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NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings assigns a 'AA' rating to the following mandatory redeemable preferred shares (MRPS) issued by Kayne Anderson MLP Investment Company (NYSE: KYN), a non-diversified closed-end fund managed by KA Fund Advisors, LLC:

--$120,000,000 4.25% series E MRPS, liquidation preference $25.00 per share due on April 1, 2019.

KEY RATING DRIVERS

The rating reflects:

--Sufficient asset coverage relative to Fitch's published criteria;

--The 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;

--The capabilities of KA Fund Advisors, LLC as investment advisor. As of Feb. 29, 2012, the fund's total assets were approximately $4.4 billion.

DETAILS OF THE TRANSACTION

The closing date for the MRPS was March 14, 2012. The fund intends to use the net proceeds from the sale of the MRPS to partially prepay series A MRPS, to make new portfolio investments and for general corporate purposes.

The MRPS are expected to trade on the NYSE Amex under the ticker 'KYN Pr E' within 30 days after the date of the prospectus supplement was issued on March 16, 2012. Prior to the commencement of trading, MRPS will remain illiquid. Fitch's rating on the MRPS addresses only the credit risk of the securities and not potential liquidity in the secondary market.

LEVERAGE

As of Feb. 29, 2012, the fund's leverage was approximately $1.11 billion, not including accrued interest, or approximately 25% of the total assets. The leverage comprised $775 million of senior unsecured notes, $260 million of MRPS, excluding series E MRPS, and $76 million of bank borrowing.

ASSET COVERAGE

At the time of the issuance, the fund's pro forma asset coverage ratio for series E MRPS and other MRPS issued by the fund, as calculated in accordance with the Investment Company Act of 1940 (1940 Act), exceeds 200%, which is the minimum asset coverage required by the 1940 Act for such senior securities.

Also, at the time of issuance, the fund's pro forma asset coverage ratios with respect to series E MRPS and the fund's other MRPS, as calculated in accordance with Fitch's 'AA' overcollateralization test (Fitch OC Test) exceeds 100%, which is the minimum asset coverage deemed consistent with a 'AA' rating assigned to series E MRPS and other MRPS issued by the fund.

Should the asset coverage tests of any series of MRPS decline below their minimum threshold amounts and are not cured in a pre-specified timeframe, the governing documents require the fund to reduce the leverage in a sufficient amount to restore compliance with the applicable asset coverage tests.

The Fitch OC Test for a given rating category is calculated by dividing the total discounted value of the fund's eligible assets by the sum of total fund's liabilities. Certain securities currently issued or to be issued by Kayne Anderson MLP Investment Company contain early prepayment penalties. Given that the fund is contractually obligated to honor these penalties in the event of prepayment, Fitch includes these additional conditional liabilities as part of total leverage in calculating the Fitch OC Test.

THE FUND

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. In addition, the fund is managed to optimize the after-tax return.

As of Feb. 29, 2012, the fund incurred a deferred tax liability in the amount of $645.2 million. In line with criteria, Fitch included 10% of the current amount of the differed tax liability as a liability for purposes of calculating the Fitch OC Test. Under a stressed market scenario, the fund may have to liquidate portfolio assets to restore its asset coverage ratios. If such a scenario occurred, Fitch expects the current unrealized gain would likely be eliminated or significantly reduced as a result of asset price declines causing such liquidation.

THE ADVISOR

KA Fund Advisors, LLC is the fund's investment adviser, 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. 29, 2012, Kayne Anderson and its affiliates managed approximately $15.2 billion. Kayne Anderson has invested in MLPs and other midstream energy companies since 1998.

RATINGS SENSITIVITY

The ratings may be sensitive to material changes in the credit quality or market risk profile of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause the ratings to be lowered by Fitch.

For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

The sources of information used to assess these ratings were the public domain and KA Fund Advisors, LLC.

Applicable Criteria and Related Research:

--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 16, 2011);

--'Global Rating Criteria for Asset-Backed Commercial Paper' (Nov. 10, 2011);

--'2012 Outlook: Closed-End Fund Leverage' (Dec. 19, 2011);

--'Closed-End Funds: Derivatives Under Review' (Nov. 16, 2011);

--'Primer: CEF Variable-Rate Demand Preferred Shares' (Oct. 27, 2011).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648840 ]

Global Rating Criteria for Asset-Backed Commercial Paper

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=655450 ]

2012 Outlook: Closed-End Fund Leverage

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=660709 ]

Closed-End Funds: Derivatives Under Review (Increased Use and Limited Transparency Are Key Considerations)

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656591 ]

Primer: CEF Variable-Rate Demand Preferred Shares (Closed-End Fund VRDPs Target Short-Term, Money Market Investors)

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=654295 ]

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