What is the purpose of this new credit agreement?

The new 364-day revolving credit agreement is intended to provide KKR's capital markets business with continued financial flexibility to facilitate the settlement of debt transactions that are syndicated by the segment.

Does this new credit facility increase KKR's overall debt capacity?

This filing indicates the replacement of an existing 364-day facility with a new one of the same tenor and a similar capacity ($750 million). While it ensures continued access to funding, it doesn't appear to represent a net increase in overall debt capacity based solely on this filing.

What is the risk to KKR & Co. Inc. if the subsidiaries default on this agreement?

The liabilities under this new revolving credit agreement are explicitly stated as non-recourse to other parts of KKR. This means that only the assets of the specific capital markets subsidiaries that are parties to the agreement are pledged as collateral, and KKR & Co. Inc. itself is not directly liable for these obligations.

How are interest rates determined for borrowings under the new agreement?

Interest rates depend on the loan type and currency. For US dollar loans, rates are based on term SOFR plus applicable margins (1.50%-2.75%). For euro loans, it's EURIBOR plus margins, and for sterling loans, it's SONIA plus margins. There's also an option for ABR Loans, based on the federal funds rate or term SOFR, plus applicable margins (0.50%-1.75%).

KKR 8-K: Material Agreements & Financial Events

Summary

KKR & Co. Inc. (KKR) announced the entry into a new 364-day revolving credit agreement on April 8, 2022, replacing its prior agreement of the same tenor. The new facility, with Mizuho Bank, Ltd. as administrative agent, provides for revolving borrowings of up to $750 million and matures on April 7, 2023. This action is designed to ensure continued financial flexibility for KKR's capital markets business. The new credit agreement maintains parity with KKR's existing $750 million revolving credit facility for its capital markets operations. Borrowings under this new agreement are specifically earmarked to facilitate the settlement of debt transactions syndicated by KKR's capital markets segment. Importantly, the obligations are limited to the relevant capital markets subsidiaries, and liabilities are non-recourse to the broader KKR entity, mitigating risk to the parent company.

Key Highlights

1KKR entered into a new 364-day revolving credit agreement with Mizuho Bank, Ltd., effective April 8, 2022.
2The new facility has a maximum borrowing capacity of $750 million and matures on April 7, 2023.
3This agreement replaces a prior 364-day revolving credit agreement that terminated on April 8, 2022.
4Borrowings under the new agreement are intended to facilitate the settlement of debt transactions syndicated by KKR's capital markets business.
5Interest rates on borrowings will vary based on the currency and type of drawdown, referencing SOFR, EURIBOR, or SONIA, plus applicable margins.
6The obligations under the agreement are limited to specific capital market subsidiaries and are non-recourse to the rest of KKR.
7The agreement includes customary covenants and a financial covenant related to the Borrowers' debt to equity ratio, secured by certain assets of the Borrowers.

KKR & Co. Inc. 8-K Report, Material Agreement (Apr 8, 2022)

Summary

Key Highlights

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