DEBT OBLIGATIONS

KKR enters into credit agreements and issues debt for its general operating and investment purposes. KKR consolidates and reports debt obligations of KKR Financial Holdings LLC ("KFN"), which are non-recourse to KKR beyond the assets of KFN.

Certain of KKR's consolidated investment funds borrow to meet financing needs of their operating and investing activities. Fund financing facilities have been established for the benefit of certain investment funds. When an investment fund borrows from the facility in which it participates, the proceeds from the borrowings are limited for their intended use by the borrowing investment fund. KKR's obligations with respect to these financing arrangements are generally limited to KKR's pro rata equity interest in such investment funds.

In certain other cases, KKR has majority-owned investment vehicles that make investments and purchase other assets with borrowings that are collateralized only by the investments and assets they own.

In addition, consolidated CFE vehicles issue debt securities to third-party investors which are collateralized by assets held by the CFE vehicle. Debt securities issued by CFEs are supported solely by the assets held at the CFEs and are not collateralized by assets of any other KKR entity. CFEs also may have warehouse facilities with banks to provide liquidity to the CFE. The CFE's debt obligations are non-recourse to KKR beyond the assets of the CFE.

KKR's borrowings consisted of the following:



	March 31, 2019							December 31, 2018
	Financing Available		Borrowing Outstanding		Fair Value			Financing Available		Borrowing Outstanding		Fair Value
Revolving Credit Facilities:
Corporate Credit Agreement	$	1,000,000	$	—	$	—		$	1,000,000	$	—	$	—
KCM Credit Agreement	434,395		—		—			451,338		—		—
KCM Short-Term Credit Agreement	750,000		—		—			750,000		—		—
Notes Issued:
KKR Issued 6.375% Notes Due 2020 ⁽¹⁾	—		499,122		523,900		⁽¹⁴⁾	—		498,975		523,500		⁽¹⁴⁾
KKR Issued 5.500% Notes Due 2043 ⁽²⁾	—		491,921		537,235		⁽¹⁴⁾	—		491,836		508,615		⁽¹⁴⁾
KKR Issued 5.125% Notes Due 2044 ⁽³⁾	—		990,831		1,030,140		⁽¹⁴⁾	—		990,740		974,320		⁽¹⁴⁾
KKR Issued 0.509% Notes Due 2023 ⁽⁴⁾	—		224,386		223,695		⁽¹⁴⁾	—		226,895		227,298		⁽¹⁴⁾
KKR Issued 0.764% Notes Due 2025 ⁽⁵⁾	—		44,435		45,402		⁽¹⁴⁾	—		44,923		45,161		⁽¹⁴⁾
KKR Issued 1.595% Notes Due 2038 ⁽⁶⁾	—		91,767		96,510		⁽¹⁴⁾	—		92,817		94,568		⁽¹⁴⁾
KFN Issued 5.500% Notes Due 2032 ⁽⁷⁾	—		493,689		502,524			—		493,568		496,359
KFN Issued 5.200% Notes Due 2033 ⁽⁸⁾	—		118,321		117,152			—		118,291		115,582
KFN Issued 5.400% Notes Due 2033 ⁽⁹⁾	—		68,705		69,689			—		68,683		68,780
KFN Issued Junior Subordinated Notes ⁽¹⁰⁾	—		232,471		197,478			—		232,142		203,135
Other Debt Obligations:
Financing Facilities of Consolidated Funds and Other ⁽¹¹⁾	4,216,970		4,534,329		4,534,329			3,840,877		5,123,768		5,123,768
CLO Senior Secured Notes ⁽¹²⁾	—		12,155,621		12,155,621			—		11,667,970		11,667,970
CLO Subordinated Notes ⁽¹²⁾	—		402,200		402,200			—		413,801		413,801
CMBS Debt Obligations ⁽¹³⁾	—		1,914,571		1,914,571			—		1,876,783		1,876,783
	$	6,401,365	$	22,262,369	$	22,350,446		$	6,042,215	$	22,341,192	$	22,339,640


(1)	$500 million aggregate principal amount of 6.375% senior notes of KKR due 2020. Borrowing outstanding is presented net of (i) unamortized note discount and (ii) unamortized debt issuance costs of $0.6 million and $0.7 million as of March 31, 2019 and December 31, 2018, respectively.


(2)	$500 million aggregate principal amount of 5.500% senior notes of KKR due 2043. Borrowing outstanding is presented net of (i) unamortized note discount and (ii) unamortized debt issuance costs of $3.5 million and $3.6 million as of March 31, 2019 and December 31, 2018, respectively.


(3)	$1.0 billion aggregate principal amount of 5.125% senior notes of KKR due 2044. Borrowing outstanding is presented net of (i) unamortized note discount (net of premium) and (ii) unamortized debt issuance costs of $7.9 million and $8.0 million as of March 31, 2019 and December 31, 2018, respectively.


