S&P rates KKR notes A

S&P said it assigned an A rating on KKR Group Finance Co. VI LLC's proposed $500 million senior unsecured notes.

KKR Group Finance is an issuing subsidiary of KKR & Co. Inc., the rated entity, S&P said.

KKR & Co., KKR Management Holdings LP, KKR Fund Holdings LP and KKR International Holdings LP will fully and unconditionally guarantee the notes on a joint and several basis, in line with KKR's other senior notes, the agency said.

The proceeds will be used to redeem its $500 million senior notes due in 2020, S&P explained/

Expectations for the company's key credit metrics are unchanged, given that this is a leverage neutral transaction, the agency said.

S&P said it continues to expect KKR's leverage to be between 1x and 1.5x in 2019 and 2020, which is still lower than the 1.75x trigger for a downgrade.

The agency said it expects the issuance to have a modestly positive impact on the company's interest expense, given the relatively high coupon on the 2020 notes.

The ratings reflect the company's long successful investing track record, high level of fee-paying assets under management and diverse platform that continues to grow at a steady pace, S&P said.

The ratings also consider the company's low leverage, solid asset coverage and strong liquidity, the agency said.

The company's earnings can be volatile given its high level of performance fees and investment income, somewhat detracting from its credit strengths, S&P said.

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