KBRA Publishes Ratings for Fidelity Private Credit Fund

KBRA publishes the issuer and senior unsecured debt ratings of BBB with a Stable Outlook for Fidelity Private Credit Fund ("FPCF" or "the company"). On January 31, 2025, KBRA assigned senior unsecured and issuer ratings of BBB with Stable Outlook on an unpublished basis.

Key Credit Considerations

The ratings and Stable Outlook are supported by FPCF's ties to Fidelity Diversifying Solutions LLC, the company's registered investment adviser and an affiliate of FMR LLC ("Fidelity" or "FMR"). Fidelity is an investment company with $5.8 trillion of total discretionary assets and 900+ investment professionals operating in 13 global sites. FPCF benefits from FMR's Levered Credit Platform, encompassing $851 billion of fixed income assets under management (AUM), $32 billion of which is leveraged loan AUM and $3.7 billion in direct lending as of September 30, 2024. The company and the Adviser have SEC exemptive relief to co-invest with certain affiliates of the Adviser and other managed affiliates. Furthermore, FMR provides robust expertise in corporate debt markets, strong loan sourcing, extensive research, sponsor and bank relationships and a vast client wealth channel. The senior management team has a long track record in the private debt markets with members having an average of 20+ years in the industry. The company maintains solid risk management practices enhanced by the FMR organization.

The ratings are further strengthened by its $1.36 billion of total investments at fair value (FV) comprising 105 portfolio companies across the middle market ($23 million median EBITDA), in generally less cyclical industries with a focus on senior secured first lien senior secured loans (94.8%) that are sponsor backed as of December 31, 2024. The top three sector concentrations are Health Care Services (14.5%), Application Software (11.3%), and Specialized Consumer Services (9.5%). The company's strict underwriting criteria is focused on a meaningful covenant package, low LTVs, appropriate fixed charge coverage, and moderate leverage. As a newly organized company, the portfolio remains unseasoned with no non-accruals and solid internal ratings with 98% of total investments at FV maintaining the company's two highest internal ratings. The company raised ~$919.8 million of equity since inception through March 1, 2025. FPCF has solid alignment with FMR and its employees with approximately 15% of the Class I shares owned by Fidelity and its employees. Leverage remains low at 0.78x at 4Q24, lower than its target range of 1.0 x to 1.25x , reflecting FPCF's strong capital raises and conservative capital deployment. The company has three bank facilities totaling $1.0 billion of commitments, of which ~$389 million was available. The company has no short-term debt maturities and had $321.7 million of unfunded commitments as of December 31, 2024. The company is expected to issue unsecured debt in the short-to-medium term to increase financial flexibility. As a perpetual BDC, the company offers tenders of up to 5% per quarter but is subject to Board approval. To date, redemptions have been insignificant. The company intends to maintain at least 10% of total investments in more liquid assets for additional liquidity reserved for redemptions.

Counterbalancing the credit strengths are the company's limited operating history, the relatively illiquid investments, retained earnings constraints as a Regulated Investment Company (RIC), 100% secured funding profile (expected to diversify), and an uncertain economic environment with high base rates, inflation, and geopolitical risks that could include non-accruals.

Fidelity Private Credit Fund is a Massachusetts-based, non-diversified, non-traded, perpetual-life closed-end investment management company. The company commenced operations on March 13, 2023, and is externally managed by Fidelity Diversifying Solutions LLC, a registered investment advisory limited liability company and an affiliate of FMR LLC. The company is regulated as a business development company (BDC) under the Investment Company Act of 1940, has elected to be treated as a RIC for tax purposes, and as such the company is required to distribute at least 90% of its taxable income to shareholders, obtain at least 90% of its income each fiscal year from dividends, interest, gains from the sale of stock or securities or similar sources, and meet certain asset diversification requirements at the end of each quarter.

Given the Stable Outlook, a rating upgrade is not expected in the medium term. A rating downgrade and/or Outlook change to Negative could be considered if management alters its stated company strategy by increasing its focus on riskier investments coupled with high leverage metrics. A prolonged downturn in the U.S. economy with negative impact on FPCF's earnings performance, asset quality, and leverage or a significant change in senior management and/or risk management policies could also lead to negative rating action.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

• Financial Institutions: Finance Company Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

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: 1008957

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