FS KKR Capital Corp, a private credit vehicle jointly managed by Future Standard and KKR, is marketing at least $400m of high-yield bonds in a rare public debt issuance for a publicly traded credit fund, according to a report by Bloomberg.
The notes, part of a broader refinancing effort, are expected to price with a yield of around 7.5%, at the lower end of initial guidance in the mid-to-high 7% range, according to people familiar with the transaction. Investor demand reportedly reached approximately $1.5bn, suggesting strong appetite for the deal.
Proceeds from the offering are expected to be used primarily to refinance existing debt, as the firm continues to manage pressure from credit performance challenges.
FS KKR Capital has faced headwinds over the past year, including loan write-downs, dividend reductions, and credit rating downgrades. The fund was cut to junk status by Moody’s Ratings in March, followed by a downgrade from Fitch Ratings in April.
In response, KKR injected capital into the vehicle earlier this year, including a $300 million preferred equity investment and a share buyback component.
The bond transaction is being arranged by a syndicate of banks including Bank of America, JPMorgan Chase, Bank of Montreal, Royal Bank of Canada, SMBC Nikko, and KKR Capital Markets.
Despite recent stress in parts of the private credit ecosystem, issuance from business development companies has picked up in 2026, with more than $14bn raised year-to-date as investor demand returns to the sector.
Market participants say improving sentiment reflects greater familiarity with BDC structures and increasing willingness among institutional investors to provide capital, even for lower-rated issuers, as spreads remain attractive relative to other fixed income opportunities.
