Kayne Anderson BDC, Inc. Debt Disclosure

Note 6. Debt

 

Corporate Credit Facility

 

As of December 31, 2024, the Company had a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $475,000, $400,000 of which has a maturity date of November 22, 2029 and the remaining $75,000 of which has a maturity date of February 18, 2027, following the Company’s amendment of the Corporate Credit Facility on November 22, 2024. The Corporate Credit Facility also provides for a feature that allows the Company, under certain circumstances, to increase the overall size of the Corporate Credit Facility to a maximum of $600,000. The interest rate on the Corporate Credit Facility is equal to Term SOFR (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.10% per annum or an “alternate base rate” (as defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.00%. The Company is also required to pay a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility.

 

Under the Corporate Credit Facility, the Company is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, and (e) maintaining a ratio of total assets (less total liabilities not representing indebtedness) to total indebtedness of the Company and its consolidated subsidiaries of not less than 1.5:1.0. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Corporate Credit Facility. Amounts available to borrow under the Corporate Credit Facility are subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as determined pursuant to the Corporate Credit Facility) that are pledged as collateral. The Corporate Credit Facility is secured by certain assets in the Company’s portfolio and excludes investments held by Kayne Anderson BDC Financing LLC (“KABDCF”) under the Revolving Funding Facility and by Kayne Anderson BDC Financing II, LLC (“KABDCF II”) under the Revolving Funding Facility II (each as defined below).

 

For the years ended December 31, 2024 and 2023, the average amount of borrowings outstanding under the Corporate Credit Facility was $173,911 and $251,655, respectively, with a weighted average interest rate of 7.42% and 7.35%, respectively, for the Corporate Facility portion. As of December 31, 2024, the Company had $250,000 outstanding under the Corporate Credit Facility at a weighted average interest rate of 6.49%. See Note 13 – Subsequent Events.

 

Revolving Funding Facility

 

As of December 31, 2024, the Company had a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $600,000. On April 3, 2024, the Company and its wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing, LLC (“KABDCF”), amended the Revolving Funding Facility. Under the terms of the third amendment, the Company and KABDCF increased the commitment amount from $455,000 to $600,000. The end of the reinvestment period was extended to April 2, 2027, and the maturity date was extended to April 3, 2029. The interest rate on the Revolving Funding Facility was reduced from daily SOFR plus 2.75% per annum to SOFR plus 2.375% - 2.50% per annum depending on the mix of loans securing the Revolving Funding Facility. All other terms of the Revolving Funding Facility remained substantially the same. The Revolving Funding Facility is secured by all of the assets held by KABDCF and the Company has agreed that it will not grant or allow a lien on the membership interest of KABDCF.

 

KABDCF is also required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility. Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by KABDCF and is subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on, loan size, industry concentration, payment frequency and status, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and KABDCF are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding Facility. See Note 13 – Subsequent Events.

For the years ended December 31, 2024 and 2023, the average amount of borrowings outstanding under the Revolving Funding Facility was $371,041 and $290,890, respectively, with a weighted average interest rate of 7.67% and 7.74%, respectively. As of December 31, 2024, the Company had $420,000 outstanding under the Revolving Funding Facility at a weighted average interest rate of 6.72 %. 

 

Revolving Funding Facility II

 

As of December 31, 2024, the Company and Kayne Anderson BDC Financing II, LLC (“KABDCF II”), a wholly-owned, special purpose financing subsidiary, had a senior secured revolving credit facility (the “Revolving Funding Facility II”). The Revolving Funding Facility II has an initial commitment of $150,000 which, under certain circumstances, can be increased up to $500,000. The Revolving Funding Facility II is secured by all of the assets held by KABDCF II and the Company has agreed that it will not grant or allow a lien on the membership interest of KABDCF II. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility II are December 22, 2026, and December 22, 2028, respectively. The interest rate on the Revolving Funding Facility II is equal to 3-month term SOFR plus 2.70% per annum. KABDCF II is also required to pay a commitment fee of 0.50% between December 22, 2023 and September 22, 2024 and 0.75% thereafter on the unused portion of the Revolving Funding Facility II.

 

Amounts available to borrow under the Revolving Funding Facility II are subject to a borrowing base that has limitations with respect to the loans securing the Revolving Funding Facility II, including limitations on, loan size, payment frequency and status, sector concentrations, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and KABDCF II are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding Facility II.

 

For the year ended December 31, 2024, the average amount of borrowings outstanding under the Revolving Funding Facility was $82,432, with a weighted average interest rate of 7.84%. For the period ended December 22, 2023 through December 31, 2023, the average amount of borrowings outstanding under the Revolving Funding Facility II was $70,000, with a weighted average interest rate of 8.07%. As of December 31, 2024, the Company had $113,000 outstanding under the Revolving Funding Facility II at a weighted average interest rate of 7.29%. See Note 13 – Subsequent Events.

 

Subscription Credit Agreement 

 

On April 1, 2024, the Company fully repaid all amounts outstanding and terminated the remaining commitment of $50,000 under its credit agreement (the “Subscription Credit Agreement”) that was scheduled to mature on December 31, 2024. The Subscription Credit Agreement permitted the Company to elect the commitment amount each quarter to borrow up to $50,000, subject to availability under the borrowing base which was calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate under the Subscription Credit Agreement was equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.25% (subject to a 0.275% SOFR floor). The Company was also required to pay a commitment fee of 0.25% per annum on any unused portion of the Subscription Credit Agreement. The Company also paid an extension fee of 0.075% per quarter on the elected commitment amount on the first day of each calendar quarter.

