KBRA Affirms Ratings for Fidelity Private Credit Fund

KBRA affirms the BBB issuer and senior unsecured debt ratings for Fidelity Private Credit Fund ("FPCF" or "the company"). The rating Outlook is Stable.

Key Credit Considerations

The ratings and Stable Outlook are supported by FPCF's ties to Fidelity Diversifying Solutions LLC, the company's registered investment adviser and an affiliate of FMR LLC ("Fidelity" or "FMR"). Fidelity is an investment company with $6.8 trillion of total discretionary assets and 1,000+ investment professionals operating across the globe. FPCF benefits from FMR's Levered Credit Platform, encompassing ~$878 billion of fixed income assets under management (AUM), $~38 billion of which is leveraged loan AUM and ~$8 billion in direct lending as of September 30, 2025 (3Q25). The company and the Adviser have SEC exemptive relief to co-invest with certain affiliates of the Adviser and other managed affiliates. Furthermore, FMR provides robust expertise in corporate debt markets, strong loan sourcing, extensive research, sponsor and bank relationships and a vast client wealth channel. The senior management team has a long track record in the private debt markets with members having an average of 20+ years in the industry. The company maintains solid risk management practices enhanced by the FMR organization.

The ratings are further strengthened by FPCF's ~$2 billion of total investments at fair value (FV) comprising 113 portfolio companies across the lower middle-to-middle market, in generally less cyclical industries with a focus on senior secured first lien loans (~92%) that are sponsor backed as of 3Q25. The portfolio also consists of relatively liquid mutual funds which make up around ~7% of investments. The top three sector concentrations are Health Care Services (~12%), Specialized Consumer Services (~10%) and Application Software (~10%). The company's strict underwriting criteria is focused on a meaningful covenant package, low LTVs, appropriate fixed charge coverage, and moderate leverage. As a relatively newly organized company, the portfolio remains unseasoned with no investments on non-accrual and solid internal ratings with 97% of total investments at FV maintaining the company's two highest internal ratings indicating that they are performing at or above underwriting.

Since inception, the company has raised around $1.2 billion of equity with only ~$35 million of redemptions (<0.5% on a quarterly average). Further, FPCF has solid alignment with FMR and its employees with ~14% of the Class I shares owned by Fidelity and its employees. Leverage remains low at ~0.8x at 3Q25, , lower than its expected operating range of 0.90x-1.25x, reflecting FPCF's strong capital raises and conservative capital deployment.

FPCF’s funding profile has diversified since ratings were assigned in January 2025 which we view positively. With the issuance of two tranches of unsecured notes (3-year and 5-year maturities), senior unsecured debt now comprises just under 23% of total debt. KBRA expects the company’s usage of senior unsecured debt to continue to build over the near-to-medium term which would increase financial flexibility and provide for lower asset encumbrance. Besides the senior unsecured term debt, the company also maintains three secured bank facilities. Terms of the revolvers (advance rates, spreads, covenants and maturities) are considered reasonable. Further, we believe the long-standing relationships between Fidelity and the banks provide advantages to the FPCF over the long-term in terms of funding availability. The company maintains sufficient liquidity with bank lines available of over $1 billion and ~$35 million of unrestricted cash set against about $480 million of unfunded commitments. Further, as a perpetual BDC, the company offers tenders of up to 5% per quarter but is subject to Board approval. To date, redemptions have been insignificant as noted above and the company intends to maintain at least 10% of total investments in more liquid assets for additional liquidity reserved for redemptions.

Counterbalancing the credit strengths are the company’s limited operating history, the relatively illiquid investments, retained earnings constraints as a Regulated Investment Company (RIC), and an uncertain economic environment inflation, and geopolitical risks that could impact non-accrual.

Fidelity Private Credit Fund is a Massachusetts-based, non-diversified, non-traded, perpetual-life closed-end investment management company. The company commenced operations on March 13, 2023, and is externally managed by Fidelity Diversifying Solutions LLC, a registered investment advisory limited liability company and an affiliate of FMR LLC. The company is regulated as a business development company (BDC) under the Investment Company Act of 1940, has elected to be treated as a RIC for tax purposes, and as such the company is required to distribute at least 90% of its taxable income to shareholders, obtain at least 90% of its income each fiscal year from dividends, interest, gains from the sale of stock or securities or similar sources, and meet certain asset diversification requirements at the end of each quarter.

Rating Sensitivities

Given the Stable Outlook, a rating upgrade is not expected in the medium term. A rating downgrade and/or Outlook change to Negative could be considered if management alters its stated company strategy by increasing its focus on riskier investments coupled with high leverage metrics. A prolonged downturn in the U.S. economy with negative impact on FPCF's earnings performance, asset quality, and leverage or a significant change in senior management and/or risk management policies could also lead to negative rating action.

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