S&P lowers KKR Financial preferreds

S&P said it affirmed the BBB issuer credit rating on KKR Financial Holdings LLC and the BBB rating on its senior unsecured notes.

The agency also said it lowered the rating on the company's perpetual preferred notes to BB from BB+.

The outlook is stable.

As pre-crisis CLOs have been called and the portfolio has diminished in size, the agency said it believes KKR Financial's importance to KKR & Co. LP has declined, S&P said.

KKR Financial’s business has evolved to consist primarily of CLOs and credit-related co-investments primarily sourced and managed by KKR, the agency explained.

Therefore, S&P said it reassessed the view of expected implicit support from KKR and now assess KKR Financial as only moderately strategic to the group.

One notch of group support, however, is still factored into the ratings, the agency said.

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