S&P puts KKR on watch

S&P said it placed the A issuer credit and unsecured debt ratings on KKR & Co. Inc. and the BBB+ rating on the company’s preferred stock on CreditWatch with negative implications, indicating uncertainty about the funding sources that the company will use to acquire Global Atlantic and the potential for leverage to increase.

The agency said it expects KKR to pay about $4.4 billion or 1.0x Global Altantic’s book value, which at the end of March was about $4.4 billion.

“Given that KKR hasn’t provided the exact mix of funding sources, the company’s pro forma leverage profile is uncertain. That said, we acknowledge that the company has managed its capital structure conservatively over time, has a sizable balance sheet that to a large extent could be monetized in the event the company is looking for liquidity, and could also seek to fund part of the transaction through primary equity issuance, particularly since the stock price benefited from the conversion into a corporation from a partnership in 2018,” S&P said in a press release.

S&P also suggested debt issuance as a source of funding.

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