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S&P downgrades Hercules Capital on lower asset coverage requirement

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S&P downgrades Hercules Capital on lower asset coverage requirement

S&P Global Ratings downgraded both its issuer credit rating and senior unsecured debt rating on Hercules Capital Inc. to BB+ from BBB-, after the specialty finance company's board approved to lower the asset coverage ratio to 150% from 200%.

The outlook is stable, which reflects the rating agency's expectation that the company "increases debt to adjusted total equity to 0.95x-1.25x, continues its strong investment performance, and maintains its focus on venture growth tech and life sciences companies."

S&P Global Ratings is unlikely to upgrade the ratings on the company in the next 12 months. The rating agency could lower the ratings if portfolio performance significantly deteriorates or if portfolio leverage increases above 1.5x.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found here.