 

New Jersey State EDA Revenue

 

5.000%

 

6/15/29

 

500,000

 

557,695

 

New Jersey State EDA Revenue:

 

 

 

 

 

 

 

 

 

Continental Airlines Inc. Project

 

5.250%

 

9/15/29

 

2,000,000

 

2,037,920

(e)

School Facilities Construction

 

1.720%

 

3/1/28

 

2,500,000

 

2,499,125

(b)

Total New Jersey

 

 

 

 

 

 

 

5,094,740

 

 

See Notes to Schedule of Investments.

 

2


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited) (cont’d)

February 28, 2013

 

SECURITY

 

RATE

 

MATURITY
DATE

 

FACE
AMOUNT

 

VALUE

 

New York — 26.1%

 

 

 

 

 

 

 

 

 

Brooklyn Arena, NY, Local Development Corp., Barclays Center Project

 

6.250%

 

7/15/40

 

$

1,000,000

 

$

1,201,510

 

Hudson, NY, Yards Infrastructure Corp. Revenue

 

5.750%

 

2/15/47

 

2,500,000

 

2,949,800

 

Liberty, NY, Development Corporation Revenue, Goldman Sachs Headquarters

 

5.250%

 

10/1/35

 

1,500,000

 

1,789,455

 

MTA, NY, Revenue

 

5.000%

 

11/15/25

 

1,000,000

 

1,176,290

 

MTA, NY, Revenue

 

5.250%

 

11/15/40

 

1,000,000

 

1,125,000

 

Nassau County, NY, Industrial Development Agency Revenue, Continuing Care Retirement, Amsterdam at Harborside

 

6.700%

 

1/1/43

 

500,000

 

343,210

 

New York City, NY, Municipal Water Finance Authority, Water & Sewer System Revenue, Second General Resolution Fiscal 2011

 

5.000%

 

6/15/31

 

4,850,000

 

5,638,028

 

New York City, NY, TFA Revenue, Unrefunded Balance, Future Tax Secured

 

5.500%

 

11/15/17

 

15,000

 

15,057

 

New York Liberty Development Corp., Liberty Revenue:

 

 

 

 

 

 

 

 

 

4 World Trade Center LLC Project

 

5.750%

 

11/15/51

 

2,000,000

 

2,372,620

 

Second Priority, Bank of America Tower

 

5.125%

 

1/15/44

 

2,500,000

 

2,774,750

 

New York State Dormitory Authority Revenue, Court Facilities Lease, NYC Issue, Non State Supported Debt, AMBAC

 

5.500%

 

5/15/30

 

3,365,000

 

4,387,455

 

New York State Dormitory Authority Revenue, Non-State Supported Debt, Columbia University

 

5.000%

 

7/1/38

 

2,000,000

 

2,299,260

 

New York State Thruway Authority, Second General Highway & Bridge Trust Fund, AMBAC

 

5.000%

 

4/1/26

 

4,700,000

 

5,285,996

 

New York State Urban Development Corp. Revenue, State Personal Income Tax

 

5.000%

 

3/15/26

 

5,000,000

 

5,732,150

 

Port Authority of New York & New Jersey

 

5.000%

 

1/15/41

 

5,000,000

 

5,624,650

 

Total New York

 

 

 

 

 

 

 

42,715,231

 

North Carolina — 4.3%

 

 

 

 

 

 

 

 

 

Charlotte-Mecklenburg Hospital Authority, NC, Health Care System Revenue, Carolinas Healthcare System

 

5.000%

 

1/15/31

 

5,000,000

 

5,701,850

 

North Carolina Medical Care Commission Health Care Facilities Revenue, Novant Health Obligation Group

 

5.000%

 

11/1/39

 

1,200,000

 

1,259,520

 

Total North Carolina

 

 

 

 

 

 

 

6,961,370

 

Ohio — 0.7%

 

 

 

 

 

 

 

 

 

Ohio State Air Quality Development Authority Revenue, FirstEnergy Generation Corp.

