Fitch Affirms Kayne Anderson Funds' Notes at 'AAA' & MRPS at 'AA'

Fitch Ratings has affirmed the 'AAA' ratings assigned to the senior unsecured notes and 'AA' ratings assigned to the mandatory redeemable preferred shares (MRPS) issued by the following closed-end funds managed by KA Fund Advisors, LLC. A complete list of rated notes and MRPS follows at the end of this press release.

--Kayne Anderson Energy Total Return Fund (NYSE: KYE)

--Kayne Anderson MLP Investment Company (NYSE: KYN)

--Kayne Anderson Midstream/Energy Fund (NYSE: KMF)

KEY RATING DRIVERS

The affirmations reflect:

--Sufficient asset coverage provided to the senior notes and MRPS as calculated per the fund's asset coverage tests;

--The structural protections afforded by mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines;

--The legal and regulatory parameters that govern the fund's operations;

--The capabilities of KA Fund Advisors, LLC as investment advisor.

FUNDS PROFILES

KYE is a non-diversified, closed-end fund, which commenced its operations on June 28, 2005. The fund's investment objective is to obtain a high level of total return with an emphasis on current income. The fund seeks to achieve that investment objective by investing principally in equity and debt securities of companies in the energy industry, such as energy related master limited partnerships (MLPs), U.S. and Canadian income trusts, marine transportation companies, midstream companies and coal companies.

KYN is a non-diversified, closed-end fund, which commenced its operations on Sept. 28, 2004. The fund's objective is to obtain high after tax total returns for its shareholders. The fund invests principally in equity securities of energy-related publicly traded MLPs.

KMF is a non-diversified, closed-end fund, which commenced its operations on Nov. 24, 2010. The fund's investment objective is to provide a high level of total return with an emphasis on making quarterly cash distributions to its common stockholders. The fund seeks to achieve that investment objective by investing at least 80% of its total assets in the securities of companies in the Midstream/Energy Sector, consisting of midstream MLPs, midstream companies, other MLPs and other energy companies.

ASSET COVERAGE

As of Feb. 28, 2014, the funds' pro forma asset coverage ratios, as calculated in accordance with the Fitch total and net overcollateralization tests (Fitch OC Tests) per the 'AAA' rating guidelines for the notes and the 'AA' rating guidelines for the MRPS, outlined in Fitch's closed-end fund criteria, were in excess of 100%. These are the minimum asset coverage guidelines required by the fund's governing documents, and evaluated as such by Fitch to arrive at the assigned rating levels.

As of Feb. 28, 2014, the funds' pro forma asset coverage ratio for the notes, as calculated in accordance with the Investment Company Act of 1940 (1940 Act), was in excess of 300%. The funds' pro forma asset coverage ratio for total leverage, including the MRPS, as calculated in accordance with the 1940 Act, was in excess of 200%. These are the minimum asset coverage ratios required by the 1940 Act and the fund's governing documents.

LEVERAGE

As of Feb. 28, 2013, KYE total assets were $1,531 million supporting $275 million of senior notes, $120 million of preferred shares, and $56 million of bank borrowing. As of the same date, KMF total assets were $1,175 million supporting $205 million of senior notes, $65 million of preferred shares, and $33 million of bank borrowing; KYN total assets were $6,645 million supporting $1,200 million of senior notes and $449 million of preferred shares.

As of Feb. 28, 2014, some of the funds also carried a deferred tax liability (DTL) as a result of certain unrealized gains typically seen in MLP closed-end funds for tax purposes. To account for any residual risk dealing with the recognition of those gains upon sale, Fitch's rating criteria reduces the numerator of the Fitch OC Tests by 10% of the DTL. The 10% figure gives credit to the likely event that much of the currently existing unrealized gains would likely be eliminated or significantly reduced as a result of asset price declines in a stressed market scenario.

NOTES STRUCTURAL PROTECTIONS

Should the asset coverage tests decline below their minimum threshold amounts (as tested on the last business day of each week), under the terms of the notes the fund is required to deliver notice to the note purchasers within five business days. The fund manager is then expected to cure the breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC Tests breaches), or by reducing leverage in a sufficient amount (for both the Fitch OC Tests and the 1940 Act test breaches) within a pre-specified time period (a maximum of 47 calendar days for the Fitch OC tests and a longer period for the 1940 Act test).

Failure to cure an asset coverage breach as described above is an event of default under the terms of the notes. The fund must then deliver a notice within five business days to the note purchasers and a majority vote of note purchasers may then declare all the notes then outstanding to be immediately due and payable.

The fund is also prohibited from paying out a common stock dividend if it fails to cure a breach to the notes' 300% 1940 Act asset coverage test. Fitch views this as an added incentive to cure and deleverage in a timely manner, regardless of acceleration by the notes purchasers.

MRPS STRUCTURAL PROTECTIONS

Should the MRPS Asset Coverage Test and Fitch OC Test decline below their minimum threshold amounts (as tested weekly) the funds are required to deliver notice to the MRPS purchasers within five days of becoming aware of such fact.

The fund manager is required to cure the breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC Tests breaches), or by reducing leverage in a sufficient amount (for both the Fitch OC Tests and Asset Coverage Test breaches) within a pre-specified time period (a maximum of 47 calendar days).

THE ADVISOR

KA Fund Advisors, LLC is the fund's investment adviser, responsible for implementing and administering the fund's investment strategy and is a subsidiary of Kayne Anderson Capital Advisors, L.P. (Kayne Anderson) a Securities and Exchange Commission-registered investment adviser. As of Feb 28, 2014, Kayne Anderson and its affiliates managed assets of approximately $26 billion, including over $22 billion in the Energy Sector (of which $17 billion was invested in MLPs and Midstream Companies). Kayne Anderson has invested in MLPs and other midstream energy companies since 1998.

