Fitch Ratings has reaffirmed BlackRock TCP Capital Corp.'s (NASDAQ:TCPC) Long-Term Issuer Default Rating as well as its senior secured and senior unsecured debt ratings at 'BB' and has removed the Rating Watch Negative. Despite the affirmation, Fitch retained a Negative Rating Outlook for the company.
According to Fitch, the removal of the Rating Watch Negative reflects a view that TCPC's credit metrics have stabilized after recent deterioration. The firm’s leverage has been trending toward management’s target and is expected to keep moving in that direction. Nonetheless, Fitch flagged that leverage remains elevated when compared with peers and in light of TCPC's risk profile. Non-accrual investments have come down from their peaks but remain at high levels.
Key metrics highlighted by Fitch
- Leverage stood at 1.65x at first quarter 2026, with net regulatory leverage at 1.29x. Both measures declined from year-end 2025 levels of 1.74x and 1.41x, respectively.
- TCPC’s asset coverage cushion was 10.9% at first quarter 2026.
- Net realized losses were 17.9% of the average portfolio at fair value for 2025 and 2.3% in first quarter 2026.
- Non-accrual investments as of first quarter 2026 were 3.0% of the debt portfolio at fair value and 8.4% of the debt portfolio at cost.
- In first quarter 2026, TCPC reduced its base dividend from $0.25 per share to $0.17 per share.
Fitch emphasized continued exposure to realized losses given still-elevated non-accruals and paid-in-kind income, and noted that TCPC’s asset coverage cushion is weaker than that of peers. Those factors underpin the Negative Rating Outlook despite observed stabilizing trends.
Operationally, TCPC refinanced $325 million of maturing senior unsecured notes using its secured revolving credit facility during first quarter 2026. That refinancing contributed to a marked shift in the company’s debt mix: unsecured debt fell to 34.8% of total debt at first quarter 2026, compared with a four-year average of 61.7%.
At first quarter 2026, TCPC reported $44 million in cash and cash equivalents and $264 million of remaining borrowing capacity under its credit facilities.
What Fitch sees
Fitch’s actions reflect a view that while several balance-sheet metrics have improved, material vulnerabilities persist. The agency pointed to still-elevated non-accruals and paid-in-kind income that could result in additional realized losses and a lower asset coverage cushion than peers, creating the rationale for the Negative outlook.