BlackRock TCP Capital Corp.’s decision to sell nearly half of its debt portfolio offers a timely case study in the importance of credit quality, leverage and liquidity as private credit becomes a larger part of individual investor portfolios.

The publicly traded business development company recently completed the sale of a $523 million portfolio of loans to a continuation vehicle backed by Pantheon. The transaction represented approximately 48% of TCPC’s debt investment portfolio before the sale and is expected to reduce the BDC’s net leverage from 1.38x to approximately 0.4x. TCPC retained a 5% interest in the continuation vehicle.

BlackRock described the transaction as an acceleration of TCPC’s portfolio repositioning that would reduce leverage, enhance liquidity and create additional capacity for new investments. The sale follows a period in which the BDC has been working through legacy credit issues and reducing its investment portfolio. TCPC reported that non-accrual investments represented 7.6% of the portfolio at cost as of March 31, 2026, while net asset value had declined to $6.72 per share from $7.07 at year-end 2025.

While TCPC is exchange-listed and therefore falls outside the nontraded BDC market, its experience raises issues that are also relevant when evaluating nontraded private credit vehicles.

Credit quality and manager selection remain critical. Private credit encompasses loans to thousands of companies across different industries, vintages and risk profiles, making the performance of individual managers and portfolios potentially quite different. BlackRock has noted that broader BDC non-accrual rates remain below their 10-year averages, based on Cliffwater data covering nearly 20,000 loans across publicly traded, nontraded and private BDC portfolios. That suggests problems within an individual portfolio should not necessarily be viewed as evidence of broad private credit deterioration.

TCPC nevertheless demonstrates what can happen when individual credits weaken. As loans move to non-accrual, undergo restructurings or are ultimately sold below their previous carrying values, both investment income and NAV can be affected. For advisors evaluating nontraded BDCs, trends in non-accruals, realized and unrealized losses and changes in portfolio valuations can therefore provide important information about underlying credit performance.

Leverage deserves similar attention. The TCPC transaction is expected to dramatically reduce the fund’s leverage and provide additional capacity to originate new loans. Nontraded BDCs also use borrowing to enhance their investment capacity, making leverage ratios—and changes in those ratios—an important component of fund analysis. Higher leverage can potentially enhance returns when investments perform as expected, but it can also magnify the effect of credit losses.

Liquidity adds another dimension for nontraded vehicles. Unlike TCPC, whose shares trade on an exchange, perpetual-life nontraded BDCs generally provide investors with limited liquidity through periodic share repurchase programs. Those programs typically restrict the amount of shares a fund will repurchase during any given quarter.

That distinction has attracted increased attention in 2026. HPS Corporate Lending Fund, a perpetually nontraded BDC now part of BlackRock’s private credit platform, received repurchase requests exceeding its 5% quarterly repurchase framework during the first quarter. Requests subsequently reached approximately 13.3% of outstanding shares for the second-quarter repurchase period, while the fund again offered to repurchase 5%.

BlackRock Private Credit Fund (BDEBT), another nontraded BDC, also received repurchase requests modestly above its quarterly limit during the same period. These events do not indicate that the funds lacked sufficient assets to meet their obligations; the repurchase limits are a structural feature designed in part to match the long-term nature of the underlying private loans with the liquidity offered to investors. They do, however, reinforce the importance of understanding the difference between a fund’s reported liquidity and the liquidity available to individual shareholders.

TCPC’s portfolio restructuring should not be interpreted as evidence that BlackRock’s nontraded BDCs face the same credit issues. The funds hold separate portfolios, and there is no indication that BDEBT, for example, is undertaking a comparable portfolio restructuring. As of June 30, 2026, BlackRock reported that BDEBT remained predominantly invested in directly originated senior-secured corporate debt.

Instead, TCPC provides a useful illustration of why evaluating a private credit investment involves more than looking at its distribution yield or recent return. Credit quality, loan vintage, non-accruals, portfolio valuation, leverage and liquidity can all influence outcomes—and those characteristics can vary substantially from one BDC to another, even when the vehicles operate within the same broader asset management organization.

As private credit continues to expand among individual investors, understanding those differences may become increasingly important to advisors determining which vehicles—and which managers—are appropriate for client portfolios.

Sources

• BlackRock TCP Capital Corp. — Q2 2026 Results and $523 Million Portfolio Sale
• BlackRock TCP Capital Corp. — Q1 2026 Financial Results
• BlackRock — BlackRock Private Credit Fund (BDEBT)
• BlackRock — BDEBT Prospectus
• HPS Corporate Lending Fund — Share Repurchase Information
• BlackRock — Private Credit Defaults: The Data Behind the Headlines
• Reuters — Private Credit Redemption and Liquidity Pressures