Fitch affirms the following ratings:

Kayne Anderson Midstream/Energy Fund (KMF)

--$55,000,000 series A 3.93% senior unsecured notes due on March 3, 2016 at 'AAA';

--$60,000,000 series B 4.62% senior unsecured notes due on March 3, 2018 at 'AAA';

--$50,000,000 series C 4.00% senior unsecured notes due on March 22, 2022 at 'AAA';

--$40,000,000 series D 3.34% senior unsecured notes due on May 1, 2023 at 'AAA';

--$35,000,000 series A 5.32% MRPS due on March 3, 2018 at 'AA';

--$30,000,000 series B 4.50% MRPS due on March 22, 2020 at 'AA'.

Kayne Anderson Energy Total Return Fund (KYE)

--$58,000,000 series D 4.15% Notes due on March 5, 2015 at 'AAA';

--$27,000,000 series E 3-month LIBOR + 155bps Notes due on March 5, 2015 at 'AAA';

--$30,000,000 series F 3-month LIBOR + 145bps Notes due on May 10, 2016 at 'AAA';

--$20,000,000 series G 3.71% Notes due on May 10, 2016 at 'AAA';

--$10,000,000 series H 4.38% Notes due on May 10, 2018 at 'AAA';

--$6,000,000 series I 2.59% Notes due on Aug. 8, 2018 at 'AAA';

--$29,000,000 series J 3.07% Notes due on Aug. 8, 2020 at 'AAA';

--$50,000,000 series K 3.72% Notes due on Aug. 8, 2023 at 'AAA';

--$45,000,000 series L 3.82% Notes due on Aug. 8, 2025 at 'AAA';

--$90,000,000 series A 5.48% MRPS due on March 5, 2017 at 'AA';

--$30,000,000 series B 5.13% MRPS due on May 10, 2018 at 'AA'.

Kayne Anderson MLP Investment Company (KYN)

--$60,000,000 series M 4.56% Notes due on Nov. 4, 2014 at 'AAA';

--$50,000,000 series N 3-month LIBOR + 185 bps notes due on Nov. 4, 2014 at 'AAA';

--$65,000,000 4.21% Series O notes due on May 7, 2015 at 'AAA';

--$45,000,000 series P 3-month LIBOR + 160 bps notes due on May 7, 2015 at 'AAA';

--$15,000,000 3.23% Series Q notes due on Nov. 9, 2015 at 'AAA';

--$25,000,000 3.73% series R notes due on Nov. 9, 2017 at 'AAA';

--$60,000,000 4.4% series S notes due on Nov. 9, 2020 at 'AAA';

--$40,000,000 4.5% series T notes due on Nov. 9, 2022 at 'AAA';

--$60,000,000 series U 3-month LIBOR + 145 bps notes due on May 26, 2016 at 'AAA';

--$70,000,000 3.71% series V notes due on May 26, 2016 at 'AAA';

--$100,000,000 4.38% series W notes due on May 26, 2018 at 'AAA';

--$14,000,000 2.46% series X notes due on May 3, 2015 at 'AAA';

--$20,000,000 2.91% series Y notes due on May 3, 2017 at 'AAA';

--$15,000,000 3.39% series Z notes due on May 3, 2019 at 'AAA';

--$15,000,000 3.56% series AA notes due on May 3, 2020 at 'AAA';

--$35,000,000 3.77% series BB notes due on May 3, 2021 at 'AAA';

--$76,000,000 3.95% series CC notes due on May 3, 2022 at 'AAA';

--$75,000,000 2.74% Series DD notes due April 16, 2019 at 'AAA';

--$50,000,000 3.20% Series EE notes due April 16, 2021 at 'AAA';

--$65,000,000 3.57% Series FF notes due April 16, 2023 at 'AAA';

--$45,000,000 3.67% Series GG notes due April 16, 2025 at 'AAA';

--$250,000,000 series HH 3-month LIBOR + 125 bps notes due on Aug. 19, 2016 at 'AAA';

--$104,000,000 5.57% series A MRPS due on May 7, 2017 at 'AA';

--$8,000,000 4.53% series B MRPS due on Nov. 9, 2017 at 'AA';

--$42,000,000 5.20% series C MRPS due on Nov. 9, 2020 at 'AA';

--$120,000,000 4.25% series E MRPS due on April 1, 2019 at 'AA';

--$125,000,000 3.50% series F MRPS due on April 15, 2020 at 'AA';

--$50,000,000 4.60% series G MRPS due on Oct. 1, 2021 at 'AA'.

RATINGS SENSITIVITY

The rating is based on the terms of the notes stipulating mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines. Should the fund fail to cure an asset coverage breach, or the note purchasers not declare the notes due and payable upon an event of default due to an asset coverage breach, this may lengthen exposure to market value risk and cause the ratings to be lowered by Fitch.

The ratings may also be sensitive to material changes in the credit quality or market risk profile of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause the ratings to be lowered by Fitch.

For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.

To receive complimentary closed-end fund research, opt-in at the following link:

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Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Rating Closed-End Fund Debt and Preferred Stock' (Aug. 14, 2013).

--'MLP Closed-End Funds: A Capital Structure Case Study' (Dec. 2, 2013);

--'2014 Outlook: U.S. Closed-End Fund Leverage' (Jan. 14, 2014).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=716220

MLP Closed-End Funds: A Capital Structure Case Study

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723839

2014 Outlook: U.S. Closed-End Fund Leverage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730159

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=826731

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