Fitch Rates New Kayne Anderson Fund Notes 'AAA'& Pfd 'AA'; Affirms Existing Ratings

Fitch Ratings assigns an 'AAA' rating to the following senior unsecured notes and an 'AA' to mandatory redeemable preferred shares (MRPS) issued by Kayne Anderson MLP Investment Company (NYSE: KYN), a non-diversified closed-end fund managed by KA Fund Advisors, LLC:

--$50,000,000 2.89% Series LL Senior Unsecured Notes, due Oct. 29, 2020;

--$40,000,000 3.26% Series MM Senior Unsecured Notes, due Oct. 29, 2022;

--$20,000,000 3.37% Series NN Senior Unsecured Notes, due Oct. 29, 2023;

--$90,000,000 3.46% Series OO Senior Unsecured Notes, due Oct. 29, 2024;

--$25,000,000 3.86% Series I Mandatory Redeemable Preferred Shares, due Oct. 29, 2022.

Fitch also affirms ratings on the fund's existing notes and mandatory redeemable preferred stock (MRPS) as listed at the end of this press release.

KEY RATING DRIVERS

The rating assignments and affirmations reflect:

--Sufficient pro forma asset coverage provided to 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.

FUND PROFILES

KYN is a non-diversified, closed-end fund, which commenced its operations on Sept. 28, 2004. KYN invests principally in equity securities of energy-related master limited partnerships (MLPs). KYN's objective is to obtain high after tax total returns for its shareholders. MLPs are publicly traded limited partnerships. Energy-related MLPs own domestic infrastructure assets that are used in the gathering, processing, transportation, storage, refining and distribution of energy-related commodities.

LEVERAGE

As of Sept. 30, 2014, KYN's pro forma total assets were approximately $8,115 million supporting $1,435 million of notes, $524 million of MRPS, and $113 million of bank borrowing. The pro forma result assumes $60 million of series M notes, which are due on Nov. 4, 2014, will be fully redeemed by then. The notes and credit facility are both unsecured and rank pari passu in the fund's capital structure, while at the same time they are both senior to the fund's MRPS.

ASSET COVERAGE

As of Sept. 30, 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 guideline required by the fund's governing documents.

The Fitch OC tests calculate standardized asset coverage by applying haircuts to portfolio holdings based on riskiness and diversification of the assets and measuring their ability to cover both on- and off-balance-sheet liabilities at the stress level that corresponds to the assigned rating.

As of Sept. 30, 2014, the funds' 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 225%. These are the minimum asset coverage ratios required the fund's governing documents.

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.

PARI PASSU CLAIM WITH CREDIT FACILITY

Upon the occurrence of an Event of Default per the Note Purchase Agreement (such as a failure to cure an asset coverage breach) or per the fund's Credit Agreement, the noteholders and the bank lender will share in their claim on fund assets pari passu when receiving payments as described in each of those agreements. The fund accounts for this pari passu status in their calculation of the Fitch OC tests.

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 and a longer period for the Asset Coverage Test).

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 Aug. 31, 2014, Kayne Anderson and its affiliates managed assets of approximately $30 billion, including over $27 billion in the Energy Sector (of which $22 billion was invested in MLPs and Midstream Companies). Kayne Anderson has invested in MLPs and other midstream energy companies since 1998.

CONCURRENT RATING AFFIRMATIONS

Fitch affirms the following ratings:

Kayne Anderson MLP Investment Company (KYN)

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

--$65,000,000 4.21% Series O 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';

--$30,000,000 2.88% Series II Notes, due July 30, 2019 at 'AAA';

--$30,000,000 3.46% Series JJ Notes, due July 30, 2021 at 'AAA';

--$80,000,000 3.93% Series KK Notes, due July 30, 2024 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';

--$50,000,000 4.06% Series H MRPS, due July 30, 2021 at 'AA'.

Fitch also notes that the following notes were paid in full (the notes were previously rated AAA by Fitch);

--$50,000,000 series N 3-month LIBOR + 185 bps Notes previously issued by KYN;

--$45,000,000 series P 3-month LIBOR + 160 bps Notes previously issued by KYN.

RATINGS SENSITIVITIES

The rating is based on the terms stipulating mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines. In the case of the rated notes, 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, 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 forthcoming complimentary closed-end fund research from Fitch, opt-in at the following link:

http://pages.fitchemail.fitchratings.com/FAMCEFBlankOptin/

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Rating Closed-End Fund Debt and Preferred Stock' (Sept. 4, 2014);

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

--'Closed-End Fund Issuance of Debt and Preferred Stock' (Oct. 15, 2014).

Applicable Criteria and Related Research:

MLP Closed-End Funds: A Capital Structure Case Study

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

Closed-End Fund Issuance of Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=795288

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=765528

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=912234

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