KBRA Assigns Rating to Crescent Capital BDC, Inc.'s $185 Million Senior Unsecured Notes due in 2029 and 2031
KBRA assigns a rating of BBB to Crescent Capital BDC, Inc.'s (NASDAQ:CCAP, the company", )) $67.5 million, 5.87% senior unsecured notes due 2029, $50 million, 5.97% senior unsecured notes due 2029, and $67.5 million, 6.20% senior unsecured notes due 2031. The rating Outlook is Stable. Funds will be used to repay maturing unsecured debt.
Key Credit Considerations
The ratings are supported by the company's ties to its credit investment platform, Crescent Capital Group LP ("CCG"), which is a large investment management company with ~$48 billion in AUM, ~$36 billion of which is comprised of private credit AUM, which provides CCAP with the benefit of scale through SEC exemptive relief to co-invest alongside other accounts across the platform. Furthermore, Sun Life Financial Inc. (NYSE:SLF), a CAD $1.5 trillion Canadian life insurance and asset management company, which acquired a 51% interest in the Crescent platform Crescent Capital Group LP ("CCG" or "the platform") in 2021, plays a valuable role in providing seed capital and investing in the debt of its fund vehicles as well as facilitating Canadian banking relationships. In the case of CCAP, SLF owns about 6% of its publicly traded equity and over $70 million of its senior unsecured debt. The ratings also consider CCAP's long operating history (one of the longest in the sector) with a strong management team that has a sound track record with an average tenure of Crescent's leadership of 20 years and solid risk management practices.
As of June 30, 2025, CCAP had a well-diversified $1.6 billion investment portfolio comprised predominantly of secured first lien loans, including first-out unitranche loans (90.7%), increasing substantially from 77% at YE 2020. The investment portfolio consists of 187 portfolio companies across 20 sectors, with median EBITDA of $29 million, and nearly all deals (99%) are sponsor backed. The company focuses on providing loans to the core and lower-middle market where there is less competition and generally to portfolio companies in less cyclical businesses that have solid cash flow, mission critical businesses, and stable operating history. Health Care Equipment & Services (27.2%), Software & Services (20.4%), and Commercial & Professional Services (16.6%) comprise the three top sector concentrations. Though recently elevated, non-accruals were acceptable at 3.7% and 2.2% at cost and fair value, respectively, as of June 30, 2025.
Further supporting the rating is the diverse and improved funding mix through strong banking relationships and access to the capital markets. As of June 30, 2025, the company's liquidity was adequate, with $227.2 million in available bank lines and $9.7 million of unrestricted cash and cash equivalents. The senior unsecured debt issuance will reduce the company's $296.6 million of senior unsecured debt maturing next year. The company had $213.4 million of unfunded commitments, of which, a portion is tied to covenants and transactions and is not expected to be drawn. Unsecured debt to total debt outstanding was 46% as of June 30, 2025. Gross leverage was 1.23x, within CCAP's target gross leverage of 1.10x - 1.30x. While the upper range of the company's target leverage is higher than peers, CCAP intends to remain below 1.30x. Asset coverage was sufficient at 180%, within regulatory asset coverage of 150%, providing an adequate cushion for weaker market conditions.
These credit strengths are counterbalanced by 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, geopolitical risks, and the potential for increasing non-accruals.
Formed in 2015, Crescent Capital BDC, Inc. is a closed-end publicly traded business development company, regulated under the Investment Company Act of 1940, which, among other things, must distribute to its shareholders at least 90% of the company's investment company taxable income. CCAP is externally managed by Crescent Cap Advisors, LLC, a subsidiary of CCG. The company's stock trades on the NASDAQ under the symbol CCAP with a recent market capitalization of ~$568 million. CCG is headquartered in Los Angeles with offices in New York, Boston, Chicago, and London with over 230 employees globally.
Rating Sensitivities
Given the rating Stable Outlook, positive momentum is unlikely over the medium term. Rating pressure is possible if a prolonged downturn in the U.S. economy has a material impact on the company's earnings performance, asset quality, and leverage. An increased focus on riskier investments, along with operating at higher than targeted leverage, or a significant change in the current management structure coupled with a negative change in strategy, credit monitoring, and/or originations could also pressure the ratings.
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Methodologies
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.
Doc ID: 1011493
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