(Bloomberg) — A personal credit score fund collectively managed by Future Normal and KKR & Co. plunged after chopping its dividend greater than forecast, as earnings declined amid decrease rates of interest and losses from troubled investments.
FS KKR Capital Corp., a enterprise improvement firm that makes direct loans, tumbled as a lot as 18% Thursday, probably the most intraday since 2020. The BDC slashed its quarterly distribution to 48 cents a share from 70 cents, a deeper reduce than the 55 cents executives had beforehand signaled. About 3.4% of the portfolio, or roughly $440 million, was on non-accrual at year-end, which means the fund now not expects to gather curiosity on these investments, up from 2.9% three months earlier.
“Particular challenges related to a number of investments” weighed on outcomes, Chief Govt Officer Michael Forman stated in a press release.
On Thursday’s earnings name, administration stated they continue to be happy with the FS-KKR partnership and targeted on increasing the portfolio, responding to a query from Wells Fargo analyst Finian O’Shea concerning the BDC’s path ahead.
“The low hanging fruit there may be that we do have too many non-income producing property,” stated Dan Pietrzak, the fund’s chief funding officer.
In the course of the fourth quarter, loans to Dental Care Alliance, Gracent and Lionbridge Applied sciences had been positioned on non-accrual standing. So had been investments in AmeriVet Companions and Alacrity Options. Lenders together with KKR took management of Alacrity early final yr.
From Bloomberg Intelligence: FS KKR’s Restore Effort Faces New Hurdles
FS KKR additionally marked down its mortgage to software program firm Medallia to about 79 cents on the greenback, from 91 cents within the prior quarter.
–With help from Brian Chappatta.
Extra tales like this can be found on bloomberg.com