BlackRock (NYSE:BLK) slashed the value of its publicly traded private credit fund, BlackRock TCP Capital Corp. (NASDAQ:TCPC), by approximately 5%.
• BlackRock TCP Capital stock is trading at depressed levels. Where is TCPC stock headed?
The publicly-traded middle-market lending fund's total markdowns were $35 million in the first quarter, according to the firm's earnings release details.
The fund has struggled recently due to increased pressure from distressed loans, asset markdowns and declining returns. Despite the decline, the company said it executed "improving credit quality" during the quarter.
BlackRock has been rapidly expanding into the private credit space in recent months, despite recent turmoil in the market. Investors have become increasingly concerned that the software sector will become irrelevant due to advancements in artificial intelligence.
Earlier this week, the firm announced plans to expand its private credit capabilities on Preqin, adding analytics and research tools designed to provide standardized intelligence across the private credit market.
Last year, BlackRock acquired HPS Investment Partners for approximately $12 billion, including TCPC. As a result of the acquisition, the firm created Private Financing Solutions (PFS), which combined the firms' private credit, GP and LP solutions, and private and liquid CLO businesses into one integrated platform.
In January, TCPC announced an estimated 19% decline in Net Asset Value (NAV) largely tied to portfolio restructurings primarily around e-commerce stocks and the bankrupt Renovo Home Partners, Seeking Alpha reported at the time. Following the announcement, shares of the stock dropped over 14%.
During the quarter, the firm invested $22.5 million in six new and two existing portfolio companies. Of these investments, $18 million, or 80.1% of total acquisitions, were in senior secured loans. The remaining $4.5 million, or 19.9% of total acquisitions, was comprised of equity investments
Non-accruals improved to 2.8% of the portfolio at fair value, benefiting from the completion of two restructurings and the successful sale of one asset.
Net leverage declined to 1.29x at quarter-end, supported by portfolio exits, partial paydowns, and disciplined balance sheet management. These positive developments were partially offset by $35 million of net portfolio markdowns during the quarter, resulting in a 4.9% decline in NAV to $6.72 per share.
TCPC Price Action: TCPC stock is up 0.34% at $4.38, but the stock remains down 20.5% year to date.
Photo: BlackRock-Photo by Poetra.RH via Shutterstock
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