KBRA Assigns Ratings to TPG Twin Brook Capital Income Fund's $100 Million Senior Secured Notes Due 2028 and 2030

KBRA assigns a rating of BBB to TPG Twin Brook Capital Income Fund's ("TCAP" or "the company") $25 million, 6.05% senior unsecured notes due June 30, 2028, and $75 million, 6.40% senior unsecured notes due June 30, 2030. The rating Outlook is Stable. Proceeds will be used to repay secured debt.

Key Credit Considerations

The ratings and Outlook are supported by TCAP’s ties to TPG Angelo Gordon’s $92 billion investment platform, with $25.8 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. In 2023, TPG Inc., a global alternative asset manager, acquired Angelo Gordon, resulting in an aggregate of $251 billion in AUM and further strengthening the company’s support base. 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 experience in the industry. The ratings are also supported by TCAP’s growing and well-diversified $3.4 billion investment portfolio comprised almost entirely of senior secured first lien loans (97.5%) to 245 portfolio companies across 43 sectors in primarily the lower middle market at 1Q25. As of March 31, 2025, the portfolio companies had a median EBITDA of ~$19 million and were largely sponsor backed with meaningful equity cushions with low LTVs and interest coverage of 2.14, using a “current quarter” calculation. Health Care Providers & Services (24.2%), Media (8.5%) and Trading Companies & Distributors (8.5%) 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. As an unseasoned portfolio, non-accruals as a percentage of total investments at cost and fair value of 0.2% and 0.1%, respectively, are low as of March 31, 2025.

As of March 31, 2025, the company's gross leverage was 0.99x and asset coverage was 200.5%, providing for a solid 34% cushion to the 150% regulatory minimum. Target leverage of 1.10x or less is consistent with perpetual-life BDC peers to ensure sufficient liquidity for potential redemptions in less favorable markets. As of March 31, 2025, there was adequate liquidity with bank credit line availability and unrestricted cash of $994.1 million set against $90 million in unsecured debt maturities within two years and $864.3 million of unfunded commitments as of March 31, 2025. A portion of the unfunded commitments is tied to covenants and not expected to be drawn while additional equity capital is raised quarterly ($194.2 million in 1Q25). As of March 31, 2025, unsecured debt to total debt of 37% (pro forma 43% with the new issuance) is solid and provides financial flexibility and lower asset encumbrance for the benefit of senior unsecured noteholders.

Formed in 2022 as a Delaware Statutory Trust, TPG Twin Brook Capital Income Fund is a non-diversified, closed-end externally managed business development company that has elected to be treated as a business development company under the 1940 Act and as a RIC, which, among other things, must distribute to its shareholders at least 90% of the company's investment taxable income. The company is managed by AGTB Fund Manager, LLC (“Adviser”), an affiliate of TPG Angelo Gordon that was acquired by TPG, Inc. (NASDAQ: TPG) in 2023.

Rating Sensitivities

A rating upgrade over 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.

Methodologies

• Financial Institutions: Finance Company Global Rating Methodology
• ESG 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.

Doc ID: 1010114

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