KBRA Assigns Rating to HPS Corporate Capital Solutions Fund's $350 Million Senior Unsecured Notes
KBRA assigns a rating of BBB to HPS Corporate Capital Solution Fund's ("HCAP" or "the company") $150 million 5.860% senior unsecured notes due August 13, 2028 and $200 million 6.200% senior unsecured notes due August 13, 2030. The rating Outlook is Stable. The proceeds will be used for to repay indebtedness, to make investments in accordance with HCAP's investment strategy and policies and for general corporate purposes.
Key Credit Considerations
The rating is supported by HCAP's ties to HPS Investment Partners, LLC ("HPS's" or "the platform"), an alternative credit manager with approximately $157 billion of assets under management (AUM) as of 1Q25. HCAP benefits from HPS's sourcing through well developed sponsor/non-sponsor relationships, underwriting, portfolio management, capital markets, and SEC exemptive relief to co-invest alongside certain other affiliated entities. The company is led by an experienced team with a long track record working within the private debt markets with founding partners having an average of 30+ years of industry experience. Furthermore, as of March 31, 2025, the company had a diversified $1.3 billion investment portfolio at fair value (FV) consisting of 131 portfolio companies in sectors the company believes are less cyclical - Software and Computer Services (17.7%), Health Care Providers (7.9%), and Pharmaceuticals and Biotechnology (7.5%). As of March 31, 2025, the investment portfolio is comprised mostly of senior secured first lien loans (91%) with a weighted average portfolio company EBITDA of $194 million. As of March 31, 2025, the company had two portfolio companies on non-accrual comprising 0.8% and 1.0% of total investments at FV and cost, respectively.
As of March 31, 2025, HCAP maintained gross leverage of 0.65x, lower than its target leverage range of a conservative 0.75x to 1.0x. HCAP's target leverage is somewhat lower than its peers, but appropriate due to its target portfolio mix which includes a portion of junior capital and, to a lesser extent, opportunistic credit. As a perpetual-life BDC, HCAP currently raises equity monthly and offers to repurchase shares on a quarterly basis, subject to the discretion of the company's Board of Trustees. From HCAP's inception to March 31, 2025, the company raised ~$819 million of equity, including reinvested distributions, and had $23.5 million of share repurchases. As a newly organized entity, HCAP has limited funding profile with one $725 million revolving credit facility at 1Q25. However, the funding profile was strengthened in 2Q25 with an increase in its committed bank facility to $900 million and an accordion provision allowing increases to the total facility size up to $1.35 billion. With the addition of the proposed notes offering and anticipated repayment of secured borrowings, the company's financial flexibility increases and reduces asset encumbrance for the benefit of the unsecured noteholders. As of 1Q25, HCAP had adequate liquidity with $197 million of available credit and $16.7 million of unrestricted cash and cash equivalents with no near-term maturities and $159 million of unfunded commitments.
Counterbalancing HCAP's credit strengths are the company's limited operating history (primarily offset by the long tenure of its management team), unseasoned investment portfolio, relatively illiquid investments, retained earnings constraints as HCAP intends to elect to be treated for federal income tax purposes as a regulated investment company ("RIC"), and uncertain economic environment with high base rates, inflation, and geopolitical risk.
Formed in August 2023 as a Delaware statutory trust, HPS Corporate Capital Solutions Fund is a perpetual-life, externally managed, non-diversified closed-end investment management company regulated as a Business Development Company ("BDC") under the Investment Company Act of 1940. The company commenced operations in April 2024. HCAP is externally managed by HPS Advisors, LLC, a wholly-owned subsidiary of HPS Investment Partners, LLC. In December 2024, BlackRock Inc. (NYSE:BLK) entered into an agreement to acquire HPS Investment Partners, LLC. The acquisition was completed on July 1, 2025. HPS has 780+ employees, including 250+ investment professionals working from 14 global offices as of March 31, 2025.
Rating Sensitivities
Given the Stable Outlook, a rating upgrade is not expected in the near to medium term. A rating down downgrade and/or Outlook change to Negative could be considered if there is a significant downturn in the U.S. economy with negative impact on HCAP's earnings performance, asset quality, and earnings. A significant change in senior management and/or risk management policies could also lead to negative rating action.
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Methodologies
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: 1010236
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Analytical Contacts
Teri Seelig, Managing Director (Lead Analyst)
+1 646-731-2386
[email protected]
Kevin Kent, Director
+1 301-960-7045
[email protected]
Business Development Contact
Constantine Schidlovsky, Senior Director
+1 646-731-1338
[email protected]