KBRA Releases Research – Private Credit: Subscription Line Performance Still Shines

KBRA releases updated research that examines the resilience of its ratings for subscription facilities, a fund finance product introduced in the 1990s that is estimated to have grown to $850 billion globally. KBRA-rated subscription facilities have also grown at an accelerated pace since we rated our first facility in 2018. KBRA has assigned ratings or provided credit assessments on 181 subscription facilities through year-end 2024, with issuance volume totaling $132 billion and rated/assessed debt exposure totaling $46 billion. Since our last report on subscription facilities in April 2023, both the number and dollar volume of KBRA-rated/assessed facilities have grown more than fourfold.

In this KBRA report, we provide an update on KBRA’s rated portfolio in terms of both issuance trends and rating performance. While some market participants consider subscription facilities to be a “risk-free” asset class, given minimal defaults over 30 years, KBRA regards this view as overly simplistic and notes that certain structural and legal considerations should be carefully evaluated for these facilities. This KBRA report outlines these considerations and examines recent market trends.

Click here to view the report.