Moody’s rates Oaktree Strategic Baa3

Moody's Investors Service said it assigned a first-time Baa3 long-term issuer rating to Oaktree Strategic Credit Fund (OSCF), a business development company.

The outlook is stable.

“The Baa3 issuer rating assigned to OSCF reflects the company's conservative leverage target of 0.85x-1x debt to equity, which translates into an expected asset coverage ratio (ACR) cushion of at least 33%, based on minimum required coverage of 150%. The company's targeted leverage range is below the large majority of rated BDC peers, which typically target a debt-to-equity range of 0.9x-1.25x. Furthermore, the median ACR cushion for the rated sector was 22% as of Dec 31, 2022, well below where OSCF's cushion would be, even if it were to operate at the upper end of its target leverage range,” Moody’s said in a press release.

The agency said the outlook reflects the position that OSCF’s portfolio will continue to grow at a measured pace.

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