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Fitch Rates Kayne Anderson MLP Investment Company's SR Notes 'AAA' & MRPS 'AA'

^{Published on 2010-05-10 12:55:26 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings has assigned the following ratings to senior securities issued by Kayne Anderson MLP Investment Company (NYSE: KYN), a closed-end funds and a non-diversified investment management company advised by KA Fund Advisors, LLC:

--$65,000,000 of 4.21% Series O senior unsecured notes due on May 7, 2015 'AAA';

--$45,000,000 of floating rate Series P senior unsecured notes due on May 7, 2015 'AAA';

--$110,000,000 of Series A mandatory redeemable preferred stock (MRPS) due on May 7, 2017 'AA'.

Fitch also affirms other outstanding senior securities issued by the same fund as follows:

--$75,000,000 Series G senior unsecured notes due on June 19, 2011 at 'AAA';

--$60,000,000 Series I senior unsecured notes due on June 19, 2012 at 'AAA';

--$125,000,000 Series K senior unsecured notes due on Jun 19, 2013 at 'AAA';

--$60,000,000 Series M senior unsecured notes due on November 4, 2014 at 'AAA';

--$50,000,000 Series N senior unsecured notes due on November 4, 2014 at 'AAA'.

In addition, the $75,000,000 Series D auction rate preferred stock (ARPS) are paid in full.

The ratings are based on sufficient asset coverage provided to the senior notes and MRPS by the fund's portfolio, structural protections afforded by mandatory de-leveraging provisions in the event of asset coverage declines, the legal and regulatory parameters that govern the fund's operations and the capabilities of KA Fund Advisors, LLC as investment advisor. The fund will use net proceeds from the sale of the above mentioned securities to repay short-term borrowings, to redeem all of the fund's Series D ARPS, to make new portfolio investments and for general corporate purposes. The fund expects to complete the redemption of ARPS on May 28, 2010.

At the time of the issuance, the fund's pro forma asset coverage ratio for senior notes, as calculated in accordance with the Investment Company Act of 1940 (1940 Act), was in excess of 300%, which is the minimum asset coverage required by the 1940 Act for such debt securities. The fund's pro forma asset coverage ratio for MRPS, as calculated in accordance with the 1940 Act, was in excess of 200%, which is the minimum asset coverage required by the 1940 Act for senior equity securities. Also, at the time of issuance, the fund's pro forma asset coverage ratios with respect to the senior notes and MRPS, as calculated in accordance with the overcollateralization test as per Fitch's rating criteria was in excess of 100%, which are the minimum asset coverage levels deemed consistent with the ratings assigned to the senior notes and MPRS.

Certain securities currently issued by Kayne Anderson MLP Investment Company contain early prepayment penalties, which may vary depending on whether the prepayment is optional or mandatory. To the extent the fund is contractually obligated to pay the prepayment penalties, Fitch included the full amount of such payments as part of total fund's liabilities in calculating the relevant Fitch OC tests.

The fund invests principally in equity securities of energy-related publicly traded master limited partnerships (MLPs). Energy-related MLPs own domestic infrastructure assets that are used in the gathering, processing, transportation, storage, refining and distribution of energy-related commodities. The fund's objective is to obtain high after tax total returns for its shareholders. As of March 31, 2010 the fund had $2 billion in total assets under management.

KA Fund Advisors, LLC is the fund's investment adviser and is responsible for implementing and administering the fund's investment strategy. It is a subsidiary of Kayne Anderson Capital Advisors, L.P. (Kayne Anderson), a Securities and Exchange Commission-registered investment adviser. As of Feb. 28, 2010, Kayne Anderson and its affiliates managed approximately $8.7 billion, including approximately $6 billion in energy-related assets. Kayne Anderson has invested in MLPs and other midstream energy companies since 1998.

Applicable criteria available on Fitch's web site at '[ www.fitchratings.com ]':

--'Closed-End Fund Debt and Preferred Stock Rating Criteria' (Aug. 17, 2009);

--'Closed-End Fund: Fitch Clarifies Criteria for Make-Whole Amounts and Other Prepayment Obligations' (March 18, 2010).

Additional information is available at '[ www.fitchratings.com ]'.

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