Shares of BlackRock TCP Capital (NASDAQ:TCPC) fell 15% after the business development company revealed a steep 19% drop in net asset value per share for the fourth quarter of 2025.
In a preliminary filing with the SEC, the company said NAV per share is expected to land between $7.05 and $7.09 as of December 31, 2025, compared with $8.71 at the end of September. Management said the decline was driven mainly by “issuer-specific developments” during the quarter.
According to the filing, just six portfolio holdings accounted for roughly 67% of the total NAV reduction, or about $1.11 per share. The largest negative contributors were Edmentum, Razor, SellerX, HomeRenew/Renovo, Hylan and InMobi.
Asset quality also deteriorated during the period. BlackRock TCP Capital said debt investments on non-accrual status increased to about 4.0% of the portfolio at fair value and 9.6% at cost, up from 3.5% and 7.0%, respectively, in the prior quarter.
Leverage moved higher as well, with net regulatory leverage rising to around 1.45x from 1.20x previously, implying a total debt-to-equity ratio of roughly 1.74x. The company said it plans to bring leverage down over time as it exits certain investments.
Net investment income for the quarter is expected to range between $0.24 and $0.26 per share, including approximately 10.9% of income paid in kind.
UBS analysts said the update could weigh on sentiment across alternative credit. “Even if the NAV decline is idiosyncratic, the disclosure will remind investors that credit normalization is underway, and non accrual rates will rise from today’s below trend levels. Given heightened near-term concerns, we expect alts to underperform broadly, with more acute pressure on those with greater exposure to direct lending.”
Separately, the company said its investment adviser has voluntarily agreed to waive one-third of its base management fee for the fourth quarter of 2025, a move expected to benefit shareholders by roughly $0.02 per share.