Summary

• FS KKR is one of the publicly listed BDCs with the highest financial leverage and the poorest credit quality.
• The company recently lost its investment-grade status with Fitch and Moody's, with both rating agencies expressing concerns about deteriorating credit quality.
• If we are indeed at the beginning of a much larger downturn in private credit, FSK's elevated leverage and deteriorating asset quality could spell trouble.
• NAV is calculated using DCF models managed and updated by an external advisor. It is important to keep in mind all the assumptions going into such models, hence their subjectivity.
• Stock prices are forward-looking in nature, while the assumptions going into a DCF model are primarily based on the recent past. This is why I view FSK's significant discount to NAV a bit like a mirage.

A Short Recap On Private Credit

I started to be interested in the world of private credit back in December 2025, when I initiated Blue Owl Capital (OWL) with a 'Sell' rating. As a reminder, Blue Owl was

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