 

5.700%

 

8/1/20

 

1,000,000

 

1,198,630

 

Oklahoma — 1.4%

 

 

 

 

 

 

 

 

 

Grand River Dam Authority, OK, Revenue

 

5.250%

 

6/1/40

 

2,000,000

 

2,326,080

 

Oregon — 0.8%

 

 

 

 

 

 

 

 

 

Multnomah County, OR, Hospital Facilities Authority Revenue, Providence Health Systems

 

5.250%

 

10/1/18

 

1,250,000

 

1,338,975

 

Pennsylvania — 5.8%

 

 

 

 

 

 

 

 

 

Central Bradford, PA, Progress Authority Revenue, Guthrie Healthcare Systems

 

5.000%

 

12/1/26

 

5,130,000

 

5,875,132

 

Pennsylvania Economic Development Financing Authority, Sewer Sludge Disposal Revenue, Philadelphia Biosolids Facility

 

6.250%

 

1/1/32

 

500,000

 

577,850

 

Philadelphia, PA, Gas Works Revenue, 7th General Ordinance, AMBAC

 

5.000%

 

10/1/17

 

2,685,000

 

3,066,807

 

Total Pennsylvania

 

 

 

 

 

 

 

9,519,789

 

 

See Notes to Schedule of Investments.

 

3

 


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited) (cont’d)

February 28, 2013

 

SECURITY

 

RATE

 

MATURITY
DATE

 

FACE
AMOUNT

 

VALUE

 

Puerto Rico — 3.6%

 

 

 

 

 

 

 

 

 

Puerto Rico Industrial, Tourist, Educational, Medical & Environmental Control Facilities Financing Authority Revenue, Ana G. Mendez University System Project

 

5.375%

 

4/1/42

 

$

500,000

 

$

504,085

 

Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue

 

5.000%

 

8/1/40

 

2,000,000

 

2,150,380

 

Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue

 

5.250%

 

8/1/41

 

1,075,000

 

1,133,566

 

Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue

 

5.500%

 

8/1/42

 

2,000,000

 

2,128,480

 

Total Puerto Rico

 

 

 

 

 

 

 

5,916,511

 

Rhode Island — 1.0%

 

 

 

 

 

 

 

 

 

Rhode Island State Clean Water Finance Agency Water PCR, Revolving Fund Pooled Loan

 

5.000%

 

10/1/24

 

1,265,000

 

1,571,674

 

Tennessee — 3.9%

 

 

 

 

 

 

 

 

 

Tennessee Energy Acquisition Corp., Gas Revenue

 

5.000%

 

2/1/20

 

3,555,000

 

4,071,719

 

Tennessee Energy Acquisition Corp., Gas Revenue

 

5.000%

 

2/1/21

 

2,000,000

 

2,288,700

 

Total Tennessee

 

 

 

 

 

 

 

6,360,419

 

Texas — 18.0%

 

 

 

 

 

 

 

 

 

Austin, TX, Water & Wastewater System Revenue

 

5.000%

 

11/15/26

 

2,500,000

 

2,926,650

 

Austin, TX, Water & Wastewater System Revenue

 

5.125%

 

11/15/28

 

2,210,000

 

2,580,308

 

Beaumont, TX, ISD, GO, School Building, PSF

 

5.000%

 

2/15/33

 

1,100,000

 

1,237,907

 

Dallas-Fort Worth, TX, International Airport Revenue:

 

 

 

 

 

 

 

 

 

Joint Improvement

 

5.000%

 

11/1/38

 

2,000,000

 

2,197,180

(e)

Joint Improvement

 

5.000%

 

11/1/42

 

1,000,000

 

1,079,340

(e)

Harris County, TX, Health Facilities Development Corp., Hospital Revenue, Memorial Hermann Healthcare Systems

 

5.250%

 

12/1/18

 

2,960,000

 

3,176,820

 

Harris County, TX, Metropolitan Transit Authority Sales & Use Tax

 

5.000%

 

11/1/36

 

2,500,000

 

2,878,575

 

Kemp, TX, ISD, GO, School Building

 

5.250%

 

2/15/33

 

3,450,000

 

3,889,978

 

Mesquite, TX, ISD, GO:

 

 

 

 

 

 

 

 

 

PSFG

 

0.000%

 

8/15/27

 

505,000

 

270,382

(c)

PSFG

 

0.000%

 

8/15/27

 

495,000

 

261,187

 

North Texas Tollway Authority Revenue

 

5.750%

 

1/1/40

 

2,500,000

 

2,849,775

 

