KBRA Downgrades Rating for KKR Return-Enhanced Investment Grade Notes (REIGN)
24 Jul 2024 | New York
KBRA has downgraded the Notes issued by KKR Return-Enhanced Investment Grade Notes (REIGN) and revised the outlook from Stable to Negative.
This ratings change is primarily driven by the accelerated pace of capital calls and slowdown in distributions from the Issuer’s underlying private investments, consistent with a softer monetization environment across the industry, the result of which places the Issuer in a constrained liquidity position to date when compared to forecasted expectations. Updated projections now indicate that the Issuer’s fund interests must achieve long-term returns that in KBRA’s opinion, are inconsistent with the prior rating assigned. KBRA notes that KKR plans to prioritize the use of portfolio distributions to service debt and rebuild liquidity reserves to the required amounts, after which, KKR will resume investing in future opportunities as previously projected. KBRA continues to view KKR’s strategic commitment to the REIGN vehicle and the firm’s broader alignment of interests by way of AUM growth and investment performance as positive credit factors that support the credit risk to Noteholders favorably. KBRA will continue to closely monitor the transaction’s performance and the Issuer’s liquidity profile in the months ahead.
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