KBRA Affirms Ratings for Monroe Capital Income Plus Corporation

KBRA affirms the issuer and senior unsecured debt ratings of BBB- for Monroe Capital Income Plus Corporation ("MCIP" or "the company"). The rating Outlook is Stable.

Key Credit Considerations

The ratings are supported by MCIP’s ties to the $23.8 billion Monroe Capital private credit platform, along with SEC exemptive relief to co-invest in directly negotiated loans among Monroe Capital affiliated funds. Monroe Capital’s solid management team has a long track record in the private credit markets, with investment committee members averaging more than 30 years of experience. The platform provides a 22-year history of strong credit performance through economic cycles.

Also supporting the ratings is MCIP’s well-diversified ~$6 billion investment portfolio comprised largely of senior secured first lien loans (85.9%, including unitranche) across 27 sectors, with most portfolio companies in the lower-middle market with EBITDA up to $35 million. The top three portfolio sectors are Business Services (22.5%), Health Care and Pharmaceuticals (15.5%), and High-Tech Industries (13.3%). Portfolio company leverage and interest coverage remain relatively conservative at 4.1x and 2.8x, respectively. Non-accrual investments remained manageable at 2.9% of cost and 1.2% of fair value as of June 30, 2026, though levels have approximately doubled since YE 2024 and contributed to negative valuation marks during 2025.

The company has a diversified funding profile comprised of a secured revolving bank facility, SPV asset facilities, unsecured senior debt, and asset-backed securitizations. As of June 30, 2026, MCIP had $404.1 million of available committed bank facility capacity and $34.6 million of cash and equivalents, compared with no near-term unsecured debt maturities and approximately $1 billion of unfunded commitments, a significant portion of which is not expected to be drawn. Liquidity is further supported by portfolio repayments and a more liquid BSL sleeve, which management targets at 5%-8% of the loan portfolio. Subsequent to quarter-end, debt repayments and asset sales increased pro forma undrawn borrowing-base capacity to approximately $659 million, while total debt declined materially.

Counterbalancing these strengths is the company's elevated leverage over recent periods. As of June 30, 2026, MCIP’s gross leverage was relatively high at 1.27x, above its long-term target of 1.00x-1.10x and higher than many perpetual-life BDC peers, reflecting, in part, the timing of a recent $335 million portfolio acquisition and shareholder redemptions. However, asset coverage remained adequate at 178%, providing a 19% cushion over the regulatory minimum, and management expects leverage to decline to within its target range within the near-term. With elevated redemption requests during the first half of 2026, MCIP has continued to meet shareholder redemption requests up to its quarterly 5% limit.

Further counterbalancing strengths is MCIP’s funding profile that remains predominantly secured, with senior unsecured debt representing only 17.6% of total debt, as well as the potential liquidity demands associated with unfunded commitments and shareholder redemptions. Additional risks include the company’s largely illiquid investment portfolio, retained earnings constraints as a regulated investment company (RIC), and an uncertain economic environment characterized by elevated base rates and geopolitical risks.

MCIP is an externally managed, closed-end, non-diversified investment management company that has elected to be treated as a Business Development Company (BDC) 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 company taxable income. The company was formed as a Maryland corporation in January 2019 when it commenced operations. The company is managed by Monroe Capital BDC Advisors, LLC, an affiliate of Monroe Capital LLC. Monroe Capital LLC focuses almost exclusively on private credit.

Rating Sensitivities

Given the Stable Outlook, a rating upgrade is not expected over the medium term. Negative rating pressure is possible if there is material deterioration in performance, including a significant increase in non-accrual investments, a significant and sustained rise in leverage, substantial and sustained realized and unrealized losses, or sustained pressure on liquidity. An increased focus on riskier investments, a change in the current management structure, and/or a change in strategy or risk management that negatively impacts credit metrics could also pressure ratings.

To access ratings and relevant documents, click here.

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