Sector developments and company hires

Jumbo BDC merger agreed
FS/KKR Advisor, a partnership between FS Investments and KKR Credit Advisors (US), has announced that FS KKR Capital Corp and FS KKR Capital Corp II - two publicly traded BDCs advised by FS/KKR - have entered into a definitive merger agreement. The merger will create one of the largest BDCs in the US, with US$14.9bn in assets under management, US$7.2bn in net asset value and over US$3bn of committed capital available to new investment opportunities.

The combined company will have a well-diversified investment portfolio and enhanced access to the investment grade debt markets. The combination will also result in reduced overall expenses and a stronger dividend profile. 

The transaction is expected to close during the second or third quarter of 2021, subject to shareholder approval and other customary closing conditions. Upon the closing, the combined company will permanently reduce its income incentive fee to 17.5% from the existing level of 20%.

In other news…

EMEA
Zenith Service has named SolideaBarbara Maccioni head of arrangement, based in Milan. Maccioni has over 15 years of experience in structured finance and will focus on complex projects in her new role. She was previously vp - trade finance sales manager at Deutsche Bank and has also worked at BNP Paribas Securities Services.

North America
400 Capital Management has hired Quinn Barton as a senior portfolio manager, focusing on CRE and CMBS origination, structuring and trading. Formerly a managing partner at Carmel Partners, Barton is tasked with expanding 400CM’s investments in commercial real estate finance. Prior to joining Carmel, he was an md and head of CMBS trading for Bank of America Securities in New York.

South African ratings hit
Moody's has downgraded the global scale ratings (GSRs) of 49 classes of notes from 10 South African RMBS and auto loan ABS, and affirmed the GSRs of 16 classes of notes. In addition, the agency has affirmed the national scale ratings (NSRs) of 53 classes of notes, upgraded the NSRs of three tranches and downgraded the NSRs of nine tranches, due to revisions to the NSR map following the downgrade of the sovereign debt rating of the Government of South Africa.

The rating actions are prompted by the lowering of South Africa's local-currency country ceiling to Baa1 from A3. This follows the weakening of the South African government's credit profile, with Moody's downgrading the sovereign rating to Ba2 from Ba1 on 20 November.