KBRA Assigns and Affirms Ratings on Senior Notes and MRPS Issued by Kayne Anderson Energy Infrastructure Fund, Inc.
30 Jul 2026 | New York
KBRA assigns a ‘AAA’ rating to $25.0 million Series CCC Senior Notes and $25.0 million Series DDD Senior Notes, and assigns an ‘A+’ rating to $15.0 Series Y Mandatory Redeemable Preferred Stock ("MRPS") issued by Kayne Anderson Energy Infrastructure Fund, Inc. (the “Fund”). Concurrently, KBRA affirms the ratings assigned to the outstanding Senior Notes and MRPS issued by the Fund. The outlook on all ratings is Stable.
The ratings continue to be supported by strong asset coverage, the liquidity of the underlying assets, and the management experience of the Fund's investment adviser, KA Fund Advisors, LLC (“KAFA”). As of June 30, 2026, senior asset coverage was 633% and total asset coverage was 492%. The Fund is registered under the Investment Company Act of 1940 and is a non-diversified closed-end investment fund. The Fund commenced operations on September 28, 2004, and its shares are listed on the New York Stock Exchange under the symbol KYN. The Fund’s investment strategy focuses on equity securities of energy infrastructure companies.
Key Credit Considerations
- Asset Coverage: The Fund is registered under the ’40 Act which imposes minimum asset coverage requirements on leverage. The Fund must maintain at least 200% coverage on total leverage (including senior debt and preferred shares) and 300% on senior debt in order to issue additional debt or preferred shares and pay dividends. The Fund manager has communicated to KBRA that KYN has a current internal target of a 55%-60% cushion relative to its financial covenants (i.e. market values could decline by approximately this amount before asset coverage ratios would be equal to financial covenants). Under the terms of the Fund's leverage agreements, asset coverage must be calculated on a weekly basis.
- In addition, asset coverage calculations, with respect to the covenants of its leverage agreements, are subject to a 20% maximum contribution from Level 3 securities, which can be comprised of illiquid and harder-to-value assets. These covenants provide additional protection against volatility in both asset valuations and coverage levels.
- Liquidity: KYN can invest in Level 3 securities which can be less liquid than securities trading in the open market because of statutory and contractual restrictions on resale. As of May 31, 2026, approximately 2.0% of the Fund’s total assets were held in Level 3 restricted securities, compared to 3.4% as of May 31, 2025. The portfolio is primarily composed of publicly traded securities, which contributes to relatively strong asset liquidity. However, the manager remains largely dependent on the ability to execute sales in the public markets, where transaction prices may not always reflect the intrinsic value of the underlying companies.
- Non-diversified Investments: KYN is a non-diversified closed-end mutual fund. Under current guidelines, the Fund will invest at least 80% of total assets in public and private securities of energy infrastructure companies. As a non-diversified fund, the Fund faces idiosyncratic risk which cannot be mitigated through industry diversification.
- Adviser Experience: KA Fund Advisors, LLC ("KAFA") is a subsidiary of Kayne Anderson Capital Advisors, L.P. ("KACALP"), collectively referred to as "Kayne Anderson" or the “Firm.” Founded in 1984, Kayne Anderson is an alternative investment management firm focused on real estate, private credit, infrastructure and energy.
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.
- Manager Quality and Track Record: Changes in management composition or performance of KAFA in its role as Fund Manager can have a positive or negative effect on the outstanding ratings, to the extent KBRA views such changes as being material to the credit of the outstanding rated debt.
- Asset Quality: A trend of stable asset performance coupled with improvements to asset coverage could result in positive rating changes.
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