FS KKR Capital Corp (NYSE:FSK), a publicly traded business development company, has entered into an underwriting agreement for the issuance and sale of $600 million in notes, the company disclosed in a recent SEC filing. The 6.125% notes, set to mature in 2030, were offered under an existing shelf registration statement complemented by prospectus supplements dated November 13, 2024.
The transaction involved a consortium of underwriters led by BofA Securities, Inc., BMO Capital Markets Corp., J.P. Morgan Securities LLC, KKR Capital Markets LLC, SMBC Nikko Securities America, Inc., and Truist Securities, Inc. The underwriting agreement was executed on Wednesday, November 13, 2024, and the details were filed with the SEC today.
FS KKR Capital Corp, headquartered in Philadelphia, Pennsylvania, specializes in providing customized credit solutions to private middle market U.S. companies. The company is advised by FS/KKR Advisor, LLC, and has a diverse portfolio that includes senior secured loans and second lien secured loans, among other types of investments.
The capital raised from the notes offering is expected to be used for general corporate purposes, which may include the repayment of existing debt, investments in accordance with the company's investment objectives, or other business opportunities.
In other recent news, FS KKR Capital Corp (FSK) reported robust third-quarter earnings, with net investment income exceeding expectations at $0.77 per share and an adjusted net investment income of $0.74 per share. The company's net asset value per share stood at $23.82. FSK also declared a fourth-quarter distribution of $0.70 per share.
New investments made by the company were approximately $1.1 billion, primarily targeted towards existing portfolio companies. FSK's management remains optimistic about future investment opportunities, particularly due to anticipated interest rate cuts and a favorable mergers and acquisitions environment in 2025.
However, the net asset value per share saw a slight decrease from $23.95 to $23.82, and concerns were raised about potentially slower declines in interest rates. Despite these challenges, FSK expects a GAAP net investment income of about $0.63 per share for the fourth quarter and maintains strong liquidity with approximately $4.4 billion available.
InvestingPro Insights
FS KKR Capital Corp's recent $600 million notes offering aligns with its strong financial position and dividend strategy. According to InvestingPro data, the company boasts a significant dividend yield of 13.74% as of the latest available information. This high yield is supported by InvestingPro Tips, which highlight that FSK has raised its dividend for 3 consecutive years and has maintained dividend payments for 11 consecutive years.
The company's financial stability is further evidenced by its profitability over the last twelve months and a P/E ratio of 11.19, suggesting a relatively attractive valuation compared to earnings. Additionally, FSK's stock is trading near its 52-week high, with a one-year price total return of 22.94%, indicating strong investor confidence.
These insights complement the article's focus on FSK's strategic financial moves, suggesting that the company is not only raising capital through debt offerings but also rewarding shareholders through consistent dividends. For investors interested in more comprehensive analysis, InvestingPro offers 6 additional tips for FSK, providing a deeper understanding of the company's financial health and market position.
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