01—Abstract
Summary
Summary of the 8-K filed May 30, 2024. Cited figures are marked; the original filing is the authoritative source.
On May 30, 2024, KKR Group Finance Co. XI LLC, an indirect subsidiary of KKR & Co. Inc., closed a yen-denominated senior notes offering totaling ¥91.4 billion across five tranches maturing from 2029 to 2054.
The notes are fully and unconditionally guaranteed by KKR & Co. Inc. and KKR Group Partnership L.P. The offering was priced on May 22, 2024, and KKR says the net proceeds will fund general corporate purposes. The notes were sold under Rule 144A and Regulation S, so they are not registered under the Securities Act.
The weighted average coupon works out to roughly 1.99%a (our calculation from the disclosed principal amounts and coupons). Coupons range from 1.559% on the 2029 notes to 3.008% on the 2054 notes, so the pricing reflects low yen-market rates. The 2029 tranche is the largest at ¥44.6 billion, about 49% of the total.
The filing does not state a U.S. dollar equivalent. At late-May 2024 exchange rates of roughly ¥155 to ¥160 per dollar, the issue would be on the order of $570 million to $590 millionb, but that figure is our estimate and is not in the filing. For investors, the filing is a routine capital-markets transaction that extends KKR's debt maturity profile and diversifies its funding into the Japanese yen market.
The indenture contains customary protections: limits on secured debt tied to voting stock or profit-participating interests, restrictions on mergers and asset sales, a 25%c holder threshold to accelerate, and a 101% change-of-control put. The filing contains no financial results or guidance, so it does not by itself change the assessment of KKR's operating performance.
02—Key points
Key Highlights
- Total offering size of ¥91.4 billion (about $0.58 billion at an estimated exchange rate; not stated in the filing) across five senior note tranches
- Maturities span 2029, 2031, 2034, 2044 and 2054, with coupons from 1.559% to 3.008% and an estimated weighted average coupon of about 1.99%
- Largest tranche is the ¥44.6 billion 1.559% notes due 2029, roughly 49% of the total issuance
- Issuer is KKR Group Finance Co. XI LLC, with full, unconditional and joint-and-several guarantees from KKR & Co. Inc. and KKR Group Partnership L.P.
- Notes are unsecured and unsubordinated, pay interest semi-annually starting November 30, 2024, and are redeemable after par call dates for the 2031, 2034, 2044 and 2054 series
- Covenants restrict secured debt on voting stock or profit-participating equity interests and limit mergers and sales of substantially all assets; holders of at least 25% can accelerate after a default
- Net proceeds are earmarked for general corporate purposes; the offering was sold under Rule 144A and Regulation S and is not registered with the SEC
03—Questions
Frequently Asked Questions
How large is this debt offering and what is the expected cost of borrowing?
The total principal is ¥91.4 billion across five tranches. Using the disclosed principal amounts and coupons, the weighted average coupon is roughly 1.99%, which is low in absolute terms because yen-denominated rates are much lower than U.S. dollar rates. The filing does not state a dollar equivalent.
Who is responsible for repaying the notes, and is there a parent guarantee?
KKR Group Finance Co. XI LLC, an indirect subsidiary, is the issuer. KKR & Co. Inc. and KKR Group Partnership L.P. fully and unconditionally guarantee the notes on a joint and several basis. The guarantees are unsecured and unsubordinated, so holders have a claim on the parent group in addition to the issuer.
When do the notes mature and when do interest payments begin?
Maturities are May 30, 2029 (2029 notes), May 30, 2031 (2031 notes), May 30, 2034 (2034 notes), May 27, 2044 (2044 notes) and May 29, 2054 (2054 notes). Interest accrues from May 30, 2024 and is paid semi-annually on May 30 and November 30, starting November 30, 2024.
Can KKR repay the notes early, and what happens on a change of control?
The issuer may redeem the 2031, 2034, 2044 and 2054 notes after their applicable par call dates at 100% of principal plus accrued interest. It may also redeem all notes at 100% plus accrued interest if certain tax law changes occur. If a change of control repurchase event occurs, holders can require repurchase at 101% of principal plus accrued interest.
Why did KKR issue yen-denominated debt, and does this filing change its financial outlook?
KKR states the net proceeds are for general corporate purposes and does not give a more specific use. Issuing in yen diversifies KKR's funding sources and lets it borrow at lower coupons than dollar debt. The filing contains no earnings, guidance or balance sheet data, so it is a financing event rather than a change in operating outlook. Investors should review KKR's 10-Q and 10-K for leverage and liquidity context.
04—Continue