S&P Global Ratings has affirmed FS Investment Corp.'s BBB issuer credit and senior unsecured debt ratings, but placed EIG Management Co. LLC's BB+ issuer credit rating on CreditWatch Negative.
The actions followed FS' announcement it is partnering with KKR & Co. LP and EIG Global Energy Partners LLC.
FS' planned business development company platform with KKR did not trigger a change in S&P's ratings outlook. It remains negative, reflecting the possibility of lower yield-based earnings over the next 18 to 24 months, as well as potential for further portfolio deterioration. S&P warned a downgrade could occur if FS records an increase in nonaccruals or paid-in-kind interest.
EIG and FS' joint venture for providing financing solutions to the energy and infrastructure industry adds "incremental diversity" to EIG's business, S&P wrote, and FS Energy and Power Fund's closed-end structure is favorable. However, EIG has yet to disclose how it will finance the deal. More debt will lead to a higher-than-expected leverage that, in turn, may cause a downgrade in S&P's ratings.
S&P has also placed EIG's first-lien notes' BB+ rating on CreditWatch Negative. S&P noted the company has $53 million in such notes due in July 2018.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
