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 $21.6 billion Monroe Capital private credit platform, along with SEC exemptive relief to co-invest in all directly negotiated loans among Monroe Capital affiliated funds. Furthermore, Monroe Capital’s solid management team has a long track record working within the private credit markets, with investment committee members having an average of 33 years of experience. The Monroe Capital platform provides a 21-year history of strong credit performance through economic cycles. Also supporting the rating is MCIP’s well-diversified investment portfolio comprised largely of senior secured first lien loans (88.4%, including unitranche) across 26 sectors, with most portfolio companies in the lower middle market with EBITDA up to $35 million. The top three portfolio sectors are considered generally less cyclical and are Business Services (19.8%), High Tech Industries (15.4%), and Healthcare & Pharmaceuticals (13.4%).

The company has a diversified funding profile comprised of a secured revolving bank facility, SPV asset facilities, unsecured senior debt, and securitizations. The company does not have a planned liquidity event but rather maintains a quarterly share repurchase program for its shareholders, offering up 5% of its outstanding common stock quarterly. Since inception through June 2025, the company raised ~$2.7 billion of equity and repurchased just ~$117 million of shares. As of June 30, 2025, the company had $239.6 million in available credit lines and $53.3 million in unrestricted cash and cash equivalents set against ~$1.2 billion of unfunded commitments and no near-term debt maturities. After the end of 2Q25, increased bank line capacity and unsecured issuances increased liquidity by ~$800 million, which will support ongoing asset growth. As of June 30, 2025, the ratio of unsecured debt to total debt increased from 18% to ~27% pro forma with the unsecured issuance of $203 million. The additional unsecured debt will increase financial flexibility and unencumber collateral for the benefit of unsecured noteholders. In addition, a portion of the unfunded commitments is tied to covenants and is not expected to be drawn while additional equity capital is issued quarterly. As of June 30, 2025, the company’s gross leverage was 1.08x (0.95x average during the second quarter). Asset coverage is solid at 193% when considering its 150% regulatory asset coverage, providing the company a 29% cushion and the ability to withstand additional market volatility in a less favorable economic environment. Non-accruals remain relatively low at 1.5% of the investment portfolio at cost and 0.8% at fair value.

Counterbalancing the strengths are mostly secured (~73%) funding profile, as well as the potential risks related to MCIP’s illiquid assets, retained earnings constraints as a regulated investment company ("RIC"), and uncertain economic environment with high base rates, inflation, 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. However, positive rating momentum could be achieved over the longer term if there is little or no credit deterioration in the company's investment portfolio, leverage remains near the target range, and senior secured first lien loans remain a high proportion of the company's total investments. Rating pressure is possible 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 riskier investments, a change in the current management structure, and/or a change in strategy and risk management that negatively impact credit metrics could also pressure ratings.

To access ratings and relevant documents, click here.

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