KBRA assigns ratings of BBB- to Monroe Capital Income Plus Corporation's ("MCIP" or "the company") $42 million, 6.20% senior unsecured notes due July 10, 2028, and its $161 million, 6.57% senior unsecured notes due July 10, 2030. The rating Outlook is Stable. Proceeds will be used to repay secured debt.

Key Credit Considerations

The ratings are supported by MCIP’s ties to the $20.7 billion Monroe Capital private credit platform, along with SEC exemptive relief to co-invest in all directly negotiated loans among Monroe Capital affiliated funds. Furthermore, Monroe Capital’s solid management team has a long track record working within the private credit markets, with investment committee members having an average of 33 years of experience. The Monroe Capital platform provides a 21-year history of strong credit performance through economic cycles. Also supporting the rating is MCIP’s well-diversified investment portfolio comprised largely of senior secured first lien loans (~89%, including unitranche) across 26 sectors, with most portfolio companies in the lower middle market with EBITDA up to $35 million. The top three portfolio sectors are considered generally less cyclical and are Business Services (20.2%), High Tech Industries (15.9%), and Healthcare & Pharmaceuticals (14.7%).

The company has a diversified funding profile comprised of a secured revolving bank facility, SPV asset facilities, unsecured senior debt, and securitizations. At 1Q25, the ratio of unsecured debt to total debt improves to ~27% (pro forma) from ~18%, increasing financial flexibility and unencumbering collateral for the benefit of unsecured noteholders. The company does not have a planned liquidity event but rather maintains a quarterly share repurchase program for its shareholders, offering up 5% of its outstanding common stock quarterly. Since inception through March 2025, the company raised more than $2.5 billion of equity and repurchased just $124.8 million of shares. As of March 31, 2025, the company had adequate liquidity of $756.1 million in available credit lines and $125.5 million in unrestricted cash set against ~$1 billion of unfunded commitments and no near-term debt maturities. In addition, a portion of the unfunded commitments is tied to covenants and transactions and is not expected to be drawn while additional equity capital is issued quarterly. As of March 31, 2025, the company’s gross leverage was 0.92x, which is within the company's conservative target leverage range of 0.9x-1.0x. Asset coverage is solid at 209% when considering its 150% regulatory asset coverage, providing the company a 39% cushion and the ability to withstand additional market volatility in a less favorable economic environment. Non-accruals remain relatively low at 1.7% of the investment portfolio at cost and 1.0% at fair value.

Counterbalancing the strengths are the potential risks related to MCIP’s illiquid assets, retained earnings constraints as a regulated investment company ("RIC"), and uncertain economic environment with high base rates, inflation, and geopolitical risks.

MCIP is an externally managed, closed-end, non-diversified investment management company that has elected to be treated as a Business Development Company (BDC) under the 1940 Act and as a RIC, which, among other things, must distribute to its shareholders at least 90% of the company's investment company taxable income. The company was formed as a Maryland corporation in January 2019 when it commenced operations. The company is managed by Monroe Capital BDC Advisors, LLC, an affiliate of Monroe Capital LLC, which had $20.7 billion of assets under management, as of March 31, 2025. Monroe Capital LLC focuses almost exclusively on private credit.

Rating Sensitivities

Given the Stable Outlook, a rating upgrade is not expected over the medium term. However, positive rating momentum could be achieved over the longer term if there is little or no credit deterioration in the company's investment portfolio, leverage remains near the target range, and senior secured first lien loans remain a high proportion of the company's total investments. Rating pressure is possible if a prolonged downturn in the U.S. economy has a material impact on performance, including increased non-accruals and a significant rise in leverage. An increased focus riskier investments or a change in the current management structure and/or a change in strategy and risk management that negatively impact credit metrics could also pressure ratings.

To access ratings and relevant documents, click here.

Methodologies

• Financial Institutions: Finance Company Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1009901

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