KBRA Issues Rating Agency Confirmation Related to a Merger of Tortoise Energy Infrastructure Corporation with Tortoise Sustainable & Social Impact Term Fund
31 Jul 2025 | New York
KBRA issues a no downgrade confirmation in relation to the proposed merger of Tortoise Energy Infrastructure Corporation ("TYG") and Tortoise Sustainable & Social Impact Term Fund ("TEAF"), with TYG being the remaining entity. The request for Rating Agency Confirmation ("RAC") was initially received on June 26, 2025. The analysis indicates that the proposed merger in and of itself will not result in a downgrade, qualification or withdrawal of KBRA’s current ratings issued in connection with the outstanding Senior Notes and Mandatory Redeemable Preferred Stock (“MRPS”).
TEAF is a closed end fund with an investment strategy which is focused on generating current income and total return, while making a positive social and environmental impact. The fund combines investments across publicly traded securities, direct and private investments and corporate debt instruments. Post merger of TEAF and TYG funds, TYG will be the surviving entity. The existing debt of TEAF is anticipated to be refinanced by an increase in TYG’s credit facility. There will be no change in TYG’s existing investment and operating strategy, which is focused on investments in publicly traded companies involved in transporting, processing, storing, distributing, or marketing natural gas, crude oil and refined petroleum products. Post merger the portfolio is anticipated to hold similar assets as the current form of TYG. KBRA’s view on the expected portfolio on pro-forma basis is that asset quality, liquidity and coverage ratio remain relatively in line with existing TYG portfolio. Merger is expected to complete by the fourth quarter of 2025, with a shareholder meeting scheduled for September 2025.
In August, prior to the completion of the merger, TYG expects to issue a new series of Senior Notes and MRPS, the proceeds of which will be used for purpose of refinancing of existing debt and for general corporate purposes. On a pro-forma basis, giving effect to the anticipated August 2025 issuance and the planned TYG-TEAF merger in the fourth quarter of 2025, TYG’s Senior Asset Coverage is expected to change from 647%, as of June 20, 2025, to 711%, and its Total Asset Coverage is expected to change from 500%, as of June 20, 2025, to 504%.
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