KBRA Affirms Ratings for TPG Twin Brook Capital Income Fund

KBRA affirms the issuer and senior unsecured debt ratings of BBB for TPG Twin Brook Capital Income Fund ("TCAP" or "the company"). The rating Outlook is Stable.

Key Credit Considerations

The ratings and Outlook are supported by TCAP’s ties to TPG Angelo Gordon’s $86 billion credit investment platform, with $29 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 ratings are also supported by TCAP’s growing and well-diversified $3.9 billion investment portfolio as of 3Q25, which is comprised almost entirely of senior secured first lien loans (~97.5%) to 258 portfolio companies across 40+ sectors, primarily in the lower middle market. Portfolio companies typically have a median EBITDA of less than $20 million and are largely sponsor backed with meaningful equity cushions with low LTVs and interest coverage of ~2.3x. Health Care Providers & Services (24%), Trading Companies & Distributors (9%), and Media (8%) are the leading portfolio industries. Although the investment portfolio is concentrated in the Health Care sector, this concentration is mitigated by several factors, including the credit platform’s expertise within the industry and strong subsector diversity.

We view the portfolio as still relatively unseasoned, which, in part, explains the very low level of non-accruals at just 0.1% of investments at cost and fair value. Over time, we expect there to be some negative credit migration. That said, the firm has shown competency in other areas of credit investing for longer periods of time which supports our view that TCAP’s credit quality will remain in line with expectations at the current rating level.

At 3Q25, the company's gross leverage was 0.89x and asset coverage was 212%, 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. Further, there is adequate liquidity with bank credit line availability and unrestricted cash of nearly $700 million with no near-term debt maturities and $1 billion of unfunded commitments as of 3Q25. A portion of the unfunded commitments is tied to covenants and transactions and is not expected to be drawn while additional equity capital is raised quarterly.

As of 3Q25, unsecured debt to total debt was ~39% up from 25% last year. We expect the company to continue to opportunistically issue senior unsecured debt providing greater financial flexibility and lower asset encumbrance.

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 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.

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