Kroll Bond Rating Agency (KBRA) assigns ratings of AAA to Kayne Anderson Midstream/Energy Fund, Inc.’s (KMF or the "Fund") outstanding Senior Notes and A+ to KMF’s outstanding Mandatory Redeemable Preferred Shares.
The Fund is registered under the Investment Company Act of 1940 (the "40 Act") and is a closed-end investment fund that is advised by KA Fund Advisors, LLC ("KAFA" or the "Fund Advisor"). The Fund had its Initial Public Offering in November 2010 and its shares are listed on the New York Stock Exchange under the symbol KMF. Under current investment guidelines, KMF is focused on investing in securities of companies in the Midstream/Energy Sector. On July 27, 2020, the Fund announced that the Board approved the Fund name to be changed to Kayne Anderson NextGen Energy & Infrastructure, Inc. which is expected to occur on or about September 28, 2020. In conjunction with this name change, the Board approved revisions to certain non-fundamental investment policies whereby KMF will invest primarily in securities of Energy Companies and Infrastructure Companies with a focus on securities of "NextGen" companies (as defined by the Fund).
The ratings are driven primarily by KMF’s strong asset coverage, liquidity, and management experience. Furthermore, KMF 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. This was most notable recently as KMF navigated through extremely challenging market conditions caused by the COVID-19 pandemic and the precipitous decline in the price of crude oil. The Fund Advisor successfully took steps to remain in compliance with 40 Act guidelines and insulate creditors and preferred shareholders. In KBRA’s view, KMF’s ability to withstand such a significant market dislocation demonstrates the strength of the Fund Advisor and the resiliency of its capital structure.
- Coronavirus (COVID-19): Investment Funds Weathering the Storm ... For Now
- Investment Funds Debt Global Rating Methodology
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
David Dicker, CFA, Associate Director (Lead Analyst)
+1 (646) 731-2449
Gopal Narsimhamurthy, Senior Director
+1 (646) 731-3392
Jared Hong, Senior Analyst
+1 (646) 731-3311
William Cox, Senior Managing Director (Rating Committee Chair)
+1 (646) 731-2472
Sted Dowd, Managing Director
+1 (646) 731-2479