KBRA Assigns Ratings to TPG Twin Brook Capital Income Fund's $225 Million Senior Unsecured Notes Due 2029 and 2031

NEW YORK--(BUSINESS WIRE)--KBRA assigns ratings of BBB to TPG Twin Brook Capital Income Fund's ("TCAP" or "the company") $50 million, 6.67% senior unsecured notes due June 2029 and its $175 million, 7.03% senior unsecured notes due June 2031. The rating Outlook is Stable. Proceeds will be used for the repayment of secured debt.

Key Credit Considerations

The ratings and Outlook are supported by TCAP’s ties to TPG Angelo Gordon’s ~$100+ billion credit investment platform, with ~$30+ billion of direct lending within the TPG Twin Brook Capital Partners middle market lending platform that allows for SEC exemptive relief to co-invest with TPG Angelo Gordon affiliated funds. TPG Angelo Gordon provides the company with robust deal sourcing, a strong sponsor network, and extensive banking relationships. Further, TCAP has a solid management team, which has a long track record working within the private debt markets with each member of senior management having 15+ years of industry experience.

The rating is also supported by TCAP’s growing and well-diversified ~$4.5 billion investment portfolio comprised almost entirely of senior secured first lien loans (~97.8%) across 40+ sectors, primarily in the lower middle market (median EBITDA <$25 million). Portfolio companies are largely sponsor-backed with meaningful equity cushions with low LTVs. Health Care Providers and Services (25.7%), Media (8.1%), and Trading Companies and Distributors (7.9%) were the leading portfolio sectors at the end of 1Q26. That said, we view the portfolio as relatively unseasoned, which, in part, explains the very low level of non-accrual investments at just 0.2% of investments at cost and 0.1% at fair value. As the portfolio seasons, we expect there will be some negative credit migration. That said, the performance of the broader credit platform supports our view that TCAP’s credit quality will remain in line with expectations for the current rating level.

At 1Q26, the company's gross leverage was 0.79x, and asset coverage was 227%, providing ample cushion to the 150% regulatory minimum. Target leverage of 1.10x or less is somewhat lower than traditional BDC peers to ensure sufficient liquidity for potential redemptions as a perpetual-life BDC in less favorable markets.

There is adequate liquidity with bank credit line availability and unrestricted cash of $462.3 million with $90 million of unsecured debt maturities in March 2027 and $1.2 billion of unfunded commitments as of 1Q26. A portion of the unfunded commitments is tied to covenants and transactions and is not expected to be drawn instantaneously. Pro forma for the new unsecured notes, we expect unsecured debt to total debt will be nearly 50%, though this would come down to 40%-45% when the March 2027 notes mature. We expect the company to continue to opportunistically issue senior unsecured debt providing greater financial flexibility and lower asset encumbrance for the benefit of unsecured debt holders. We also note that TCAP has experienced modest redemption requests in comparison to a number of perpetual-life BDCs.

Counterbalancing these credit strengths is the unseasoned portfolio that provides an element of uncertainty with respect to future performance. Further counterbalancing the company’s strengths are the potential risk related to the company’s illiquid investments, retained earnings constraints as a regulated investment company (RIC), and a more uncertain economic environment with high base rates, inflation, and geopolitical risks.

Rating Sensitivities

Given the Stable Outlook, a rating upgrade is not expected in the medium term. The Outlook could be revised to Negative, or the rating could be downgraded, if a prolonged downturn in the U.S. economy has a material impact on performance, including increased non-accruals and a significant rise in leverage. An increased focus on riskier investments or a change in the current management structure and/or a change in strategy and risk management that negatively impacts credit metrics could also pressure ratings.

To access ratings and relevant documents, click here.

Methodology

• Financial Institutions: Finance Company 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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