Marketable Energy & Infrastructure Credit

Energy & infrastructure credit offers a very unique combination of above market yield and below market credit risk which is very difficult to find else where in broader liquid credit markets

Dedicated energy & infrastructure credit investment professionals ​with the ability to leverage the broader team including analysts, engineers, operators, executives and former investment bankers with infrastructure and energy backgrounds

Highlights

Energy & infrastructure credit is a highly liquid, $600+ billion investable universe with over 300 separate issuers and over 900 separate securities in which to invest

Substantially lower default rates for high yield infrastructure bonds than broader high yield market indices

Above market yields and returns

Low incidence of credit loss

Well developed and highly liquid market

Strategy

Kayne has a long-term, proven track record in energy & infrastructure investing, both equity and credit

Energy & infrastructure credit is an ideal area in which to invest later in the economic cycle, as these entities tend to provide “essential services” that are less susceptible to broader economic downturns

Including infrastructure credit as part of a diversified portfolio of leveraged loans or high yield bonds tends to enhance return without meaningfully increasing overall portfolio volatility

Above Market Yields and Returns

  • Infrastructure debt securities offer yields significantly above comparably-rated bonds and loans due to investor misperception that these credits entail significant commodity or sovereign debt risk
  • Infrastructure debt, on a standalone basis or as part of a broader fixed income portfolio, can enhance return without increasing portfolio volatility
  • Infrastructure debt securities tend to exhibit low correlation with broader fixed income subsectors

Low Incidence of Credit Loss/Recession Resistant

  • Issuers generally own strategically important “hard assets” that are critical to national infrastructure, are difficult to replicate and provide stable cash flows, even during recessionary periods
  • Historical default rates for below investment grade infrastructure debt are less than half of broader high yield and emerging market averages
  • Infrastructure debt tends to outperform the broader markets during economic downturns
  • Minimal exposure to commodity exposed debt issuers (less than 3% currently)

Well Developed and Highly Liquid Market

  • Infrastructure bonds and loans are part of the broader tradable debt markets with nearly $600 billion of investable assets and hundreds of issuers
  • The average issue size is well over $500 million, underwritten by well-known investment bank syndicates and traded in the liquid “over the counter” fixed income markets
  • Active secondary market allows adept managers to take advantage of market dislocations or relative value opportunities