What is the purpose of this new credit agreement?

The primary purpose of this $750 million revolving credit agreement is to provide KKR's capital markets business with the necessary funding to settle debt transactions that they syndicate. It essentially serves as a backstop for their deal-making activities in the capital markets division.

Does this debt create additional risk for KKR & Co. Inc. as a whole?

No, the filing explicitly states that the obligations under this agreement are limited to the specific borrowing subsidiaries within KKR's capital markets business and are non-recourse to other parts of KKR. This means that if the borrowing entities cannot meet their obligations, the liability does not extend to the parent company or other KKR divisions.

How does this new facility compare to the previous one?

This new agreement is a 364-day revolving credit facility for $750 million, replacing a similar 364-day facility that expired on June 27, 2019. The size is larger than the previous $500 million facility, and it continues to serve the same purpose for KKR's capital markets operations.

What are the potential costs associated with using this credit facility?

There is a facility fee of 0.20% payable on the entire $750 million amount. Additionally, if borrowings are drawn, interest will be charged. For Eurocurrency loans, the rate is LIBOR plus a margin between 1.25% and 2.50%. For ABR loans, the rate is a base rate plus a margin between 0.25% and 1.50%. The specific margin depends on the loan duration.

KKR 8-K: Material Agreements & Financial Events

Summary

KKR & Co. Inc. (KKR) has entered into a new 364-day revolving credit agreement with Mizuho Bank, Ltd., totaling $750 million. This agreement, effective June 27, 2019, replaces a similar facility that expired on the same date. The new credit line is specifically designated to support the settlement of debt transactions managed by KKR's capital markets business. Importantly, the obligations under this new agreement are non-recourse to the broader KKR entity and are limited to the capital markets subsidiaries acting as borrowers. This structure aims to isolate the risk associated with these debt settlement activities. The facility provides KKR's capital markets division with continued access to essential funding for its syndication operations, ensuring operational flexibility.

Key Highlights

1KKR secured a new $750 million, 364-day revolving credit facility.
2The facility is set to expire on June 26, 2020.
3Proceeds are dedicated to facilitating the settlement of debt transactions syndicated by KKR's capital markets business.
4Obligations under the agreement are limited to specific capital markets subsidiaries and are non-recourse to the broader KKR entity.
5The new credit line ranks pari passu with an existing $500 million facility for the capital markets business.
6Interest rates vary based on loan type (Eurocurrency or ABR), with margins ranging from 0.25% to 2.50% plus applicable benchmark rates.
7A facility fee of 0.20% is payable on the total facility amount.

KKR & Co. Inc. 8-K Report, Material Agreement (Jun 27, 2019)

Summary

Key Highlights

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