Formed in 2009, FS KKR Capital Corp. (NYSE: FSK) (“the company”) is a closed-end, externally managed BDC that provides capital primarily in the form of senior secured loans, largely to upper-middle market companies both in the U.S. and non-U.S., as well as a substantial position in asset-based finance loans. The company has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) for federal income tax purposes.
FSK is externally managed by FS/KKR Advisor, LLC (“Adviser”), a 2018 partnership between Future Standard and KKR Credit.
Key Credit Considerations
The rating downgrade reflects a sustained deterioration in FSK’s credit profile, driven by recently elevated realized and unrealized losses and a material increase in non-accrual investments, pressuring net asset value (NAV) and increasing regulatory leverage above the company’s target of 1.0x-1.25x. Total realized and unrealized losses…
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