Ares Strategic Income Fund Receives Significant Expansion to Credit Facility
Ares Strategic Income Fund, a non-listed business development company with $3.4 billion in assets and 297 portfolio companies, recently amended and restated its senior secured credit agreement with JPMorgan Chase Bank NA, who serves as administrative agent and the lenders party thereto (as amended and restated, the “A&R Credit Facility”). The A&R Credit Facility extended the end of the revolving period and the stated maturity date from Dec. 20, 2026, and Dec. 20, 2027, respectively, to April 15, 2028, and April 15, 2029, respectively. It increased the aggregate commitment from $800 million to $1.75 billion and modified certain covenant restrictions.
The A&R Credit Facility also provides for a feature that allows the fund to increase the overall size of the A&R Credit Facility to a maximum of $2.625 billion under certain circumstances.
Launched in December 2022, the fund primarily invests in directly originated, senior secured, floating rate loans to U.S. companies.
The interest rate charged on the A&R Credit Facility is based on the secured overnight financing rate plus a credit spread adjustment of 0.10% (or an alternate rate of interest for certain loans, commitments and/or other extensions of credit denominated in certain approved foreign currencies plus a spread adjustment, if applicable) plus an applicable spread of either 1.75% or 1.875% or an “alternate base rate” (as defined in the agreements governing the A&R Credit Facility) plus an applicable spread of either 0.75% or 0.875%, in each case, determined monthly based on the total amount of the borrowing base relative to the sum of (i) the greater of (a) the aggregate amount of revolving exposure under the A&R Credit Facility and (b) 85% of the total commitments of the A&R Credit Facility (or, if higher, the total revolving exposure) plus (ii) other debt, if any, secured by the same collateral as the A&R Credit Facility.
Additionally, the fund is required to pay a commitment fee of 0.375% per annum on any unused portion of the A&R Credit Facility and a letter of credit fee of 0.25% per annum on letters of credit issued and the applicable spread.
The A&R Credit Facility also provides for a sub-limit for the issuance of letters of credit for up to an aggregate amount of $100 million. The amount available for borrowing under the A&R Credit Facility is reduced by any letters of credit issued. The A&R Credit Facility also provides for a sub-limit for the issuance of swingline loans for up to an aggregate amount of $100 million. The amount available for borrowing under the A&R Credit Facility is reduced by any letters of credit issued.
Ares Strategic Income Fund is a private credit solution that benefits from Ares Credit Group. The fund seeks to generate current income, the potential for capital appreciation, and attractive risk-adjusted returns through market cycles.
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