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NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings has affirmed the 'AAA' rating assigned to the following notes issued by Franklin Universal Trust (NYSE: FT), a leveraged multi-sector closed-end fund advised by Franklin Advisers, Inc.:

--$42,000,000 of 5.87% senior notes due Aug. 28, 2013.

KEY RATING DRIVERS

The affirmation follows Fitch's annual review of FT and reflects:

--Sufficient asset coverage relative to Fitch's published criteria;

--The structural protections afforded by mandatory de-leveraging provisions in the event of asset coverage declines;

--The legal and regulatory parameters that govern the fund's operations;

--The capabilities of Franklin Advisers, Inc. as the investment advisor.

Fitch's ratings on the notes speak only to timely repayment of interest and principal in accordance with the governing documents and not to potential liquidity in the secondary market.

LEVERAGE

As of Feb. 24, 2012, the fund's total assets were approximately $227 million. The fund's total leverage was approximately $46 million or 20% of total assets, consisting entirely of rated notes.

ASSET COVERAGE

As of the same date, the fund's asset coverage ratios, as calculated in accordance with the Fitch total and net overcollateralization tests (Fitch OC tests) per the 'AAA' rating guidelines outlined in Fitch's applicable criteria, were in excess of 100%, which is the minimum asset coverage amount deemed consistent with an 'AAA' rating. These tests serve as minimum asset coverage covenants required by the fund's governing documents. Should the asset coverage for the notes decline below 100%, the governing documents require the fund to restore compliance within 50 business days.

Additionally, the fund's asset coverage ratio for debt, as calculated in accordance with the Investment Company Act of 1940 (1940 Act), was in excess of 300%, which is also a minimum asset coverage required by the fund's governing documents.

FUND PROFILE

Franklin Universal Trust is a diversified, closed-end management investment company, registered under the Investment Company Act of 1940, as amended, that commenced investment operations in September 1988. The fund's primary investment objective is high current income consistent with preservation of capital. The fund's secondary investment objective is growth of income through dividend increases and capital appreciation. Under normal circumstances, the fund invests primarily in two asset classes: high yield bonds and utility stocks. The fund also invests to a lesser extent in foreign equity securities and sovereign debt, in each case U.S. dollar denominated. As of Feb. 24, 2012, the portfolio was comprised of 69% high yield corporate securities, 30% common equity securities, and 1% cash and short-term investments.

FUND ADVISOR

Franklin Advisers, Inc., a subsidiary of Franklin Resources, Inc. (NYSE:BEN) acts as the investment adviser to the fund. As of Dec. 21, 2011, Franklin Advisers, Inc. managed approximately $372 billion in assets.

RATING SENSITIVITY

The rating may be sensitive to material changes in the credit quality or market risk profiles of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause the rating to be lowered by Fitch. For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

The sources of information used to assess this rating were the public domain and Franklin Advisers, Inc.

Applicable Criteria and Related Research:

--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 16, 2011);

--'Closed-End Funds: Derivatives Under Review (Increased Use and Limited Transparency Are Key Considerations)' (Nov. 16, 2011);

--'2012 Outlook: Closed-End Fund Leverage' (Dec. 19, 2011).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648840 ]

Closed-End Funds: Derivatives Under Review (Increased Use and Limited Transparency Are Key Considerations)

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656591 ]

2012 Outlook: Closed-End Fund Leverage

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=660709 ]

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