Key Takeaways
- • KBRA assigned an A- rating with a Stable Outlook to MidCap Financial Issuer Trust's $500 million 7.050% senior unsecured notes due November 15, 2029, per a Business Wire release.
- • Proceeds from the notes will be used to repay senior secured debt, and MidCap FinCo Intermediate LLC guarantees the debt.
- • The rating reflects MidCap's strategic relationship with Apollo Global Management, which manages over $1 trillion in AUM, and Apollo, Athene and affiliates together own about 50% of the company.
- • Pro-forma total assets fell to $10.7 billion from $15.1 billion after a September 2026 restructuring that moved about $4.3 billion of CLO-related debt into a separate entity.
- • Pro-forma unencumbered assets to senior unsecured debt stood at 1.46x against a 1.25x target, and net debt to adjusted tangible equity was 2.13x against a 2.5x financial policy ceiling.
Summary
KBRA has assigned a rating of A- to MidCap Financial Issuer Trust's $500 million 7.050% senior unsecured notes due November 15, 2029, with a Stable Outlook, according to the rating agency's Business Wire announcement. MidCap Financial Issuer Trust is a wholly-owned subsidiary of MidCap FinCo Intermediate LLC, which serves as guarantor. The company, headquartered in Bethesda, Maryland, has operated since 2008 and focuses on middle-market specialty finance. The proceeds will be used to repay senior secured debt.
KBRA cites MidCap's strategic relationship with Apollo Global Management (NYSE: APO), which KBRA describes as providing access to an platform with more than $1 trillion in assets under management, including about $850 billion of credit-related AUM as of June 30, 2026. Apollo, Athene Holding Ltd and other Apollo affiliates together own roughly 50% of the company. MidCap serves as Apollo's primary direct origination platform in the private middle market, with more than 560 borrower relationships and 500 sponsor relationships. Committed capital totaled $62 billion as of June 30, 2026, including investments from Apollo vehicles and third-party capital managed by Apollo as a registered investment adviser. KBRA also noted a seasoned senior management team averaging over 21 years of experience working together.
In September 2026, MidCap completed a previously announced restructuring that placed its securitization-dependent businesses, mostly its collateralized loan obligations with an outstanding balance of about $4.3 billion, into a separate entity. On a pro-forma basis as of June 30, 2026, total assets declined to $10.7 billion from $15.1 billion. The top three asset classes were 47% leveraged loans, 23% asset-based loans and 11% real estate.
KBRA highlighted reasonable earnings driven by net interest income and historically low impairment levels across the credit cycle. Pro-forma unencumbered assets to senior unsecured debt was 1.46x, above the company's 1.25x target, and net debt to adjusted tangible equity was 2.13x, expected to remain below the 2.5x financial policy when junior subordinated notes are treated as 50% debt and 50% equity. The additional senior unsecured issuance supports MidCap's goal of reducing secured debt and increasing unencumbered collateral.
KBRA identified risks including investment in illiquid non-investment-grade debt and a somewhat elevated non-accrual rate as of June 30, 2026, with potential for further non-accruals in an uncertain environment of elevated interest rates, inflationary pressures and geopolitical risk. The agency noted the portfolio is primarily first-lien senior secured loans. Given the Stable Outlook, an upgrade is not expected over the medium term, and downward pressure could emerge if portfolio performance materially underperforms expectations or asset quality deteriorates.
KBRA cites MidCap's strategic relationship with Apollo Global Management (NYSE: APO), which KBRA describes as providing access to an platform with more than $1 trillion in assets under management, including about $850 billion of credit-related AUM as of June 30, 2026. Apollo, Athene Holding Ltd and other Apollo affiliates together own roughly 50% of the company. MidCap serves as Apollo's primary direct origination platform in the private middle market, with more than 560 borrower relationships and 500 sponsor relationships. Committed capital totaled $62 billion as of June 30, 2026, including investments from Apollo vehicles and third-party capital managed by Apollo as a registered investment adviser. KBRA also noted a seasoned senior management team averaging over 21 years of experience working together.
In September 2026, MidCap completed a previously announced restructuring that placed its securitization-dependent businesses, mostly its collateralized loan obligations with an outstanding balance of about $4.3 billion, into a separate entity. On a pro-forma basis as of June 30, 2026, total assets declined to $10.7 billion from $15.1 billion. The top three asset classes were 47% leveraged loans, 23% asset-based loans and 11% real estate.
KBRA highlighted reasonable earnings driven by net interest income and historically low impairment levels across the credit cycle. Pro-forma unencumbered assets to senior unsecured debt was 1.46x, above the company's 1.25x target, and net debt to adjusted tangible equity was 2.13x, expected to remain below the 2.5x financial policy when junior subordinated notes are treated as 50% debt and 50% equity. The additional senior unsecured issuance supports MidCap's goal of reducing secured debt and increasing unencumbered collateral.
KBRA identified risks including investment in illiquid non-investment-grade debt and a somewhat elevated non-accrual rate as of June 30, 2026, with potential for further non-accruals in an uncertain environment of elevated interest rates, inflationary pressures and geopolitical risk. The agency noted the portfolio is primarily first-lien senior secured loans. Given the Stable Outlook, an upgrade is not expected over the medium term, and downward pressure could emerge if portfolio performance materially underperforms expectations or asset quality deteriorates.
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