KBRA Affirms the Rating to BNP Paribas' Participation in a Capital Call Facility to Antin Infrastructure Partners V
17 Feb 2025 | London
KBRA UK (KBRA) affirms the A rating assigned to BNP Paribas' participation in a capital call facility in the form of a committed and secured multi-draw term loan facility to be used by way of short-term loans or letters of credit (the “Facility”) to the partnerships comprising Antin Infrastructure Partners V (“Antin V” or the “Fund”). The Outlook is Stable. The rating was requested by BNP Paribas as a participating lender in the transaction. Neither Antin Infrastructure Partners V nor any of its associates has requested this report or the rating, and this report has not been prepared for or approved by any of them. BNP Paribas has committed €212.5 million to the €2.5 billion Facility.
Key Credit Considerations
Financial Covenants and Structural Features: The primary collateral and source of repayment for the Facility is the uncalled capital commitments of the Fund. On an ongoing basis, each partnership is required to maintain uncalled capital commitments ranging from 1.5x to 2.5x, which is then reduced to between 1.3x and 2.3x after 50% of capital commitments have been called, of the aggregate amount of all Fund indebtedness. These Coverage Thresholds vary depending on the specific partnership and have been adjusted to reflect the underlying Limited Partners ("LP") quality in each partnership. Additionally, once 50% of capital commitments have been called, each partnership is required to comply with a Net Asset Value (NAV) Ratio test, requiring that the sum of the Undrawn Commitments plus the NAV of the partnership’s existing investments is at least 3.0x the aggregate amount of all Fund indebtedness. A failure to remedy a breach of these covenants within five Business Days will result in an Event of Default under the terms of the Facility Agreement. In addition to the above protective financial covenants, the Lenders also have security over the right of the General Partner to issue capital calls further to a continuing event of default. As of the most recent Compliance Certificate provided for September 2024, the Facility was in compliance with covenants.
Alignment of Interests: A failure to fulfil a capital call can result in the loss of rights to distributions from the Fund as well as the potential to be restricted from investing in future private capital opportunities. Furthermore, in the event a Limited Partner defaults in respect of its obligation to meet capital contributions, the defaulting Limited Partner is subject to the application of various default provisions.
Limited Partner Diversification: Diversification of the LP’s commitments is determined utilising an adjusted Herfindahl-Hirschman Index (the “HHI”). As of September 2024, the aggregate investor base of LPs included in the Facility across all Partnerships includes 171 investors with an adjusted HHI of 32.5. The most concentrated Partnership’s borrowing base, Antin Infrastructure Partners V – A SCSp, includes 21 investors with a diversification index of 9.8. This represents a relatively highly concentrated investor base, which is largely offset by the quality of the LPs, which are typically investment grade rated institutional investors. The diversification is relatively in line with the assessment at prior surveillance. The Fund has raised additional capital from more than 100 LPs and reached its final close with €10.2 billion commitments in December 2024, and it is expected the diversification of the borrowing base will improve as new LP commitments are approved by the lenders to be included under the Facility investor base.
Quality of Limited Partner Commitments: KBRA’s assessment of LP credit quality considered a combination of third-party public ratings and an independent, internal review of the investors that are included in the Facility borrowing base. Of the investors of the FinCo, which accounts for 100% of the total commitments included in the Facility, approximately 75.8% of the LP commitments constitute investors that carry third party public ratings, either directly or through a parent entity, from KBRA or select third party Credit Rating Agencies. KBRA evaluated the remaining 24.2% of unrated investors comprising the Fund. This evaluation resulted in an estimation of approximately 92.5% of total commitments to be of investment grade credit quality, which is in line with the assessment at prior surveillance.
No Cross Collateralisation Between Partnerships: The partnerships do not guarantee one another’s borrowings at the partnership level. Additionally, for any borrowings at the FinCo level, the partnerships only guarantee the obligations up to their respective pro-rata commitments. As such, KBRA considered the investor base and coverage thresholds of each partnership on a standalone basis in arriving at its final rating.
Manager Experience: Established in 2007, Antin Infrastructure Partners (“Antin” or the “Firm”) is a private equity firm that focuses on infrastructure investments. As of September 2024, the Firm had approximately €32.3 billion of assets under management across its Flagship, Mid Cap and NextGen investment strategies. Antin employs more than 240 professionals across six offices in France, Luxembourg, Singapore, South Korea, United Kingdom, and United States.
Rating Sensitivities
Decline in Limited Partner Credit Quality: A decline in the credit quality of the Fund’s Limited Partners could weaken the underlying collateral base of the transaction and jeopardise the ability of the Fund to repay borrowings as a result of: (i) deterioration in credit quality of the underlying Limited Partners; or (ii) transfer of interest(s) to Limited Partner(s) of lower credit quality characteristics, which may result in negative rating changes.
Increase in Limited Partner Credit Quality: An overall higher credit quality of the Fund’s Limited Partners as a result of: (i) improvement in credit quality of the underlying Limited Partners; or (ii) the transfer of interest(s) to Limited Partner(s) with better credit characteristics, which may result in positive rating changes.
Underperformance of Fund Assets or Investments: Underperformance of the Fund’s underlying assets or investments may jeopardise debt repayment as the deterioration of the Fund may, for example, elicit hesitation of the Fund’s Limited Partners to fund their respective capital calls regardless of their contractual obligations to do so and the security and protections of the lender.
To access ratings and relevant documents, click here.