Texas State Municipal Gas Acquisition & Supply Corp. III, Gas Supply Revenue

 

5.000%

 

12/15/28

 

2,500,000

 

2,734,400

 

Texas State, GO, Water Financial Assistance

 

5.000%

 

8/1/27

 

2,755,000

 

3,348,702

 

Total Texas

 

 

 

 

 

 

 

29,431,204

 

Washington — 5.1%

 

 

 

 

 

 

 

 

 

Port of Seattle, WA, Revenue

 

5.000%

 

8/1/25

 

2,395,000

 

2,905,207

 

Port of Seattle, WA, Revenue, Refunding, Intermediate Lien, NATL

 

5.000%

 

3/1/30

 

2,000,000

 

2,143,600

 

Washington State Health Care Facilities Authority Revenue, PeaceHealth

 

5.000%

 

11/1/28

 

3,000,000

 

3,268,710

 

Total Washington

 

 

 

 

 

 

 

8,317,517

 

Wisconsin — 4.7%

 

 

 

 

 

 

 

 

 

Public Finance Authority, WI, Airport Facilities Revenue, Transportation Infrastructure Properties LLC

 

5.000%

 

7/1/42

 

4,000,000

 

4,156,840

(e)

 

See Notes to Schedule of Investments.

 

4


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited) (cont’d)

February 28, 2013

 

SECURITY

 

RATE

 

MATURITY
DATE

 

FACE
AMOUNT

 

VALUE

 

Wisconsin — continued

 

 

 

 

 

 

 

 

 

Wisconsin State HEFA Revenue, SSM Health Care Corp.

 

5.000%

 

6/1/25

 

$

3,110,000

 

$

3,477,540

 

Total Wisconsin

 

 

 

 

 

 

 

7,634,380

 

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS (Cost — $219,681,121)

 

242,703,571

 

SHORT-TERM INVESTMENTS — 2.0%

 

 

 

 

 

 

 

 

 

Colorado — 0.1%

 

 

 

 

 

 

 

 

 

Colorado Educational & Cultural Facilities Authority, National Jewish Federation Bond Program\Series B-2, LOC-National City Bank

 

0.110%

 

12/1/34

 

140,000

 

140,000

(h)(i)

Florida — 0.3%

 

 

 

 

 

 

 

 

 

Miami-Dade County, FL, Health Facilities Authority Hospital Revenue, Miami Children’s Hospital Project, NATL, LOC-Wells Fargo Bank N.A.

 

0.120%

 

8/1/34

 

400,000

 

400,000

(h)(i)

Palm Beach County, FL, Revenue, Comprehensive Alcoholism Rehabilitation Programs Inc., LOC-Wells Fargo Bank N.A.

 

0.210%

 

4/1/20

 

150,000

 

150,000

(h)(i)

Total Florida

 

 

 

 

 

 

 

550,000

 

New York — 0.9%

 

 

 

 

 

 

 

 

 

Nassau Health Care Corp., NY, Revenue, LOC-TD Bank N.A.

 

0.090%

 

8/1/29

 

1,200,000

 

1,200,000

(h)(i)

New York City, NY, GO, SPA-Dexia Credit Local

 

0.190%

 

8/1/28

 

300,000

 

300,000

(h)(i)

Total New York

 

 

 

 

 

 

 

1,500,000

 

North Carolina — 0.3%

 

 

 

 

 

 

 

 

 

Charlotte, NC, Water & Sewer System Revenue, SPA-Depfa Bank PLC

 

0.090%

 

7/1/36

 

200,000

 

200,000

(h)(i)

Raleigh, NC, COP, Downtown Improvement Project, SPA-Wells Fargo Bank N.A.

 

0.100%

 

2/1/34

 

300,000

 

300,000

(h)(i)

Total North Carolina

 

 

 

 

 

 

 

500,000

 

South Carolina — 0.4%

 

 

 

 

 

 

 

 

 

University of South Carolina, School of Medicine, Education Trust Revenue Healthcare Facilities, LOC-Wells Fargo Bank N.A.

