Main Street Capital Corp.

The stable outlook reflects Main Street Capital Corp.'s strong capital position, track record of good performance, and diverse funding sources. Over the next 12-24 months--despite the possibility of a shallow recession--we expect the company will operate with debt to adjusted total equity (ATE) of 1.0x-1.5x, cushion to the minimum 150% asset coverage ratio, and sufficient liquidity. We could lower the ratings in the next 12-24 months if: Debt to ATE exceeds 1.5x, The regulatory asset coverage ratio declines to 165%, Asset quality or earnings materially weaken, or The company significantly increases its equity investments (on a cost basis). An upgrade is unlikely over the next 12 months. Houston-based Main Street is a specialty finance company that primarily provides long-term debt

...Our ratings on Main Street Capital Corp. reflect the company's low leverage, long record of good performance, and diversity of funding sources. On the other hand, the ratings are limited by elevated nonaccruals and S&P Global Ratings' view that the company's investments in illiquid assets, such as the equity of lower middle-market (LMM) companies, could constrain financial flexibility in adverse markets....

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