Fitch Affirms BlackRock TCP Capital's 'BB' Rating, Assigns Negative Outlook on Asset Quality Concerns

Fitch Ratings has affirmed the 'BB' Long-Term Issuer Default Rating for BlackRock TCP Capital Corp. (NASDAQ:TCPC) but has assigned a Negative outlook, signaling potential pressure on the rating. The credit agency removed the business development company (BDC) from a Rating Watch Negative, acknowledging that its credit metrics have stabilized after a period of stress.

Rating Rationale

The Negative outlook reflects Fitch's concerns over TCPC's asset quality and balance sheet composition. The ratings agency highlighted that still-elevated non-accrual loans and paid-in-kind (PIK) income could translate into additional realized losses. Furthermore, Fitch noted that TCPC's asset coverage cushion—a key measure of a BDC's ability to absorb losses—is weaker than that of its peers.

The removal of the Rating Watch Negative was prompted by signs of stabilization. Fitch believes TCPC's leverage has begun to trend toward its target levels, and non-accrual loans have declined from their peak, though they remain high. The agency affirmed the 'BB' rating on the company's senior secured and senior unsecured debt.

Key Financial Metrics

According to Fitch's report, TCPC's financial profile shows both improvement and continued areas of concern. Key figures from the first quarter of 2026 include:

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• Net Regulatory Leverage: Decreased to 1.29x from 1.41x at the end of 2025.
• Asset Coverage Cushion: Stood at 10.9%.
• Non-Accrual Investments: Remained above average at 3.0% of the debt portfolio at fair value and 8.4% at cost.
• Net Realized Losses: Equaled 2.3% of the average portfolio in Q1 2026, following a significant 17.9% in 2025.

Balance Sheet and Capital Actions

In the first quarter of 2026, TCPC took several steps to manage its capital structure and liquidity. The company reduced its base dividend to $0.17 per share from $0.25 per share. It also refinanced $325 million of maturing senior unsecured notes using its secured revolving credit facility.

This refinancing shifted the company's funding mix, causing its proportion of unsecured debt to fall to 34.8% of total debt, a significant drop from its four-year average of 61.7%. As of the end of the quarter, TCPC reported having $44 million in cash and $264 million in remaining borrowing capacity under its credit facilities.