BlackRock TCP Capital Is Risky But May Prove Profitable
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BlackRock TCP Capital (TCPC) faces risks due to low dividend coverage, elevated non-accruals, and significant debt maturities. However, its discounted valuation limits downside risk. The company's first-lien debt orientation and floating rate structure make it sensitive to interest rate changes, impacting net investment income (NII) and dividend per share (DPS) coverage. Despite potential DPS cuts, TCPC's yield may still be attractive for investors with a reasonable yield-on-cost.
January 27, 2025 | 3:30 pm
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BlackRock TCP Capital faces risks from low dividend coverage and significant debt maturities, but its discounted valuation limits downside risk. Interest rate sensitivity affects NII and DPS, with potential DPS cuts. Yield may still attract investors.
TCPC's financial risks are balanced by its discounted valuation, which limits downside risk. The company's sensitivity to interest rates affects its NII and DPS, potentially leading to DPS cuts. However, the yield may still be attractive to certain investors, resulting in a neutral short-term impact.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100