KBRA Assigns Rating to BlackRock Private Credit Fund's $200 Million Senior Unsecured Notes Due 2028 and 2030
KBRA assigns a rating of BBB- to BlackRock Private Credit Fund's ("BDEBT" or "the company") $50 million, 5.78% senior unsecured notes due December 17, 2028 and its $150 million, 6.14% senior unsecured notes due October 8, 2030. The rating Outlook is Stable. Funds will be used for general corporate purposes.
Key Credit Considerations
The rating is supported by BDEBT's ties to BlackRock, Inc. (NYSE:BLK) and its $360 billion Private Financing Solutions ("PFS") platform, which was created following the acquisition and integration of HPS Investment Partners ("HPS") into the BlackRock credit platform. Central to PFS is a $190 billion private credit franchise, including $122 billion in direct lending, strengthened by the added scale, senior leadership, and experienced workout team gained through the HPS acquisition.
BDEBT maintains SEC exemptive relief to co-invest among certain BlackRock credit affiliates and investment vehicles, allowing BDEBT to compete in the highly competitive industry through size and scale. Also supporting the rating is the company's diversified $1.7 billion investment portfolio at fair value (FV), comprised almost exclusively of senior secured first lien loans (99.8%) to 243 portfolio companies across 30+ sectors. BDEBT focuses on investing in the core middle market (portfolio companies with $25 million-$125 million EBITDA), a comparatively less competitive segment with higher yields than the upper middle market segment. The top three portfolio sectors, generally considered less cyclical, are Professional Services (15.1%), Software (13.1%), and Diversified Financial Services (10.5%). With an unseasoned portfolio, non-accruals were low at 0.3% and 0.2% at cost and FV, respectively, as of June 30, 2025.
BDEBT's funding mix is diversified with a secured revolving bank facility, an SPV asset facility, and senior unsecured notes. This issuance will boost pro forma unsecured debt to total debt to 35%-40%, providing lower asset encumbrance for the benefit of senior unsecured noteholders and increased financial flexibility. BDEBT's gross and net leverage were low at 0.87x and 0.83x, respectively, and lower than the company's target net leverage range of 0.90x-1.20x. As the company deploys capital, KBRA expects leverage to continue to increase but stay within the target range. As of June 30, 2025, asset coverage was solid at 214% when considering its 150% regulatory asset coverage requirement, providing the company with a significant cushion to withstand increased market volatility in a less favorable economic environment. As of June 30, 2025, the company had solid liquidity with $336 million in available credit lines and $30.7 million of cash set against $364.5 million of unfunded commitments and no near-term debt maturities. Presently, about 28% of assets are classified as Level 2 (19% as BSL, which adds another layer of liquidity). BDEBT's long-term BSL target is 10%.
Counterbalancing the strengths is the company's short operating history with an unseasoned portfolio, relatively illiquid assets, retained earnings constraints as a RIC, and uncertain economic environment with high base rates, inflation, and geopolitical risks.
Incorporated in 2021 as a Delaware statutory trust, the company is a non-traded perpetual, continuously offered management investment company that has elected to be treated as a business development company regulated under the Investment Company Act of 1940 and treated as a RIC for tax purposes, which, among other things, must distribute to its shareholders at least 90% of the company's investment company taxable income. BDEBT is externally managed by BlackRock Capital Investment Advisors, LLC, a wholly-owned, indirect subsidiary of BLK.
Rating Sensitivities
Given the Stable Outlook, a rating upgrade is not expected over the medium term. However, positive rating momentum could be achieved over time if credit metrics remain solid as the portfolio seasons, leverage remains near the target range, and senior secured loans remain a high proportion of the company's total investments. A rating downgrade and/or Outlook change to Negative could occur if management alters its stated strategy by increasing focus on riskier investments coupled with higher leverage metrics. A prolonged downturn in the U.S. economy with negative impact on the company's earnings performance, asset quality, and leverage and/or a change in credit monitoring could also precipitate negative rating action.
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Methodologies
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan's Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
Doc ID: 1011482
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