Research Update: Main Street Capital Corp. Rating Lowered To 'BBB-' On COVID-19 Related Economic Impact; Outlook Stable

We expect the economic impact of the COVID-19 pandemic to result in increased credit losses, increased calls on liquidity to fund commitments, and adverse financing conditions for business development companies. In addition, Main Street Capital Corp.'s loans on nonaccrual status have also risen over the past year. As a result, we are lowering the issuer credit and senior unsecured debt ratings on the company to 'BBB-' from 'BBB'. The stable outlook reflects our expectation that the company will operate with total debt to adjusted total equity (ATE) of less than 1.0x, a substantial cushion to the minimum 200% asset coverage ratio, and debt (excluding Small Business Investment Co. [SBIC] debt) to reported equity below 0.85x. On March 24, 2020, S&P

...- We expect the economic impact of the COVID-19 pandemic to result in increased credit losses, increased calls on liquidity to fund commitments, and adverse financing conditions for business development companies. - In addition, Main Street Capital Corp.'s loans on nonaccrual status have also risen over the past year. - As a result, we are lowering the issuer credit and senior unsecured debt ratings on the company to '###-' from '###'. - The stable outlook reflects our expectation that the company will operate with total debt to adjusted total equity (ATE) of less than 1.0x, a substantial cushion to the minimum 200% asset coverage ratio, and debt (excluding Small Business Investment Co. [SBIC] debt) to reported equity below 0.85x....

Research Update