KKR Credit Income Fund Announces June 2026 Distribution of A$0.0167 and Reports A$758.9 Million Net Tangible Assets

Portfolio Structure and Asset Allocation

As of 30 June 2026, KKR Credit Income Fund maintains a diversified portfolio comprising 385 assets from 241 issuers, balancing exposure across credit markets. The portfolio’s composition is 56% traded credit and 44% private credit, including European Direct Lending positions. This allocation aims to capitalize on opportunities across market environments while mitigating concentration risk through geographic and sector diversification.

The credit quality profile is balanced, with holdings spanning BB-rated, B-rated, lower-rated, and unrated securities. Senior secured debt constitutes 75% of the portfolio, senior unsecured debt 13%, and subordinated instruments 3%. The portfolio’s weighted average price is 96.86, with an effective duration of 0.7 years, reflecting a short-duration stance to manage interest rate sensitivity. Current portfolio yield is 8.1%, yield-to-maturity is 9.7%, and option-adjusted credit spread is 620 basis points.

Performance Overview for June 2026 and Year-to-Date

The fund achieved a total net return of +1.25% for June 2026, driven by positive contributions from traded credit assets. Over longer periods, returns remain consistent: three-month net return at +3.26%, six-month return at +2.70%, one-year annualised return at +3.67%, three-year annualised return at +7.36%, and five-year annualised return at +5.15%. Since inception on 21 November 2019, cumulative total returns reached +34.50%, equating to +4.55% annualised.

Distributions have been steady, with monthly payouts averaging +0.68% of NTA in the prior financial year, totaling +8.17%. For the current financial year to 30 June 2026, monthly distributions ranged from +0.68% to +0.72%, summing to +7.70%. This consistent distribution track record underscores the fund’s ability to generate reliable income while preserving capital.

European Direct Lending Strategy and Portfolio Quality

The European Direct Lending (EDL) segment, representing approximately 44% of the portfolio, contributed +0.83% net return in June 2026 after hedging and fees. Since inception, the EDL strategy has recorded zero write-downs, with limited watchlist exposure, demonstrating disciplined credit selection and active portfolio management. No new asset additions or disposals occurred in June, with returns driven by income from existing holdings and stable credit fundamentals.

KKR’s European credit investment teams leverage their expertise to identify direct lending opportunities across Europe. The absence of write-downs and low watchlist levels reflect strict underwriting standards and proactive issuer monitoring amid varied market conditions, including US Federal Reserve policy shifts and sector-specific credit dynamics.

Opportunistic Credit Strategy and Market Positioning

The Opportunistic Credit portfolio returned -0.01% in June 2026 net of hedging and fees, indicating stability with minimal net change. High-yield bonds and leisure sector exposures contributed positively within this segment. This strategy capitalizes on credit dislocations and diverse market segments, with varying asset class and sector contributions underlying the near-flat monthly performance.

Year-to-date, high-yield bonds, equities, and convertible securities have been strong contributors, alongside the leisure sector. Conversely, technology, electronics, and service sector holdings detracted from returns, reflecting sectoral performance dispersion amid evolving credit fundamentals and market technicals.

Credit Market Environment and Macroeconomic Factors

In June 2026, credit markets showed resilience despite mixed monetary policy signals and geopolitical developments. The US high-yield market returned +0.2%, supported by stable spreads amid progress on the US-Iran conflict, a hawkish Federal Reserve meeting, and increased fund inflows. Strong technical demand and credit fundamentals offset higher US Treasury yields and rate volatility.

US leveraged loans delivered +0.1% return, buoyed by robust macro data and CLO demand, mitigating spread widening from Fed expectations and software sector weakness. Loan spreads widened with increased sector dispersion; BB- and CCC-rated loans returned +0.3%, while B-rated loans were flat, illustrating differentiated performance across credit ratings.

Net Tangible Asset Valuation and Market Pricing

As of 30 June 2026, the fund’s net tangible assets stood at A$758.9 million, with an NTA per unit of A$2.35. The ASX trading price was A$2.04 per unit, reflecting market valuation. With 322,533,881 units outstanding, the market capitalization was approximately A$657.97 million. The NTA represents the manager’s valuation of portfolio assets, while the ASX price reflects market sentiment and expectations.

Valuations are conducted by KKR Australia Investment Management Pty Ltd, overseen by Responsible Entity The Trust Company (RE Services) Limited, ensuring governance and accountability. Monthly NTA updates incorporate investment performance, distributions, and portfolio valuation changes. The spread between NTA and market price fluctuates with market conditions and investor sentiment.

Distribution Policy and Income Strategy

For the financial year ending 30 June 2027, the fund targets a monthly distribution of A$0.0167 per unit, or A$0.20 annually, equating to an 8.52% yield based on NTA. Distribution yield based on ASX price was not disclosed. Monthly distributions provide investors with regular income aligned with the fund’s consistent return generation from its credit portfolio.

The fund aims for medium-term average total returns of 6% to 8% per annum, combining income and capital appreciation. Distribution targets are indicative and not guaranteed; actual payouts may vary with portfolio performance. Fees include a 0.88% management fee plus 0.022% net GST annually on NTA, and a performance fee up to 5.125% on returns exceeding RBA cash rate plus 4.00%, subject to a high-water mark, aligning manager incentives with investor outcomes.

Fund Structure, Governance, and Management

KKR Credit Income Fund is a registered managed investment scheme with ASIC (ARSN 634 082 107), listed on ASX under code KKC since 21 November 2019. The investment manager is KKR Australia Investment Management Pty Ltd (ABN 42 146 164 454), a subsidiary of Kohlberg Kravis Roberts & Co. L.P. The Responsible Entity is The Trust Company (RE Services) Limited (ABN 45 003 278 831), responsible for fund operations and compliance.

The fund leverages KKR’s global credit expertise across opportunistic credit and European direct lending strategies, accessing diverse credit markets and instruments. Investors can access fund documentation and updates at www.kkcaustralia.com.au, enabling transparency on portfolio composition, performance, and market impacts.

Sector and Geographic Diversification

The portfolio is diversified across industries and regions to mitigate concentration risk. Opportunistic Credit exposure includes 32% technology and electronics, 19% other sectors, 11% media, 9% leisure, 9% healthcare, 9% services, and 6% basic industry. Geographic allocation is 52% EMEA, 47% North America, and 1% Asia.

Interest rate exposure in opportunistic credit is 77% floating rate, 19% fixed rate, and 3% other. Portfolio concentration shows top 10 issuers at 18.85%, top 20 at 32.48%, top 25 at 38.29%, top 50 at 60.71%, and top 100 at 85.79%, reflecting balanced issuer diversification within credit market realities.

Market Outlook and Return Expectations

The fund maintains a medium-term target of 6% to 8% average total returns per annum through full business cycles, considering yield environment, credit spreads, and capital appreciation potential. Returns may vary period-to-period based on credit market conditions, issuer developments, and macroeconomic factors.

The immediate impact of the June 2026 update on unit price was not publicly evident. Investors should monitor KKC unit price in relation to NTA changes and market sentiment. Historical performance includes inception annualised returns of +4.55% and five-year annualised returns of +5.15%, though past results do not guarantee future outcomes amid evolving credit and interest rate environments.