KBRA Affirms Ratings for North Haven Private Income Fund LLC

KBRA affirms the issuer and senior unsecured debt ratings of BBB for North Haven Private Income Fund LLC (“North Haven” or "the company"). The rating Outlook is Stable.

Key Credit Considerations

The ratings and Outlook are supported by North Haven's strong ties to the ~$1.6 trillion in assets under management and/or supervision of Morgan Stanley Asset Management. The company benefits from investment banking, global capital markets, investment management, and wealth management within the Morgan Stanley (NYSE: MS) ecosystem in addition to MS' robust sponsor and banking relationships. As part of the MS ecosystem, North Haven leverages the broad MS private credit platform (“MSPC”), which includes $20.8 billion of committed capital in direct lending along with SEC exemptive relief to co-invest with certain other affiliated investment vehicles managed by the company's adviser, MS Capital Partners Inc. ("Adviser") or its affiliates. Furthermore, as of 1Q25, North Haven's $6.3 billion diversified investment portfolio at fair value (FV) was comprised of a significant percentage of senior secured first lien loans at ~98% spread across 319 companies in 45 industries, primarily in less cyclical sectors. The investment portfolio's median EBITDA is $86.8 million, and the top three sectors are Software (21.3%), Insurance Services (11.0%), and Commercial Services & Supplies (8.0%). These sectors are less likely to be directly impacted by proposed tariffs. Asset quality is solid with only two portfolio companies on non-accrual, representing 0.2% and .01% of total investments at cost and FV, respectively, as of 1Q25. Despite the relatively unseasoned portfolio due to the company's short operating history, 98.1% of the portfolio maintains an internal rating of 2 or higher, indicating that loans are performing at or above expectations at underwriting.

At 1Q25, North Haven maintained gross leverage of 0.85x, lower than its target leverage range of 1.0x to 1.25x and well within the regulatory minimum asset coverage ratio of 150%. North Haven's funding mix is solid and includes a corporate revolver, SPV asset-based facilities, and senior unsecured notes. As of 1Q25, ~49% of the company’s total debt outstanding is senior unsecured debt, providing greater financial flexibility and low asset encumbrance for the benefit of unsecured noteholders. Liquidity remains solid with sufficient bank credit availability of ~$2.4 billion and $230.3 million of unrestricted cash and cash equivalents set against $311 million of notes due within the next two years and total unfunded commitments of $1.0 billion at 1Q25.

Counterbalancing North Haven’s credit strengths are the company’s limited operating history offset by the long tenure of its management in private credit, the relatively illiquid investments, retained earnings constraints as a regulated investment company ("RIC"), and an uncertain economic environment with high base rates, inflation, and geopolitical risk that could increase non-accruals.

North Haven Private Income Fund LLC is a New York based, externally managed, non-diversified, private, perpetual life, closed-end investment management company regulated as a business development company under the Investment Company Act of 1940. For tax purposes, the company has elected to be treated as a RIC. North Haven commenced operations on February 1, 2022. MS Capital Partners Adviser Inc. (“MS Capital” or “the Adviser”) is North Haven’s investment adviser. MS Capital is a wholly owned subsidiary of Morgan Stanley, a leading global investment bank. North Haven is not a subsidiary nor consolidated with MS. Morgan Stanley has no obligation, contractual or otherwise, to financially support North Haven. North Haven’s obligations are neither MS’ obligations nor are they guaranteed by MS, and MS has no history of financially supporting any MS BDC even during periods of financial distress.

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 higher leverage metrics. A prolonged downturn in the U.S. economy with negative impact on North Haven’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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