Rating constraints specific to BKCC include weaker-than-peer credit performance since inception, a higher focus on junior debt investments compared to peers, current elevated exposure to equity investments, and the management team's more limited experience running a BDC.
Fitch believes that BKCC's affiliation with the broader BlackRock platform enhances the BDC's access to investment resources, deal flow, and funding.
During the first nine months of 2017, BKCC recorded net realized losses representing approximately 5.8% of the average portfolio, at fair value, which was above the peer average.
30, 2017, BKCC's exposure to oil and gas investments accounted for 8.5% of the investment portfolio at fair value, which is above the rated BDC peer average and up from 4.7% at YE16.
BKCC's core operating earnings faced increased pressure in 2017, driven by overall market dynamics and a decline in yielding investments due to portfolio challenges.
30, 2017, BKCC deployed approximately $600 million into new investments under the new management team, of which 98% are interest or dividend generating.
Fitch views BKCC's low leverage as appropriate to provide a cushion for potential valuation movements, specifically in oil and gas investments, while access to the equity markets remain uncertain.
Despite BKCC's senior focus, the yield on its income-producing portfolio, at cost, was higher than the peer average, which Fitch believes could be indicative of a higher-risk portfolio.
In October 2014, BKCC, along with Gordon Brothers Group, established Gordon Brothers Finance Company (GBFC), a commercial finance company with $324.8 million in assets at Sept.
30, 2015, oil and gas investments accounted for 10.3% of BKCC's portfolio on a fair value basis, which was the third highest among rated peers.
Since cutting its dividend in May 2014, a move deemed prudent by Fitch, BKCC has maintained strong dividend coverage.
BKCC's liquidity profile remains sufficient with $7.2 million of balance sheet cash and $327.75 million of available capacity under its senior secured credit facility, subject to borrowing base requirements, at Sept.