00:00It's Benzinga bringing Wall Street to Main Street. Moody's ratings downgraded FS KKR Capital Corp
00:05to BAW 1 from BAW 3, moving the private credit fund into junk status, citing worsening asset
00:11quality and rising bad loans. Non-accrual loans reached 5.5% of total investments at the end of
00:172025. Moody's said the fund's asset quality challenges have weakened profitability and
00:22eroded net asset value relative to peers. The fund reported a net loss of $114 million in the
00:29fourth quarter and $11 million in net income for 2025. Shares fell 4% and are down more than 30
00:36%
00:36this year. FSK uses borrowed money to boost returns, so the downgrade may raise borrowing costs and
00:42reduce future returns. Moody's also cited higher leverage, more payment-in-kind loans, and lower
00:47first lien exposure. Software loans made up 16.4% of total exposure. For all things money, visit
00:54benzinga.com.
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