Fitch Ratings affirmed Fidus Investment Corporation's Long-Term Issuer Default Rating (IDR) at 'BBB-', with a Stable Outlook. Fitch also affirmed FDUS's secured revolving credit facility at 'BBB' and unsecured debt issuances at 'BBB-'. These ratings reflect the senior focus of FDUS's investment portfolio, its above-average asset coverage cushion, and a solid asset quality track record.
Fitch highlighted FDUS's consistent operating performance, solid funding flexibility with demonstrated access to public debt markets, and an experienced management team. The rating agency noted FDUS's increasingly senior portfolio, with senior secured debt investments making up 77% of the total portfolio at fair value in Q1 2025, an increase from 73.3% a year ago. This strategic shift towards senior secured debt is viewed favorably by Fitch.
The company's asset quality has been strong historically, with average net realized gains of 4.9% of the average portfolio at fair value from 2021-2024, which compares favorably to rated peers. Non-accruals were 0.9% and 4.2% of the portfolio on a fair value and cost basis, respectively, as of Q1 2025. FDUS's leverage, measured by par debt to equity, was 0.81x as of Q1 2025, implying an asset coverage cushion of 47.5%, which is well-above the rated peer average.
Unsecured debt represented 64.1% of FDUS's total debt as of Q1 2025, providing solid funding flexibility. Fitch expects FDUS to continue accessing unsecured debt markets to manage its debt maturity profile, including replacing $250 million in unsecured issuances maturing in 2026. Dividend coverage remains strong, with net investment income coverage of dividends declared at 122.8% in Q1 2025, above the rated peer average.
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