Kayne Anderson Energy Infrastructure Fund Enters Into $135 Million Revolving Credit Facility
Kayne Anderson Energy Infrastructure Fund, Inc. (KYN) announced a $135 million unsecured revolving credit facility, replacing a $175 million facility. The interest rate is SOFR plus 1.40%. The Company had $1 million borrowed as of February 22, 2024.
The announcement by Kayne Anderson Energy Infrastructure Fund, Inc. (KYN) regarding the new $135 million unsecured revolving credit facility is a strategic financial move that bears analysis. The reduction in the facility size from $175 million to $135 million suggests a recalibration of the fund's debt strategy. This could be interpreted as a positive signal indicating that the fund is optimizing its capital structure, potentially reducing the cost of capital. The interest rate being tied to SOFR plus a variable percentage based on asset coverage ratios is noteworthy. With the current rate at SOFR plus 1.40%, it reflects a favorable borrowing cost in the current economic climate, assuming that SOFR remains within expected ranges.
For investors and stakeholders, the implications of this credit facility are multifaceted. On the one hand, it provides the fund with liquidity that can be used for investment opportunities or to manage cash flows more effectively. On the other hand, the commitment fee on unused amounts could be a drag on earnings if the facility is underutilized. The short-term maturity of the facility also suggests that KYN may need to renegotiate or refinance this line of credit in a year, which could be subject to the prevailing interest rates and market conditions at that time.
From a market perspective, the terms of the credit facility could reflect the lender's view of the energy infrastructure sector's risk profile. The narrower range of interest rates (SOFR plus 1.40% to SOFR plus 2.25%) compared to broader market variations indicates confidence in the fund's asset management and sector stability. This confidence could stem from the essential nature of energy infrastructure, which tends to provide steady cash flows and can be less sensitive to economic downturns.
Further analysis of the fund's distribution policy reveals a flexible approach to shareholder returns, with the rate potentially being adjusted based on market conditions and portfolio performance. This flexibility could be appealing to income-focused investors, particularly in a volatile market environment. However, the lack of guaranteed distribution amounts means that investors must be cognizant of the underlying risks associated with the variability of returns.
Legally, the press release's cautionary note emphasizes regulatory compliance and the non-binding nature of the communication, which is standard for such announcements. It is crucial for investors to understand that the press release does not constitute an offer to sell or a solicitation to buy securities. This distinction is important to mitigate potential legal misunderstandings and to underscore that investment decisions should not be based solely on this announcement. Additionally, the availability of the credit agreement on the company's website provides transparency and allows for further due diligence by interested parties.
02/22/2024 - 06:05 PM
HOUSTON, Feb. 22, 2024 (GLOBE NEWSWIRE) -- Kayne Anderson Energy Infrastructure Fund, Inc. (the “Company”) (NYSE: KYN) announced today that it has entered into a $135 million unsecured revolving credit facility (the “Credit Facility”). The Credit Facility matures on February 20, 2025. The Credit Facility replaces the Company’s $175 million unsecured revolving credit facility that was scheduled to mature on February 23, 2024.
The interest rate on outstanding borrowings under the Credit Facility may vary between SOFR plus 1.40% and SOFR plus 2.25% , depending on the Company’s asset coverage ratios. Based on the Company’s current asset coverage ratios, the interest rate is SOFR plus 1.40% . The Company will pay a commitment fee of 0.20% per annum on any unused amounts of the Credit Facility. As of February 22, 2024, the Company had $1 million borrowed under the Credit Facility.
A copy of the credit agreement is available on the Company’s website at www.kaynefunds.com/kyn .
Kayne Anderson Energy Infrastructure Fund, Inc. (NYSE: KYN) is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended, whose common stock is traded on the NYSE. The Company’s investment objective is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders. KYN intends to achieve this objective by investing at least 80% of its total assets in securities of Energy Infrastructure Companies. See Glossary of Key Terms in the Company’s most recent quarterly report for a description of these investment categories and the meaning of capitalized terms.
The Company pays cash distributions to common stockholders at a rate that may be adjusted from time to time. Distribution amounts are not guaranteed and may vary depending on a number of factors, including changes in portfolio holdings and market conditions.
This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of any securities in any jurisdiction in which such offer or sale is not permitted. Nothing contained in this press release is intended to recommend any investment policy or investment strategy or consider any investor’s specific objectives or circumstances. Before investing, please consult with your investment, tax, or legal adviser regarding your individual circumstances.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This communication contains statements reflecting assumptions, expectations, projections, intentions, or beliefs about future events. These and other statements not relating strictly to historical or current facts constitute forward-looking statements as defined under the U.S. federal securities laws. Forward-looking statements involve a variety of risks and uncertainties. These risks include but are not limited to changes in economic and political conditions; regulatory and legal changes; energy industry risk; leverage risk; valuation risk; interest rate risk; tax risk; and other risks discussed in detail in the Company’s filings with the SEC, available at www.kaynefunds.com or www.sec.gov . Actual events could differ materially from these statements or our present expectations or projections. You should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. Kayne Anderson undertakes no obligation to publicly update or revise any forward-looking statements made herein. There is no assurance that the Company’s investment objectives will be attained.
Contact investor relations at 877-657-3863 or cef@kayneanderson.com .
What is the amount of the unsecured revolving credit facility announced by Kayne Anderson Energy Infrastructure Fund, Inc.?
Kayne Anderson Energy Infrastructure Fund, Inc. announced a $135 million unsecured revolving credit facility.
What is the interest rate on outstanding borrowings under the Credit Facility?
The interest rate on outstanding borrowings under the Credit Facility may vary between SOFR plus 1.40% and SOFR plus 2.25%, depending on the Company’s asset coverage ratios. Currently, the interest rate is SOFR plus 1.40%.
Where can a copy of the credit agreement be found?
A copy of the credit agreement is available on the Company’s website at www.kaynefunds.com/kyn.
What is the investment objective of Kayne Anderson Energy Infrastructure Fund, Inc.?
The investment objective of Kayne Anderson Energy Infrastructure Fund, Inc. is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders.
How much did the Company have borrowed under the Credit Facility as of February 22, 2024?
As of February 22, 2024, the Company had $1 million borrowed under the Credit Facility.