 

0.110%

 

9/1/25

 

600,000

 

600,000

(h)(i)

TOTAL SHORT-TERM INVESTMENTS (Cost — $3,290,000)

 

 

 

3,290,000

 

TOTAL INVESTMENTS — 150.5 % (Cost — $222,971,121#)

 

 

 

245,993,571

 

Auction Rate Cumulative Preferred Stock, at Liquidation Value — (52.0)%

 

 

 

(85,000,000

)

Other Assets in Excess of Liabilities — 1.5%

 

 

 

2,433,517

 

TOTAL NET ASSETS — 100.0%

 

 

 

$

163,427,088

 

 

(a)

Maturity date shown represents the mandatory tender date.

(b)

Variable rate security. Interest rate disclosed is as of the most recent information available.

(c)

Pre-Refunded bonds are escrowed with U.S. government obligations and/or U.S. government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.

(d)

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, unless otherwise noted.

(e)

Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).

(f)

Bonds are escrowed to maturity by government securities and/or U.S. government agency securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings.

(g)

All or a portion of this security is held at the broker as collateral for open futures contracts.

(h)

Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer or liquidity provider on no more than 7 days notice.

(i)

Maturity date shown is the final maturity date. The security may be sold back to the issuer before final maturity.

#

Aggregate cost for federal income tax purposes is substantially the same.

 

See Notes to Schedule of Investments.

 

5


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited) (cont’d)

February 28, 2013

 

 

Abbreviations used in this schedule :

 

AGM

 

- Assured Guaranty Municipal Corporation - Insured Bonds

 

AMBAC

 

- American Municipal Bond Assurance Corporation - Insured Bonds

 

CDA

 

- Communities Development Authority

 

COP

 

- Certificates of Participation

 

EDA

 

- Economic Development Authority

 

EDC

 

- Economic Development Corporation

 

EDR

 

- Economic Development Revenue

 

EFA

 

- Educational Facilities Authority

 

FGIC

 

- Financial Guaranty Insurance Company - Insured Bonds

 

GO

 

- General Obligation

 

HEFA

 

- Health & Educational Facilities Authority

 

ISD

 

- Independent School District

 

LOC

 

- Letter of Credit

 

MTA

 

- Metropolitan Transportation Authority

 

MWRA

 

- Massachusetts Water Resources Authority

 

NATL

 

- National Public Finance Guarantee Corporation - Insured Bonds

 

PCFA

 

- Pollution Control Financing Authority

 

PCR

 

- Pollution Control Revenue

 

PSF

 

- Permanent School Fund

 

PSFG

 

- Permanent School Fund Guaranty

 

SPA

 

- Standby Bond Purchase Agreement - Insured Bonds

 

TFA

 

- Transitional Finance Authority

 

Summary of Investments by Industry †

 

Health Care

 

15.3

%

Transportation

 

14.5

 

Special Tax Obligation

 

12.0

 

Local General Obligation

 

10.5

 

Industrial Revenue

 

9.8

 

Power

 

8.3

 

Water & Sewer

 

7.9

 

Other

 

6.1

 

Leasing

 

5.0

 

State General Obligation

 

4.5

 

Education

 

3.5

 

Pre-Refunded/Escrowed to Maturity

 

1.1

 

Solid Waste/Resource Recovery

 

0.2

 

Short - Term Investments

 

1.3

 

 

 

100.0

%

 

† As a percentage of total investments. Please note that Fund holdings are as of February 28, 2013 and are subject to change.

 

See Notes to Schedule of Investments.

 

6


 

WESTERN ASSET MUNICIPAL PARTNERS FUND INC.

 

Schedule of investments (unaudited) (cont’d)

February 28, 2013

 

Ratings Table*

Standard & Poor’s/Moody’s/Fitch**

 

AAA/Aaa

 

11.4

%

AA/Aa

 

41.0

 

A

 

38.3

 

BBB/Baa

 

6.8

 

B/B

 

0.8

 

A-1/VMIG 1

 

1.3

 

NR

 

0.4

 

 

 

100.0

%

 

*                 As a percentage of total investments.

**          The ratings shown are based on each portfolio security’s rating as determined by Standard & Poor’s, Moody’s or Fitch, each a Nationally Recognized Statistical Rating Organization (“NRSRO”). These ratings are the opinions of the NRSRO and are not measures of quality or guarantees of performance.  Securities may be rated by other NRSROs, and these ratings may be higher or lower. In the event that a security is rated by multiple NRSROs and receives different ratings, the Fund will treat the security as being rated in the highest rating category received from a NRSRO.

