KBRA Assigns Rating to Bain Capital Specialty Finance, Inc.'s $350 Million Senior Unsecured Notes Due 2031

NEW YORK--(BUSINESS WIRE)--KBRA assigns a rating of BBB to Bain Capital Specialty Finance, Inc.'s ("BCSF" or “the company”) $350 million, 5.95% senior unsecured notes due 2031. The rating Outlook is Stable. The proceeds will be used for general corporate purposes and for repayment of existing secured indebtedness.

Key Credit Considerations

The rating and Stable Outlook is supported by BCSF’s ties to the ~$60 billion Bain Capital Credit ("BCC") credit platform, including ~$20 billion dedicated to private credit as of September 30, 2025, along with SEC exemptive relief to co-invest in other funds managed by BCSF’s adviser and its affiliates. BCC's solid management team has a long track record working in private credit markets dating back to the mid-1990s, with BCC’s platform providing a 28-year history of strong credit performance through economic cycles. Also supporting the rating is BCSF’s well-diversified investment portfolio comprised largely of senior secured first lien loans at 64.6% (84.7% on a look-through to the joint ventures ("JV")) to 195 portfolio companies across 30 sectors, exclusive of investments in JVs, most in the core middle market with median EBITDA of $46 million as of 3Q25. The top three portfolio sectors, when excluding JV investments, are High Tech Industries (14.0%), Business Services (11.9%), Aerospace & Defense (10.9%). Credit quality is solid with non-accruals of 1.5% and 0.7% at cost and fair value, respectively, consistent with rated peers.

The company’s funding profile is well diversified, consisting of a secured revolving bank facility, a CLO, and unsecured notes. Unsecured debt to total debt was 63.4% as of 3Q25, providing the company with financial flexibility and less asset encumbrance for the benefit of senior unsecured noteholders. As of September 30, 2025, liquidity was adequate with $457 million of bank credit availability and $86.8 million of cash and cash equivalents, including cash denominated in foreign currency, including short-term restricted cash for purposes of investment, set against $600 million of near-term unsecured debt ($300 million due in March 2026 and $300 million in October 2026) and $493.6 million of unfunded commitments. A proportion of the unfunded commitments are tied to transactions and/or negative covenants and are not expected to be drawn.

The strengths are counterbalanced by the high proportion of non-qualifying assets (29.0%) and elevated leverage of 1.33x, which are somewhat offset by the high proportion of first lien senior secured loans within the JVs (98+%) and generally high credit quality of the investment portfolio, as well as leverage net of cash of 1.25x, within the target range of 1.0x-1.25x. Further counterbalancing strengths are retained earnings constraints as a regulated investment company ("RIC") and uncertain economic environment with high base rates, inflation, and geopolitical risks.

BCSF is an externally managed, non-diversified, investment management company that elected to be treated as a Business Development Company (BDC) under the 1940 Act and as a RIC, which, among other things, must distribute to its shareholders at least 90% of the company’s investment taxable income. The company was formed as a Delaware Corporation in October 2015 and was publicly listed on the NYSE in November 2018. The company is managed by BCSF Advisors LP, a wholly owned subsidiary of Bain Capital Credit, which is a wholly owned subsidiary of Bain Capital, LP, which had $215+ billion of AUM as of September 30, 2025.

Rating Sensitivities

Given the Stable Outlook, a rating upgrade is not expected over the medium term. A rating downgrade and/or Outlook change to Negative could be considered if management increases focus on riskier investments coupled with higher leverage metrics or makes a significant change in the current management structure. A prolonged downturn in the U.S. economy that has material impact on performance and non-accruals that significantly affect capital, leverage, and liquidity metrics would also negatively impact rating/Outlook.

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Methodologies

• Financial Institutions: Finance Company Global Rating Methodology
• ESG Global Rating Methodology

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.

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