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HTGC's Baa2 Credit Rating Upgraded by Moody's, Outlook Stable

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Key Takeaways

  • Moody's upgraded Hercules Capital's credit and corporate ratings to Baa2 with a stable outlook.
  • The move reflects HTGC's profitability, asset quality, low leverage and funding diversity.
  • HTGC's strong management, liquidity and market access supported the rating upgrade.

Hercules Capital, Inc. (HTGC - Free Report) announced that Moody’s Investors Service, Inc. has upgraded its investment grade credit and corporate ratings to Baa2 from Baa3. The rating agency also revised the company’s outlook to stable from positive.

Rationale Behind HTGC’s Rating Upgrade

The upgraded ratings reflect Hercules Capital’s strong operating performance record, characterized by solid profitability and asset quality. Further, it reflects the company’s low leverage and lower dependence on secured funding sources.
 
Additionally, the ratings are supported by HTGC’s robust internal management and proven access to capital markets on the back of its solid performance.

Seth Meyer, CFO of Hercules Capital, stated, “This rating upgrade reflects our strong long-term operating history and internally managed structure, our diversified balance sheet and well-managed liquidity and commitment to disciplined underwriting.”

In August, Kroll Bond Rating Agency, Inc. affirmed HTGC’s investment grade credit and corporate ratings of BBB+ with a stable outlook.

Shares of Hercules Capital have risen 7.4% against the industry’s 3.6% decline in the past three months.

Zacks Investment Research
Image Source: Zacks Investment Research

HTGC currently carries a Zacks Rank #3 (Hold).

HTGC Peers Worth Considering

Some better-ranked peers of Hercules Capital worth a look are Main Street Capital Corp. (MAIN - Free Report) and Bain Capital Specialty Finance, Inc. (BCSF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Main Street’s current-year earnings has remained unchanged in the past month. The company’s shares have gained 14.5% over the past six months.

The Zacks Consensus Estimate for Bain Capital’s current-year earnings has remained unchanged in the past month. Its shares have declined 11.5% over the past six months.

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