Fitch Ratings has assigned expected 'BBB-(EXP)' ratings to Nuveen Churchill Direct Lending Corp.'s (NCDL) Long-Term Issuer Default Rating (IDR), senior secured debt, and proposed senior unsecured debt issuance. The Rating Outlook is Stable, reflecting Fitch's confidence in NCDL's operational and financial profile. This rating acknowledges NCDL's access to investment resources from Churchill Asset Management and support from its parent company, Nuveen and TIAA.
The expected ratings are supported by NCDL's experienced management team, its focus on senior investments, strong portfolio diversification, solid asset coverage cushion, and sound liquidity. Fitch anticipates that unsecured debt will increase to at least 20% of total debt with the proposed issuance, and to 35% or more over the Outlook horizon, which is expected to enhance funding flexibility. NCDL's non-accruals stood at 0.6% of debt investments at fair value as of September 30, 2024, which is below the rated BDC peer averages.
NCDL's portfolio is heavily concentrated in first-lien debt investments, comprising 90.1% of the total portfolio at fair value as of 3Q24, exceeding the rated peer average of 77.5%. The company's par debt-to-equity ratio was 1.11x at 3Q24, with an asset coverage cushion of 21.0%, aligning with Fitch's 'bbb' category benchmark. Net investment income coverage of base dividends was 124.8% for the nine months ended September 30, 2024, indicating strong dividend sustainability.
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