JPMorgan-Led Banks Cut FSK Credit Line by $648 Million as KKR Pledges $300 Million Support
Updated
Updated · CNBC · May 11
JPMorgan-Led Banks Cut FSK Credit Line by $648 Million as KKR Pledges $300 Million Support
1 articles · Updated · CNBC · May 11
FS KKR Capital's bank facility was cut by $648 million on May 8 to $4.05 billion, with some lenders potentially exiting rather than renewing commitments.
KKR responded with a $300 million support package—$150 million of new equity and $150 million to buy shares from investors seeking to leave—after FSK posted a $2-per-share first-quarter loss.
FSK's stress deepened as net asset value fell about 10%, non-accrual loans rose to 8.1% from 5.5%, and loans to Medallia and Affordable Care stopped paying interest.
Banks also raised rates on the remaining facility while lowering the minimum equity covenant to $3.75 billion from $5.05 billion, giving FSK more room before default but signaling expectations of further asset declines.
The moves hit one of private credit's most visible pressure points: FSK shares are down nearly 50% over the past year, Moody's cut the fund to junk in March, and software loans remain its biggest exposure.
Is one fund's crisis a warning shot for the entire $2 trillion private credit market?
If a fund’s assets are solid, why did it need a massive bailout just to prop up its stock price?
As AI devalues software, are private portfolios sitting on a ticking time bomb of bad tech debt?