Another cockroach? Why a private-credit fund run by BlackRock is getting hammered

By Steve Goldstein

Fund says its net asset value has fallen by about 19%

A BlackRock fund invested in private credit was under pressure on Monday.

A private credit fund run by the world's largest asset manager declined sharply on Monday after revealing its net asset value will be marked down by nearly one-fifth.

Shares in BlackRock TCP Capital Corp. (TCPC), which invests in the private credits of "middle-market" companies worth between $100 million and $1.5 billion, slumped 15% after a late Friday filing to the Securities and Exchange Commission in which it revealed its net asset value for the fourth quarter will fall 19%.

The fund, which had $1.8 billion in assets at the end of the third quarter, was trading at $4.99, vs. the company's estimated NAV of between $7.05 and $7.09.

That decline, it said, "is primarily driven by issuer-specific developments during the quarter," naming the particular issues to blame as educational software firm Edmentum, Amazon aggregators Razor and SellerX, residential contractor HomeRenew, infrastructure services provider Hylan and mobile advertising firm InMobi.

The fund said it'll waive one-third of its base management fee for the quarter.

The private credit industry came under scrutiny last year - JPMorgan CEO Jamie Dimon famously warned of "cockroaches," as in you rarely just find one - after private-credit issuer bankruptcies by the auto supplier First Brands and subprime auto lender Tricolor. That said, the most recent reporting season for both Wall Street and regional banks didn't reveal any notable loan-loss provisions.

Investors already were wary of this BlackRock fund, and other so-called business-development companies- the TCP fund was down 37% over the last 52 weeks, even before the warning.

Jan van Eck, CEO of VanEck, in an interview with the Excess Return podcast, pointed out many funds went from trading at a 10% premium to NAV to a 10% discount.

The S&P BDC Index, which tracks funds including the Blue Owl Technology Finance Corp. (OTF) and Ares Capital Corp. (ARCC), has lost 15% over the last 52 weeks.

Shares of BlackRock (BLK) edged higher in opening trade.

-Steve Goldstein

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01-26-26 0932ET