Fitch Affirms BlackRock TCP Capital at 'BB' But Assigns Negative Outlook on Asset Quality Concerns

Fitch Ratings affirmed BlackRock TCP Capital Corp.’s (NASDAQ: TCPC) Long-Term Issuer Default Rating at 'BB', removing the business development company (BDC) from its Rating Watch Negative. However, the credit agency assigned a Negative rating outlook, signaling persistent concerns over the firm's asset quality and leverage profile.

Rating Rationale

The removal of the Rating Watch Negative reflects Fitch's view that TCPC's credit metrics have stabilized after a period of pressure. The agency noted that leverage has been trending down toward the company's target levels and that non-accrual loans have declined from their peak.

Despite this stabilization, the Negative outlook points to lingering risks. Fitch highlighted that TCPC's levels of non-accrual investments and paid-in-kind (PIK) income remain elevated, which could lead to future realized losses. The ratings agency also cited a weaker asset coverage cushion relative to its industry peers as a key factor in the negative assessment.

Key Metrics Under Scrutiny

Fitch's analysis pointed to several key financial indicators that, while improving, remain areas of concern. The company has made progress in reducing its debt levels but still faces challenges with its loan portfolio quality.

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• Leverage: Net regulatory leverage declined to 1.29x at the end of the first quarter of 2026, down from 1.41x at year-end 2025.
• Asset Coverage: The company's asset coverage cushion stood at 10.9% in the first quarter, a level Fitch considers weaker than that of its peers.
• Non-Accruals: Investments on non-accrual status remained above average, accounting for 3% of the debt portfolio at fair value and 8.4% at cost as of the first quarter.

Strategic and Financial Adjustments

In response to financial pressures, TCPC has taken several strategic steps. In the first quarter, the company reduced its quarterly base dividend to $0.17 per share from $0.25 per share to preserve capital.

TCPC also altered its funding mix by refinancing $325 million of maturing senior unsecured notes with its secured revolving credit facility. This strategic shift caused the proportion of unsecured debt to fall to 34.8% of total debt, a significant decrease from the four-year average of 61.7%, according to Fitch. As of the first quarter of 2026, the company reported having $44 million in cash and $264 million in remaining borrowing capacity.