Research Update: Ares Capital Corp. Upgraded To 'BBB' On Long Operating History And Strong Financial Flexibility; Outlook Stable

Year to date, Ares Capital Corp. (ARCC) has reported steady operating results while maintaining its strong market position, its strong financial flexibility, a diversified funding mix, and leverage below 1.3x. For the nine months ended Sept. 30, 2024, ARCC's payment-in-kind (PIK) income remained relatively unchanged, at roughly 15% of gross investment income. Loans on nonaccrual declined to about 1.8%. As a result, we raised our issuer credit rating and debt rating on ARCC to 'BBB' from 'BBB-'. The stable outlook reflects our expectation that, over the next 12-24 months, ARCC will continue to grow its portfolio, report steady operating performance with no material strain in asset quality, operate with leverage below 1.3x, and maintain its strong funding and financial flexibility

...- Year to date, Ares Capital Corp. (ARCC) has reported steady operating results while maintaining its strong market position, its strong financial flexibility, a diversified funding mix, and leverage below 1.3x. - For the nine months ended Sept. 30, 2024, ARCC's payment-in-kind (PIK) income remained relatively unchanged, at roughly 15% of gross investment income. Loans on nonaccrual declined to about 1.8%. - As a result, we raised our issuer credit rating and debt rating on ARCC to '###' from '###-'. - The stable outlook reflects our expectation that, over the next 12-24 months, ARCC will continue to grow its portfolio, report steady operating performance with no material strain in asset quality, operate with leverage below 1.3x, and maintain its strong funding and financial flexibility relative to peers....

Research Update