Fitch Rates Tortoise Energy Infrastructure Notes 'AAA'; Affirms Existing Ratings

NEW YORK--()--Fitch Ratings assigns 'AAA' ratings to the following senior unsecured notes issued (Notes) by Tortoise Energy Infrastructure Corp (NYSE MKT: TYG):

--$10 million of series II Notes, 3.22% fixed rate, due Dec. 18, 2022;

--$20 million of series JJ Notes, 3.34% fixed rate, due Dec. 18, 2023;

--$10 million of series KK Notes, 3.53% fixed rate, due Dec. 18, 2025.

Fitch also affirms the ratings on existing senior unsecured notes and MRPS as listed at the bottom of this press-release.

KEY RATING DRIVERS

The rating assignments and affirmations reflect:

--Sufficient asset coverage provided to senior notes and MRPS as calculated per the fund's asset coverage tests;

--The structural protections afforded by mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines;

--The legal and regulatory parameters that govern the fund's operations;

--The capabilities of Tortoise Capital Advisors, LLC as investment advisor.

FUND PROFILE

TYG is a non-diversified, closed-end management investment company with the goal of obtaining a high level of total return with an emphasis on current distributions. The fund invests the majority of its portfolios in equity securities of publicly-traded Master Limited Partnerships (MLP) and their affiliates in the energy infrastructure sector. These companies gather, transport, process, store, distribute or market natural gas, natural gas liquids, coal, crude oil, refined petroleum products or other natural resources, or explore, develop, manage or produce such commodities.

FUND LEVERAGE

TYG manages a portfolio of approximately $4,600 million in assets and had pro forma leverage of $905 million using Nov. 21, 2014 figures. The total leverage ratio is approximately 19.7%. Pro-forma leverage consists of approximately $65 million in bank borrowings, $545 million in Fitch-rated senior notes (pari-passu to the bank borrowings), and $295 million in junior Fitch-rated MRPS.

ASSET COVERAGE

The funds' asset coverage ratio, as calculated in accordance with the Fitch total and net overcollateralization tests (Fitch OC tests) per the 'AAA' rating guidelines for the senior notes and the 'AA' rating guidelines for the MRPS, outlined in Fitch's closed-end fund criteria, were in excess of 100%. These are the minimum asset coverage guideline required by the funds' governing documents.

The Fitch OC tests calculate standardized asset coverage by applying haircuts to portfolio holdings based on riskiness and diversification of the assets and measuring their ability to cover both on and off-balance sheet liabilities at the stress level that corresponds to the assigned rating.

The fund's asset coverage ratio for the senior notes, as calculated in accordance with the Investment Company Act of 1940 (1940 Act) at current market values, was in excess of 300%. The funds' pro forma asset coverage ratio for total leverage, including the MRPS, as calculated in accordance with the 1940 Act also at current market values, was in excess of 200%. These are the minimum asset coverage ratios required by the funds' governing documents.

NOTES STRUCTURAL PROTECTIONS

Should the asset coverage tests decline below their minimum threshold amounts (as tested on the last business day of each week), under the terms of the senior notes the funds are required to deliver notice to the note purchasers within five business days. The funds' managers are then expected to cure the breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC Tests breaches), or by reducing leverage in a sufficient amount (for both the Fitch OC Tests and the 1940 Act test breaches) within a pre-specified time period (a maximum of 47 calendar days for the Fitch OC Tests and a longer period for the 1940 Act test).

Failure to cure an asset coverage breach as described above is an event of default under the terms of the notes. The funds must then deliver a notice within five business days to the senior note purchasers and a majority vote of note purchasers may then declare all the notes then outstanding to be immediately due and payable.

The fund is also prohibited from paying out a common stock dividend if it fails to cure a breach to the notes' 300% 1940 Act asset coverage test. Fitch views this as an added incentive to cure and deleverage in a timely manner, regardless of acceleration by the notes purchasers.

MRPS STRUCTURAL PROTECTIONS

Should the MRPS Asset Coverage Test and Fitch OC Test decline below their minimum threshold amounts (as tested weekly) the funds are required to deliver notice to the MRPS purchasers within five days of becoming aware of such fact.

The fund's managers are required to cure the breach by altering the composition of the portfolio toward assets with lower discount factors (for Fitch OC Tests breaches), or by reducing leverage in a sufficient amount (for both the Fitch OC Tests and Asset Coverage Test breaches) within a pre-specified time period (a maximum of 47 calendar days).

THE ADVISOR

Tortoise, a wholly owned subsidiary of Tortoise Holdings, LLC, is the fund's investment adviser, responsible for the fund's overall investment strategy and its implementation. The advisor was formed in October 2002 and, as of Nov. 30, 2014, it had approximately $17.7 billion in assets under management. Montage Asset Management, LLC, a wholly-owned entity of Mariner Holdings, LLC owns approximately 61% of Tortoise Holdings, LLC, with the remaining interest held by certain senior Tortoise employees.

