Moody's Ratings assigns Baa3 issuer rating to T. Rowe Price OHA Select Private Credit Fund; outlook is stable
TL;DR
KBRA affirms BBB rating for T. Rowe Price OHA Select Private Credit Fund with Stable Outlook, citing strong management ties, low leverage, and solid liquidity, though risks include portfolio immaturity and economic uncertainties.
KBRA has affirmed the BBB issuer rating for T. Rowe Price OHA Select Private Credit Fund (OCREDIT), with a Stable Outlook, reflecting the fund’s strong ties to Oak Hill Advisors (OHA) and its experienced management team. The rating is supported by OHA’s $108 billion in assets under management (AUM) and T. Rowe Price Group’s $1.77 trillion AUM as of September 30, 2025. OCREDIT’s investment portfolio, totaling $2.7 billion, is predominantly composed of senior secured first lien loans (90% as of 3Q25), targeting upper middle-market companies with a weighted average EBITDA of $308 million. The portfolio's focus on less cyclical industries and absence of non-accrual investments as of 3Q25 further strengthen its credit profile.
The fund’s capital structure features low leverage, with gross and net leverage at 0.80x and 0.77x, respectively, below its target of 1.0x. Solid liquidity is highlighted by $781 million in available credit lines and $34.3 million in unrestricted cash, offsetting $463.6 million in unfunded commitments. Asset coverage stood at 225% as of September 30, 2025, exceeding the 150% regulatory requirement. Post-quarter-end, the fund expanded its BNP facility by $100 million to $500 million, enhancing flexibility.
Counterbalancing factors include the unseasoned nature of the portfolio, risks from illiquid investments, and constraints as a regulated investment company (RIC) requiring 90% income distribution. Economic uncertainties, including high interest rates and geopolitical risks, also pose challenges. OCREDIT operates as a non-diversified closed-end fund, managed externally by OHA Private Credit Advisors LLC, and functions as both a Business Development Company and RIC under the 1940 Act.
A downgrade could arise from increased leverage, a prolonged economic downturn, or shifts toward riskier investments. The Stable Outlook underscores KBRA’s confidence in OCREDIT’s current risk management and operational framework.
