Kayne Anderson BDC Assigns Ratings for $200 Million Senior Unsecured Notes Due 2028 and 2030

KBRA assigns a BBB rating to Kayne Anderson BDC's $200 million senior unsecured notes due 2028 and 2030. The rating is supported by the company's diversified $2.2 billion investment portfolio, solid management team, and conservative underwriting and risk management practices. The rating outlook is stable, and the proceeds will be used to repay existing indebtedness and general corporate purposes.

Kroll Bond Rating Agency (KBRA) has assigned a BBB rating to Kayne Anderson BDC, Inc.'s (NYSE: KBDC) $200 million senior unsecured notes due in 2028 and 2030. The rating reflects the company's diversified investment portfolio, solid management team, and conservative risk management practices.

Kayne Anderson BDC's investment portfolio, valued at approximately $2.2 billion, consists mainly of senior secured first lien loans across 27 industries, with a focus on middle market companies in the U.S. The portfolio's median EBITDA is $33.7 million, excluding investments on watch list. The company benefits from shared resources with Kayne Anderson Private Credit (KAPC), a $7.2 billion AUM subsidiary of Kayne Anderson Capital Advisors, L.P. (KACALP), which has a $38 billion AUM investment platform.

The rating is supported by KBDC's solid management team, each with over 20 years of experience in leveraged finance, and their strong credit performance over the past 14 years. The company's conservative underwriting and risk management practices have resulted in a weighted average portfolio company leverage and interest coverage ratio of 4.3x and 2.5x, respectively.

The rating outlook is stable, and the proceeds from the note issuance will be used to repay existing indebtedness and for general corporate purposes. KBDC's liquidity remains strong, with available credit lines and cash of $390.4 million set against $25 million of unsecured debt maturities in June 2027 and unfunded portfolio company commitments of $250.8 million.

However, the rating is counterbalanced by KBDC's mostly secured funding profile (~93%), limited operating history, and the requirement as a regulated investment company (RIC) to distribute 90% of net investment income. Additionally, the company's asset coverage ratio is 210%, providing a solid cushion against regulatory asset coverage of 150%.

The rating is unlikely to be upgraded in the intermediate term, and the outlook could be revised to Negative or the rating could be downgraded if a prolonged downturn in the U.S. economy has a material impact on performance.

References:
[1] https://www.streetinsider.com/Business+Wire/KBRA+Assigns+Rating+to+Kayne+Anderson+BDC%2C+Inc.s+%24200+Million+Senior+Unsecured+Notes+Due+2028+and+2030/25291384.html
[2] https://www.marketbeat.com/stocks/NYSE/KBDC/