Moody's assigns MidCap Ba3

Moody's Investors Service said it assigned a first-time Ba3 long-term corporate family rating and a first-time long-term senior unsecured rating of B1 to MidCap Financial Issuer Trust, a wholly owned subsidiary of MidCap Finco Intermediate Holdings Ltd., a commercial lender managed by Apollo Global Management, Inc.

“Today's rating action follows MidCap's announcement that MidCap Financial would issue $825 million in senior unsecured notes maturing in 2028. The notes are guaranteed by MidCap,” Moody’s said in a press release.

“MidCap Financial's Ba3 CFR reflects its ba3 stand-alone assessment, which is supported by the firm's solid earnings profile stemming from a diversified investment portfolio, adequate capitalization, a history of low loan losses, and the capabilities and management expertise of Apollo. These credit strengths are balanced by the credit challenges stemming from a high reliance on secured sources of funding, which carries refinancing risk,” the agency said.

The one notch difference between the long-term unsecured rating and the CFR reflects MidCap’s obligations under its recourse bilateral bank facilities, which rank senior to the unsecured notes, Moody’s said.

The outlook is stable, indicating the expectation that MidCap will continue reporting solid earnings and capitalization, along with stable asset quality metrics and adequate liquidity in the next 12-18 months, the agency said.

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