Moody's assigns Apollo Debt Baa3

Moody's Ratings said it assigned a first-time Baa3 long-term issuer rating to Apollo Debt Solutions BDC (ADS). The outlook is stable. It is externally managed by Apollo Credit Management, LLC, a consolidated subsidiary of Apollo Global Management, Inc.

“ADS' Baa3 issuer rating reflects the company's strong capitalization and focus on first-lien and unitranche lending. ADS has a leverage target of 1x with an upper bound of 1.25x debt to equity (gross debt to equity was 0.64x as of Dec. 31, 2023), which translates into an expected asset coverage ratio (ACR) cushion of at least 20%, based on minimum required coverage of 150%. This is consistent with most rated BDCs.

“However, the company's asset composition is favorable relative to peers, with 99.4% of investments in first-lien or unitranche loans as of Dec. 31, 2023. While this may moderate over time, we expect this percentage to remain above 95%, supporting the asset quality of the company's portfolio. ADS also focuses on lending to large capital corporate borrowers in less cyclical sectors, which should enhance the portfolio's resilience to difficult economic conditions,” Moody’s said in a press release.

The stable outlook reflects the view that ADS will solidly continue expanding over the next 12 months, the agency said.

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