KBRA Affirms Ratings for Kayne Anderson BDC, Inc.

KBRA affirms the issuer and senior unsecured debt ratings of BBB for Kayne Anderson BDC, Inc. (NYSE: KBDC) ("the company"). The rating Outlook is Stable.

Key Credit Considerations

The ratings reflect KBDC’s diversified ~$2.2 billion portfolio, consisting almost entirely of senior secured first lien loans across 25 to 30 industries, focused on private U.S. middle market companies with a median EBITDA of $39 million (excluding watch list and opportunistic investments) as of March 31, 2026 (1Q26).

We view KBDC's portfolio as conservatively constructed and managed, noting the significant senior, first lien focus, with granular position sizes and industry concentrations limited. Portfolio strength is further demonstrated by low investment leverage (~4.4x) and favorable interest coverage (~2.4x) excluding watch list and opportunistic investments. That said, non-accruals have ticked up to 4.1% and 2.5% of cost and fair value, respectively, at 1Q26 from 2.6% and 1.4% in the prior quarter reflecting idiosyncratic investment under performance. Reflected in the ratings is our expectation that non-accruals will remain contained over the near-to-medium term and that realized losses will not meaningfully impact KBDC’s leverage profile.

With the deployment environment somewhat subdued, leverage was 1.05x at 1Q26, remaining towards the lower end of KBDC’s 1.0x—1.25x target. Meanwhile, KBDC’s asset coverage ratio was 195%, providing a solid cushion to its 150% regulatory requirement. We expect the company to operate generally near the middle of its targeted leverage range given its ongoing rotation out of BSLs (expected to be complete over the next couple of quarters) and management's stated preference to operate conservatively in the current volatile operating environment.

KBDC’s funding profile has generally diversified to its expected form. The company’s funding mix is just over 24% unsecured which is within management’s targeted range of 20-30%, though over the longer-term we expect this to increase and be more in-line with rated peers. The company’s funding mix also includes two SPV asset facilities and a secured revolving credit facility. As of 1Q26, the company’s liquidity was solid with $537 million of credit line availability and $33 million of unrestricted cash and cash equivalents (including short-term investments) set against just $25 million of unsecured debt maturing in June 2027 and unfunded portfolio company commitments of $289 million. We note that of those commitments, $175 million are revolvers that can be drawn upon with the balance being delayed draw term loans where an event needs to happen in order for KBDC to be required to fund.

Rating Sensitivities

At their current level, ratings are considered well-positioned and an upgrade is not expected in the near-to-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 the rating.

To access ratings and relevant documents, click here.

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