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

Fitch Ratings affirmed BlackRock TCP Capital Corp.'s (NASDAQ: TCPC) Long-Term Issuer Default Rating at 'BB' but revised the company's outlook to Negative. The action removes the business development company (BDC) from a Rating Watch Negative, signaling that Fitch believes TCPC's credit metrics have stabilized, though significant risks remain.

Key Rating Drivers

The revision to a Negative outlook reflects persistent credit quality challenges, according to the rating agency. Fitch highlighted concerns that still-elevated non-accrual investments and paid-in-kind (PIK) income could lead to additional realized losses for the BDC. The firm's asset coverage cushion was also noted as being weaker than that of its peers.

Despite these concerns, the removal of the Rating Watch Negative indicates some improvement. Fitch acknowledged that TCPC's leverage has been trending downward toward its target levels and that non-accrual loans have declined from their peak, even while remaining high.

A Look at the Numbers

Fitch's analysis pointed to several key metrics from the first quarter of 2026 that informed its decision:

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• Leverage: Net regulatory leverage improved to 1.29x at the end of Q1 2026, down from 1.41x at year-end 2025.
• Asset Coverage: The company's asset coverage cushion, a key measure of solvency for BDCs, was 10.9%.
• Non-Accruals: Investments on non-accrual status remained above average, representing 3% of the debt portfolio at fair value and 8.4% at cost.
• Realized Losses: TCPC booked significant net realized losses equal to 17.9% of its average portfolio at fair value in 2025, followed by 2.3% in the first quarter of 2026.

Financial and Strategic Adjustments

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

TCPC also shifted its funding profile by refinancing $325 million of maturing senior unsecured notes using its secured revolving credit facility. This move decreased its proportion of unsecured debt to 34.8% of total debt, a significant drop from its four-year average of 61.7%, according to Fitch. As of the end of the first quarter, TCPC reported having $44 million in cash and $264 million in available borrowing capacity.