CONCURRENT RATING AFFIRMATIONS

Fitch affirms the following ratings:

Tortoise Energy Infrastructure Corporation (TYG):

--$110,000,000 6.11% Series E senior notes due on April 10, 2015 at 'AAA';

--$30,000,000 5.85% Series G senior notes due on Dec. 21, 2016 at 'AAA';

--$10,000,000 4.35% Series I senior notes due on May 12, 2018 at 'AAA';

--$15,000,000 3.30% Series J senior notes due on Dec. 19, 2019 at 'AAA';

--$10,000,000 3.87% Series K senior notes due on Dec. 19, 2022 at 'AAA';

--$20,000,000 3.99% Series L senior notes due on Dec. 19, 2024 at 'AAA';

--$13,000,000 2.75% Series M senior notes due on Sept. 27, 2017 at 'AAA';

--$10,000,000 3.15% Series N senior notes due on Sept. 27, 2018 at 'AAA';

--$15,000,000 3.78% Series O senior notes due on Sept. 27, 2020 at 'AAA';

--$12,000,000 4.39% Series P senior notes due on Sept. 27, 2023 at 'AAA';

--$10,000,000 Series Q floating rate senior notes due on Sept. 27, 2018 at 'AAA';

--$25,000,000 3.77% Series R senior notes due on Jan. 22, 2022 at 'AAA';

--$10,000,000 3.99% Series S senior notes due on Jan. 22, 2023 at 'AAA';

--$25,000,000 4.16% Series T senior notes due on Jan. 22, 2024 at 'AAA';

--$35,000,000 Series U floating rate senior notes due on April 17, 2019 at 'AAA';

--$39,400,000 6.07% Series V senior notes due on Dec 21, 2014 at 'AAA';

--$12,500,000 3.88% Series W senior notes due on June 15, 2016 at 'AAA';

--$12,500,000 4.55% Series X senior notes due on June 15, 2018 at 'AAA';

--$12,500,000 2.77% Series Y senior notes due on June 14, 2020 at 'AAA';

--$12,500,000 2.98% Series Z senior notes due on June 14, 2021 at 'AAA';

--$10,000,000 3.48% Series AA senior notes due on June 14, 2025 at 'AAA';

--$12,000,000 2.75% Series BB senior notes due on Sept. 27, 2017 at 'AAA';

--$15,000,000 3.48% Series CC senior notes due on Sept. 27, 2019 at 'AAA';

--$13,000,000 4.21% Series DD senior notes due on Sept. 27, 2022 at 'AAA';

--$5,000,000 Series EE floating rate senior notes due on Sept. 27, 2018 at 'AAA';

--$10,000,000 4.16% Series FF senior notes due on Nov. 20, 2023 at 'AAA';

--$20,000,000 Series GG floating rate senior notes due on April 17, 2019 at 'AAA';

--$20,000,000 Series HH floating rate senior notes due on Sept. 9, 2019 at 'AAA';

--$80,000,000 of Series B MRPS, 4.375% fixed rate, due on Dec. 31, 2027 at 'AA';

--$50,000,000 of Series C MRPS, 3.95% fixed rate, due on May 1, 2018 at 'AA';

--$85,000,000 Series D MRPS, 4.01% fixed rate, due on 12/17/2021 at 'AA';

--$80,000,000 Series E MRPS, 4.34% fixed rate, due on 12/17/2024 at 'AA'.

Fitch also notes that the Series V senior notes are due Dec. 21, 2014 and expects them to be paid in full on the next business day.

RATINGS SENSITIVITY

The rating is based on the terms stipulating mandatory collateral maintenance and de-leveraging provisions in the event of asset coverage declines. In the case of the rated notes, should the fund fail to cure an asset coverage breach, or the note purchasers not declare the notes due and payable upon an event of default, this may lengthen exposure to market value risk and cause the ratings to be lowered by Fitch.

The ratings may also be sensitive to material changes in the credit quality or market risk profile of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause the ratings to be lowered by Fitch.

For additional information about Fitch closed-end fund ratings guidelines, please review the criteria referenced below, which can be found on Fitch's website.

To receive forthcoming complimentary closed-end fund research from Fitch, opt-in at the following link:

http://pages.fitchemail.fitchratings.com/FAMCEFBlankOptin/

Additional information is available at www.fitchratings.com.

The sources of information used to assess this rating were the public domain and Tortoise Capital Advisors.

Applicable Criteria and Related Research:

--'Rating Closed-End Fund Debt and Preferred Stock' (Sept. 4, 2014);

--'MLP Closed-End Funds: A Capital Structure Case Study' (Dec. 2, 2013);

--'2014 Outlook: U.S. Closed-End Fund Leverage' (Jan. 14, 2014);

--'Use of Leverage in U.S. Closed-End Funds (Slidedeck Apr-2014)' (May 1, 2014);

--'Fitch: US Closed-End Funds Pick Up Steam in Private Placements' (June 2, 2014).

Applicable Criteria and Related Research:

Rating Closed-End Fund Debt and Preferred Stock

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=765528

MLP Closed-End Funds: A Capital Structure Case Study

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723839

2015 Outlook: Closed-End Funds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=824608

Use of Leverage in U.S. Closed-End Funds (Slidedeck Apr-2014)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747937

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=958635

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Yuriy Layvand, CFA, +1-212-908-9191
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, New York, 10004
or
Secondary Analyst
Benjamin Han, +1-212-908-9177
Analyst
or
Committee Chairperson
Ralph Aurora, +1-212-908-0528
Senior Director
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Yuriy Layvand, CFA, +1-212-908-9191
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, New York, 10004
or
Secondary Analyst
Benjamin Han, +1-212-908-9177
Analyst
or
Committee Chairperson
Ralph Aurora, +1-212-908-0528
Senior Director
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com