Leading market position relative to other business development companies (BDCs) Strong historical underwriting track record and investment portfolio results. Largely unsecured funding profile with well-laddered maturities Well-diversified investment portfolio by industry and borrower Relatively high exposure to second-lien loans Predominately illiquid investments that may constrain financial flexibility in adverse market conditions The positive outlook reflects ARES Capital Corp.'s (ARCC) sustained strong operating results and further strengthening of its funding profile and financial flexibility over the last 12 months. We expect ARCC will gradually increase leverage to 1.0x-1.3x debt to adjusted total equity (ATE). At the same time, we expect ARCC will maintain a strong investment portfolio performance and solid operating results. We could raise the ratings in the next 12–18