 

See Notes to Schedule of Investments.

 

7

 


 

Notes to schedule of investments (unaudited)

 

1. Organization and significant accounting policies

 

Western Asset Municipal Partners Fund Inc. (the “Fund”) was incorporated in Maryland on November 24, 1992 and is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Board of Directors authorized 100 million shares of $0.001 par value common stock. The Fund’s primary investment objective is to seek a high level of current income which is exempt from federal income taxes, consistent with the preservation of capital. As a secondary investment objective, the Fund intends to enhance portfolio value by purchasing tax exempt securities that, in the opinion of the investment manager, may appreciate in value relative to other similar obligations in the marketplace.

 

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”).

 

(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 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. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. 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 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.

 

The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North American Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to 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.

 

8


 

Notes to schedule of investments (unaudited) (continued)

 

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—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 carried at fair value:

 

ASSETS

 

 

QUOTED PRICES

 

OTHER
SIGNIFICANT
OBSERVABLE
INPUTS

 

SIGNIFICANT
UNOBSERVABLE
INPUTS

 

 

 

DESCRIPTION

 

(LEVEL 1)

 

(LEVEL 2)

 

(LEVEL 3)

 

TOTAL

 

Municipal bonds†

 

 

$

242,703,571

 

 

$

242,703,571

 

Short-term investments†

 

 

3,290,000

 

 

3,290,000

 

Total investments

 

 

$

245,993,571

 

 

$

245,993,571

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

Futures contracts

 

$

180,407

 

 

 

$

180,407

 

Total

 

$

180,407

 

$

245,993,571

 

 

$

246,173,978

 

†See Schedule of Investments for additional detailed categorizations.

 

(b) Futures contracts. The Fund uses futures contracts generally to gain exposure to, or hedge against, changes in interest rates or gain exposure to, or hedge against, changes in certain asset classes. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

 

Upon entering into a futures contract, the Fund is required to deposit cash or cash equivalents with a broker in an amount equal to a certain percentage of the contract amount. This is known as the “initial margin” and subsequent payments (“variation margin”) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract.

 

Futures contracts involve, to varying degrees, risk of loss. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.

 

(c) Security transactions.  Security transactions are accounted for on a trade date basis.

 

2. Investments

 

At February 28, 2013, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

 

Gross unrealized appreciation

 

$

23,249,598

 

Gross unrealized depreciation

 

(227,148

)

Net unrealized appreciation

 

$

23,022,450

 

 

At February 28, 2013, the Fund had the following open futures contracts:

 

 

 

NUMBER OF
CONTRACTS

 

EXPIRATION
DATE

 

BASIS
VALUE

 

MARKET
VALUE

 

UNREALIZED
GAIN

 

Contracts to Sell:

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury 30-Year Bonds

 

67

 

3/13

 

$

9,914,251

 

$

9,733,844

 

$

180,407

 

 

9


 

Notes to schedule of investments (unaudited) (continued)

 

3. Derivative instruments and hedging activities

 

GAAP requires enhanced disclosure about an entity’s derivative and hedging activities.

 

The following is a summary of the Fund’s derivative instruments categorized by risk exposure at February 28, 2013.

 

 

 

Futures Contracts

 

Primary Underlying
Risk

 

Unrealized Appreciation

 

Interest Rate Risk

 

$

180,407

 

 

During the period ended February 28, 2013, the volume of derivative activity for the Fund was as follows:

 

 

 

Average market
value

 

Futures contracts (to sell)

 

$

10,299,453

 

 

10


 

ITEM 2.                                                  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 registrant’s last fiscal quarter that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

 

ITEM 3.                                                  EXHIBITS.

 

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.

 



 

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, thereunto duly authorized.

 

Western Asset Municipal Partners Fund Inc.

 

 

 

By

/s/ R. Jay Gerken

 

 

R. Jay Gerken

 

 

Chief Executive Officer

 

 

 

Date: April 25, 2013

 

 

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/ R. Jay Gerken

 

 

R. Jay Gerken

 

 

Chief Executive Officer

 

 

 

Date: April 25, 2013

 

 

 

By

/s/ Richard F. Sennett

 

 

Richard F. Sennett

 

 

Principal Financial Officer

 

 

 

Date: April 25, 2013