(4)	¥25 billion (or $225.6 million) aggregate principal amount of 0.509% senior notes of KKR due 2023. Borrowing outstanding is presented net of unamortized debt issuance costs of $1.2 million and $1.3 million as of March 31, 2019 and December 31, 2018, respectively. These senior notes are denominated in Japanese Yen ("JPY").


(5)	¥5.0 billion (or $45.1 million) aggregate principal amount of 0.764% senior notes of KKR due 2025. Borrowing outstanding is presented net of unamortized debt issuance costs of $0.7 million and $0.7 million as of March 31, 2019 and December 31, 2018, respectively. These senior notes are denominated in JPY.


(6)	¥10.3 billion (or $92.9 million) aggregate principal amount of 1.595% senior notes of KKR due 2038. Borrowing outstanding is presented net of unamortized debt issuance costs of $1.2 million and $1.2 million as of March 31, 2019 and December 31, 2018, respectively. These senior notes are denominated in JPY.

(7)

KKR consolidates KFN and thus reports KFN's outstanding $500.0 million aggregate principal amount of 5.500% senior notes due 2032. Borrowing outstanding is presented net of (i) unamortized note discount and (ii) unamortized debt issuance costs of $4.3 million and $4.4 million as of March 31, 2019 and December 31, 2018, respectively. These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

(8)

KKR consolidates KFN and thus reports KFN's outstanding $120.0 million aggregate principal amount of 5.200% senior notes due 2033. Borrowing outstanding is presented net of unamortized debt issuance costs of $1.7 million and $1.7 million as of March 31, 2019 and December 31, 2018, respectively. These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

(9)

KKR consolidates KFN and thus reports KFN's outstanding $70.0 million aggregate principal amount of 5.400% senior notes due 2033. Borrowing outstanding is presented net of unamortized debt issuance costs of $1.3 million and $1.3 million as of March 31, 2019 and December 31, 2018, respectively. These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

(10)

KKR consolidates KFN and thus reports KFN's outstanding $258.5 million aggregate principal amount of junior subordinated notes. The weighted average interest rate is 5.2% and 5.0% and the weighted average years to maturity is 17.5 years and 17.8 years as of March 31, 2019 and December 31, 2018, respectively. These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

(11)

Amounts include (i) borrowings at consolidated investment funds relating to financing arrangements with major financial institutions, generally to enable such investment funds to make investments prior to or without receiving capital from fund limited partners and (ii) borrowings by certain majority-owned investment vehicles that are collateralized only by the investments and assets they own. The weighted average interest rate is 4.9% and 4.6% as of March 31, 2019 and December 31, 2018, respectively. In addition, the weighted average years to maturity is 3.6 years and 3.3 years as of March 31, 2019 and December 31, 2018, respectively.


(12)	CLO debt obligations are carried at fair value and are classified as Level II within the fair value hierarchy. See Note 5 "Fair Value Measurements."


(13)	CMBS debt obligations are carried at fair value and are classified as Level III within the fair value hierarchy. See Note 5 "Fair Value Measurements."


(14)	The notes are classified as Level II within the fair value hierarchy and fair value is determined by third party broker quotes.

Revolving Credit Facilities

KCM Credit Agreement

KKR Capital Markets maintains a revolving credit agreement with a major financial institution (the "KCM Credit Agreement") for use in KKR's capital markets business, which provides for revolving borrowings of up to $500 million with a $500 million sublimit for letters of credit. As of March 31, 2019 and December 31, 2018, no amounts were outstanding under the KCM Credit Agreement, however various letters of credit were outstanding in the amount of $65.6 million and $48.7 million, respectively, which reduce the overall borrowing capacity of the KCM Credit Agreement.

Other Debt Obligations

Debt Obligations of Consolidated CFEs

As of March 31, 2019, debt obligations of consolidated CFEs consisted of the following:



	Borrowing Outstanding		Weighted Average Interest Rate		Weighted Average Remaining Maturity in Years
Senior Secured Notes of Consolidated CLOs	$	12,155,621	3.4	%	11.5
Subordinated Notes of Consolidated CLOs	402,200		(1)		11.7
Debt Obligations of Consolidated CMBS Vehicles	1,914,571		4.0	%	24.5
	$	14,472,392


(1)	The subordinated notes do not have contractual interest rates but instead receive a pro rata amount of the net distributions from the excess cash flows of the respective CLO vehicle. Accordingly, weighted average borrowing rates for the subordinated notes are based on cash distributions during the period, if any.

Debt obligations of consolidated CFEs are collateralized by assets held by each respective CFE vehicle and assets of one CFE vehicle may not be used to satisfy the liabilities of another. As of March 31, 2019, the fair value of the consolidated CFE assets was $15.8 billion. This collateral consisted of Cash and Cash Equivalents Held at Consolidated Entities, Investments, and Other Assets.

Debt Covenants

Borrowings of KKR contain various debt covenants. These covenants do not, in management's opinion, materially restrict KKR's operating business or investment strategies as of March 31, 2019. KKR is in compliance with its debt covenants in all material respects as of March 31, 2019.