KBRA assigns a rating of BBB to Franklin BSP Capital Corp's ("FBCC" or "the company") $300 million, 6.00% senior unsecured notes due 2030. The rating Outlook is Stable. The proceeds will be used to repay existing indebtedness.

Key Credit Considerations

The rating and Outlook are supported by FBCC’s affiliation with Franklin Templeton, a leading global asset manager with ~$1.6 trillion in AUM as of July 31, 2025, as well as FBCC's ties to Franklin Templeton's wholly owned subsidiary, Benefit Street Partners ("BSP"), a credit platform with ~$79 billion in AUM as of May 31, 2025. The credit platform includes a ~$23 billion direct lending platform that provides SEC exemptive relief to co-invest among BSP affiliates and enhances scale in the competitive private credit environment. The rating is also supported by FBCC's diversified ~$4.1 billion investment portfolio, comprised of 146 companies across 16 industries, excluding investments in JVs, mostly first lien senior secured loans (76.3%, and 91.9% when looking through to the JV, Post Road Equipment Finance, and Siena Capital) to middle market companies as of June 30, 2025. The top three portfolio sectors, exclusive of investments in JVs, are Business Services (15.8%), Financials (15.5%), and Healthcare (14.4%). Non-accrual loans as a percent of total investments at cost and FV were 3.0% and 1.8%, respectively, an increase year-over-year from 2.3% and 1.5%, respectively, due principally to the addition to non-accrual status of a sizeable position in a healthcare portfolio company; however, the ratio of non-accrual investments to total investments remains consistent with peers with seasoned portfolios.

Further supporting the rating is FBCC’s strong access to capital markets, backed by a diversified funding base that includes a secured bank facility, SPV asset facilities, and senior unsecured debt. As of June 30, 2025, the company’s liquidity was adequate with available credit lines and cash and cash equivalents of $640.4 million, including $535.1 million of credit line availability and $105.3 million of unrestricted cash and cash equivalents, compared with $300 million of unsecured debt due within two years (March 2026) and unfunded portfolio company commitments of $622.9 million. Most commitments are subject to performance tests and/or Adviser approval. Unsecured debt to total debt outstanding was 30.5% as of June 30, 2025, with the new issuance repaying upcoming maturities. FBCC’s gross and net leverage (when including preferred equity as debt) are 1.27x and 1.21x, respectively, near FBCC's target net leverage range of 1.10x-1.20x. The asset coverage ratio is 178%, providing a 19% cushion above the 150% regulatory minimum.

Strengths are counterbalanced by the relatively illiquid investments and retained earnings constraints as a RIC, as well as an uncertain economic environment with high base rates, inflation, and geopolitical risks.

Franklin BSP Capital Corporation is a non-traded externally managed non-diversified investment management company regulated as a business development company under the Investment Company Act of 1940. The company has elected to be treated as a RIC. The company is managed by Franklin BSP Capital Adviser L.L.C., an affiliate of Benefit Street Partners, which is a wholly-owned subsidiary of Franklin Templeton.

Rating Sensitivities

The rating is unlikely to be upgraded in the medium term. The Outlook could be revised to Negative, or the rating could be downgraded, if there is a significant downturn in the U.S. economy that has a negative impact on earnings performance, asset quality, and leverage. Other unexpected asset quality deterioration, a rise in leverage metrics, or a significant change in senior management could also pressure the rating.

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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: 1011055

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