 

For the years ended December 31, 2024 and 2023, the average amount of borrowings outstanding under the Subscription Credit Agreement were $3,306 and $41,782, respectively, with a weighted average interest rate of 7.61% and 7.03%, respectively.  

 

Senior Unsecured Notes

 

As of December 31, 2024, the Company had $75,000 aggregate principal amount of senior unsecured notes (the “Notes”).

The table below sets forth a summary of the key terms of each series of Notes outstanding at December 31, 2024.

 

Series		Principal Outstanding December 31, 2024				Unamortized Issuance Costs				Estimated Fair Value December  31, 2024				Fixed Interest Rate				Maturity
A		$	25,000			$	196			$	26,860				8.65	%		6/30/2027
B			50,000				447				54,580				8.74	%		6/30/2028
		$	75,000			$	643			$	81,440

  

Holders of the Notes are entitled to receive cash interest payments semi-annually (on January 30 and July 30) at the fixed rate. As of December 31, 2024, the weighted average interest rate on the outstanding Notes was 8.71%.

 

As of December 31, 2024, the Notes were rated “BBB” by Kroll Bond Rating Agency (“KBRA”). The Company is required to maintain a current rating from one rating agency with respect to the Notes. In the event the Company does not maintain a current rating from a rating agency for a specified period of time or the credit rating on the Notes falls below “BBB-” (a “Below Investment Grade Event”), the interest rate per annum on the Notes will increase by 1.0% during the period the Notes are rated below “BBB-”. In the event the Company’s Secured Debt Ratio exceeds 55% (a “Secured Debt Ratio Event”), the interest rate per annum on the Notes will increase by 1.5% during the period the ratio is above stated percentage. If a Below Investment Grade Event and a Secured Debt Ratio Event is continuing at the same time the aggregate increase in interest rate per annum will not exceed 2.0%.

 

The Notes were issued in private placement offerings to institutional investors and are not listed on any exchange or automated quotation system. The Notes contain various covenants related to other indebtedness, liens and limits on the Company’s overall leverage. The Company must maintain a minimum amount of shareholder equity and the Company’s asset coverage ratio must be greater than 150% as of the last business day of each fiscal quarter. The Notes are redeemable in certain circumstances at the option of the Company and may be redeemed under certain circumstances to cure the asset coverage ratio covenant.

 

The Notes are unsecured obligations of the Company and, upon liquidation, dissolution or winding up of the Company, will rank: (1) senior to all of the Company’s outstanding common shares; (2) on parity with any unsecured creditors of the Company and any unsecured senior securities representing indebtedness of the Company; and (3) junior to any secured creditors of the Company.

 

At December 31, 2024, the Company was in compliance with all covenants under the Notes agreements.

 

Debt obligations consisted of the following as of December 31, 2024 and 2023.

 

		December 31, 2024
		Aggregate Principal Committed				Outstanding Principal				Amount Available(1)				Net Carrying Value(2)
Notes		$	75,000			$	75,000			$	-			$	74,357
Corporate Credit Facility			475,000				250,000				225,000				246,765
Revolving Funding Facility			600,000				420,000				180,000				415,254
Revolving Funding Facility II			150,000				113,000				37,000				111,749
Total debt		$	1,300,000			$	858,000			$	442,000			$	848,125

 

	(1)	The amounts available under the Company’s credit facilities do not reflect any limitations related to each borrowing base as of December 31, 2024.

(2)

The carrying value of the Notes, Corporate Credit Facility, Revolving Funding Facility and Revolving Funding Facility II are presented net of deferred financing costs totaling $9,875.

		December 31, 2023
		Aggregate Principal Committed				Outstanding Principal				Amount Available(1)				Net Carrying Value(2)
Notes		$	75,000			$	75,000			$	-			$	74,149
Corporate Credit Facility			400,000				234,000				166,000				232,285
Revolving Funding Facility			455,000				306,000				18,536				303,981
Revolving Funding Facility II			150,000				70,000				9,716				68,195
Subscription Credit Agreement			50,000				10,750				39,250				10,709
Total debt		$	1,130,000			$	695,750			$	233,502			$	689,319

 

(1)

The amount available under the Company’s credit facilities reflects the assets held at KABDCF and KABDCF II and any limitations related to each borrowing base as of December 31, 2023.

 

(2)

The carrying value of the Notes, Corporate Credit Facility, Revolving Funding Facility, Revolving Funding Facility II and Subscription Credit Agreement are presented net of deferred financing costs totaling $6,431.

  

For the years ended December 31, 2024, 2023 and 2022, the components of interest expense were as follows:

 

		For the years ended
		December 31, 2024				December 31, 2023				December 31, 2022
Interest expense		$	57,798			$	49,620			$	18,170
Amortization of debt issuance costs			3,718				2,694				2,122
Total interest expense		$	61,516			$	52,314			$	20,292
Average interest rate			8.6	%			8.4	%			5.5	%
Average borrowings		$	705,690			$	624,464			$	368,182