Fitch Revises BlackRock TCP Capital Outlook to Negative on Credit Quality Concerns

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 also removed the firm from Rating Watch Negative, signaling that its credit metrics have stabilized but remain a concern.

Rating Rationale

The Negative outlook reflects persistent risks in TCPC's portfolio, according to Fitch. The agency highlighted still-elevated levels of non-accrual loans and paid-in-kind (PIK) income, which do not generate immediate cash flow and could translate into future realized losses. Fitch also noted that the business development company's asset coverage cushion is weaker than that of its industry peers.

The removal of the Rating Watch Negative indicates Fitch's belief that TCPC's metrics, while still high, have stabilized and are trending toward the company's target levels. The firm's leverage has decreased from its peak at the end of 2025.

Key Financial Metrics

Fitch detailed several key metrics from the first quarter of 2026 that underpin its decision:

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• Leverage: TCPC’s statutory leverage was 1.29x at the end of Q1 2026, an improvement from 1.41x at year-end 2025. Its gross leverage stood at 1.65x.
• Asset Quality: Non-accrual investments, or loans not generating their stated interest, remained above average at 3% of the debt portfolio at fair value and 8.4% at cost.
• Losses: The company reported net realized losses of 2.3% of the average portfolio in Q1 2026, following a significant 17.9% in 2025.
• Coverage Cushion: The asset coverage cushion, a key measure of a BDC's ability to absorb losses, was 10.9%.

Strategic Adjustments

In response to financial pressures, TCPC has made several strategic changes. The company cut its quarterly base dividend to $0.17 per share from $0.25 per share in the first quarter of 2026.

TCPC also altered its funding mix by refinancing $325 million of maturing senior unsecured notes with its secured revolving credit facility. This move significantly reduced its reliance on unsecured funding, with unsecured debt falling to 34.8% of total debt, down from a four-year average of 61.7%. As of the end of the first quarter, TCPC had $44 million in cash and $264 million in available borrowing capacity.