Fitch Affirms BlackRock TCP Capital 'BB' Rating, Assigns Negative Outlook

Fitch Ratings affirmed the 'BB' Long-Term Issuer Default Rating for BlackRock TCP Capital Corp. (NASDAQ: TCPC) but revised the company's outlook to Negative. The credit rating agency removed TCPC from its Rating Watch Negative list, signaling that key credit metrics have stabilized, though significant risks remain.

Rationale for the Negative Outlook

The Negative outlook reflects persistent credit quality challenges within the business development company's (BDC) portfolio, according to Fitch. The agency highlighted several areas of concern that could lead to further realized losses, including:

• Elevated non-accruals: As of the first quarter of 2026, non-accrual investments stood at 3% of the debt portfolio at fair value and 8.4% at cost, which Fitch noted is above average.
• High paid-in-kind (PIK) income: This form of non-cash interest income can sometimes indicate stress in underlying portfolio companies.
• Weaker asset coverage: TCPC's asset coverage cushion was 10.9% at the end of Q1 2026, which is lower than that of its peers, providing less of a buffer against portfolio losses.

Fitch's analysis follows a period of significant stress, with TCPC reporting net realized losses of 17.9% of its average portfolio at fair value in 2025.

Stabilizing Leverage and Balance Sheet Adjustments

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The removal of the Rating Watch Negative was prompted by signs of stabilization, particularly in the company's leverage. TCPC has taken steps to de-risk its balance sheet, which has been reflected in its key financial metrics.

• Statutory leverage declined to 1.65x in the first quarter of 2026 from 1.74x at year-end 2025.
• Net regulatory leverage was 1.29x, down from 1.41x over the same period.

In a move to preserve capital, TCPC also cut its quarterly base dividend to $0.17 per share from $0.25 in the first quarter. Additionally, the company refinanced $325 million of maturing senior unsecured notes using its secured revolving credit facility, which reduced its reliance on unsecured debt to 34.8% of total debt, down from a four-year average of 61.7%.

Market Implications

A Negative outlook indicates that a ratings downgrade is possible over the next 12 to 18 months if credit quality does not improve or if the asset coverage cushion deteriorates further. For investors, this signals heightened monitoring of TCPC's ability to manage its portfolio of loans to middle-market companies, particularly its non-performing assets. As of the end of Q1 2026, TCPC reported having $44 million in cash and equivalents and $264 million in remaining borrowing capacity.