KBRA Affirms the Ratings on the Senior Notes and Mandatory Redeemable Preferred Shares Issued by Tortoise Energy Infrastructure Corp.
19 Dec 2025 | New York
KBRA affirms the ratings assigned to the Senior Notes (Series KK, OO, TT, PP, UU, QQ, RR, VV and WW) and the Mandatory Redeemable Preferred Shares (Series F, H, I, G, J) issued by Tortoise Energy Infrastructure Corp. ("TYG" or the “Fund”). The Outlook is Stable.
The Fund is registered under the Investment Company Act of 1940 (the “40 Act”) and is a closed-end investment fund that is sponsored by Tortoise Capital Advisors (the "Firm" or "Tortoise"). The Fund had its Initial Public Offering in February 2004, and its shares are listed on the New York Stock Exchange under the symbol TYG. The Fund invests in energy infrastructure companies that generate, transport and distribute electricity, as well as process, store, distribute and market natural gas and natural gas liquids.
The affirmation of the ratings are driven primarily by TYG’s strong asset coverage, liquidity profile and management experience. Furthermore, TYG has demonstrated its willingness and ability to remain in compliance with 40 Act leverage thresholds with a goal to consistently exceed these levels and maintain downside cushion. In November 2025, TYG completed the merger with Tortoise Sustainable & Social Impact Term Fund (TEAF), a closed-end fund with an investment strategy focused on assets that generate current income and total return while also delivering positive social and environmental impact. Post merger, TYG was the surviving entity and there was no change to TYG’s existing investment and operating strategy. Following the merger, TEAF’s outstanding leverage was consolidated into TYG’s credit facility.
Key Credit Considerations
- Asset Coverage: As a Fund registered under the Investment Company Act of 1940, regulatory requirements dictate minimum asset coverage ratios of 300% on senior debt and 200% on total leverage (with respect to senior debt and preferred stock) in order for TYG to maintain the ability to issue additional debt or preferred shares and pay dividends. Tortoise Capital Advisors has demonstrated its ability and willingness to meet these asset coverage requirements with a goal to consistently exceed these levels and maintain downside cushion. Furthermore, distributions to common shareholders are only permitted so long as total asset coverage is greater than 225%. This coverage level as it relates to distributions highly incentivizes the Fund’s management team to maintain its asset coverage cushion.
- Liquidity: At least 90% of TYG’s total investments are invested in securities of energy infrastructure companies. TYG may also invest up to 30% of its total investments in restricted securities which are less liquid than securities trading in the open market because of statutory and contractual restrictions on resale. As the portfolio is primarily invested in publicly traded securities, the liquidity of the Fund’s assets is relatively strong. Despite the strong liquidity profile, the manager is largely reliant on sales into public markets, which may not always reflect the intrinsic value of the underlying companies.
- Non-diversified Investments: TYG is a non-diversified closed-end fund that focuses primarily on energy infrastructure companies. As a non-diversified fund in the energy infrastructure space, the Fund faces idiosyncratic risk that cannot be mitigated through industry diversification.
- Sponsor Experience: Tortoise Capital Advisors L.L.C. (“Tortoise” or the “Firm”) was founded in 2002 and as of October 31, 2025, the Firm manages approximately $8.7 billion AUM with approximately 40 employees domiciled in Kansas City. Tortoise provides investors with access to active and passive investment solutions across the capital structure through a variety of investment vehicles including separately managed accounts, closed-end funds, open-end funds, interval funds, private funds and exchange-traded products. Investments are focused across the energy value chain, including the production, transportation, storage, and distribution of essential energy commodities, as well as regulated utilities and critical networks.
Rating Sensitivities
- Asset Coverage: A deterioration in asset coverage levels below '40 Act requirements and the Fund manager’s inability to liquidate assets and demonstrate intention to cure within the 30-day time-period could result in negative rating changes.
- Asset Quality: A trend of stable asset performance coupled with improvements to asset coverage could result in positive rating changes.
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