KKR's Fund Downgraded to Junk by Moody's Amid Rising Bad Loans
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 24 2026
0mins
Source: CNBC
- Credit Rating Downgrade: Moody's downgraded FS KKR Capital Corp's debt rating from Baa3 to Ba1, indicating a shift to junk status, which reflects worsening asset quality and declining profitability, leading to erosion of net asset value relative to peers.
- Rising Bad Loans: By the end of 2025, the fund's non-accrual loans rose to 5.5%, one of the highest rates among rated business development companies, indicating increasing asset quality challenges that could impact future investment returns.
- Investor Withdrawal Surge: Amid concerns over impending credit losses, retail investors are rushing to withdraw funds, creating liquidity pressures for the fund that may further increase borrowing costs and affect future returns.
- Poor Financial Performance: FS KKR reported a net loss of $114 million in Q4 2025, with only $11 million in net income for the entire year, highlighting a significant decline in profitability that could undermine its competitive position in the market.
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Analyst Views on FSK
Wall Street analysts forecast FSK stock price to rise
6 Analyst Rating
0 Buy
6 Hold
0 Sell
Hold
Current: 10.220
Low
15.50
Averages
17.25
High
18.50
Current: 10.220
Low
15.50
Averages
17.25
High
18.50
About FSK
FS KKR Capital Corp. is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company. The Company is focused on providing customized credit solutions to private middle market United States companies. Its investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. Its portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle market United States companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private United States companies. It may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the over-the-counter market or directly from its target companies as primary market or directly originated investments. The Company is managed by FS/KKR Advisor, LLC.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Faruqi & Faruqi Investigates FS KKR Capital Securities Claims
- Legal Investigation Launched: Faruqi & Faruqi LLP is investigating potential claims against FS KKR Capital, particularly for investors who purchased securities between May 8, 2024, and February 25, 2026, urging them to apply for lead plaintiff status by the July 3, 2026 deadline to represent other investors in a federal securities class action.
- False Statement Allegations: The lawsuit alleges that FS KKR Capital and its executives violated federal securities laws by overstating the effectiveness of their portfolio restructuring and investment valuations, misleading investors and impacting the company's reputation and stock price.
- Asset Value Decline: A report on August 6, 2025, revealed a 6.2% decline in net asset value and a $474 million drop in total fair value of investments, resulting in a loss per share of negative $0.75, exacerbating investor losses significantly.
- Dividend Cut Impact: On February 25, 2026, FS KKR Capital announced a reduction in its dividend from $0.70 to $0.48 per share, reflecting deteriorating financial conditions that may lead to decreased investor confidence and increased stock price volatility.
See More
Shareholder Notice for FS KKR Capital Corp Class Action
- Lawsuit Background: The Gross Law Firm has issued a notice to shareholders who purchased FS KKR Capital Corp (NYSE: FSK) shares between May 8, 2024, and February 25, 2026, regarding potential legal action due to false statements.
- Allegation Details: The complaint alleges that the company made materially false and misleading statements regarding the effectiveness of its portfolio restructuring, the valuation of its investments, and the sustainability of its distribution strategy, leading to shareholder misconceptions about the company's prospects.
- Action Steps: Shareholders must register by July 6, 2026, to participate in the class action, and upon registration, they will receive updates through portfolio monitoring software to keep them informed about the case's progress.
- Law Firm Overview: The Gross Law Firm is committed to protecting investor rights and focuses on recovering losses incurred by investors due to misleading statements and illegal business practices, highlighting its expertise and track record in class action lawsuits.
See More
FS KKR Capital Corp. Class Action Notice
- Class Action Notice: Rosen Law Firm reminds investors who purchased FS KKR Capital securities between May 8, 2024, and February 25, 2026, to apply as lead plaintiffs by July 6, 2026, to potentially receive compensation without any out-of-pocket costs.
- Lawsuit Background: The lawsuit alleges that FS KKR Capital made false statements regarding its portfolio restructuring and valuation, resulting in investor losses when the truth emerged, highlighting significant deficiencies in the company's financial transparency and investor trust.
- Law Firm Credentials: Rosen Law Firm specializes in securities class actions and has achieved the largest securities class action settlement against a Chinese company, demonstrating its extensive experience and success in handling such cases, which bolsters investor confidence.
- Investor Action Recommendation: Investors can visit Rosen Law Firm's website or call the toll-free number for more information, emphasizing the importance of careful selection of legal counsel to ensure professional legal support and effective litigation representation.
See More
Multiple Companies Face Class Action Lawsuits
- Regencell Bioscience Lawsuit: During the period from October 28, 2024, to October 31, 2025, Regencell is accused of failing to disclose its vulnerability to market manipulation, exposing investors to significant financial risks and potential regulatory scrutiny.
- SES AI Misleading Business Prospects: From January 29, 2025, to March 4, 2026, SES AI is alleged to have overstated its business prospects, as deals with companies lacking operations did not yield expected revenues, casting doubt on its growth outlook for 2026.
- FS KKR Capital Overstatements: Between May 8, 2024, and February 25, 2026, FS KKR is accused of overstating the effectiveness of its portfolio restructuring efforts, which negatively impacted its financial results and rendered previous positive statements misleading.
- Graphic Packaging Operational Issues: From February 4, 2025, to February 2, 2026, Graphic Packaging is alleged to have downplayed significant inventory management issues and reduced demand, leading to unreliable financial guidance and adverse effects on its business performance.
See More
FSK Failed to Disclose Portfolio Risks, Investors Lost $2.03
- Investor Losses: Following the disclosure of deteriorating portfolio valuations on February 25, 2026, FS KKR Capital Corp. investors faced a loss of $2.03 per share, leading to a 15.24% drop in stock price to $11.29 on February 26, highlighting significant deficiencies in the company's risk disclosures.
- Rising Non-Accrual Rates: The company's non-accrual rate surged to 5.5%, significantly above the industry average of 3.8%, indicating a deterioration in financial health that could jeopardize future dividend payments and further erode investor confidence.
- Legal Action Allegations: The lawsuit alleges that FS KKR Capital employed vague language in its risk disclosures, failing to clearly identify specific issues already present in the portfolio, which misled investors and affected their decision-making processes regarding investments.
- Investor Rights Protection: Investors are urged to take action by July 6, 2026, to safeguard their rights in the FS KKR case, reflecting a strong demand for transparency and accountability from the company.
See More
Class Action Lawsuit Reminder Against FS KKR Capital Corp.
- Class Action Notification: The Schall Law Firm reminds investors of a class action lawsuit against FS KKR Capital Corp. (NYSE:FSK) for violations of securities laws during the period from May 8, 2024, to February 25, 2026, with a deadline for participation set for July 3, 2026.
- False Statement Allegations: The complaint alleges that FSK misled investors regarding the effectiveness of its portfolio restructuring activities, overstating the value of its portfolio and the valuation process, which resulted in investor losses when the truth emerged.
- Dividend Program Misrepresentation: The company is accused of making false and misleading statements about the strength of its quarterly dividend program, which affected investors' perceptions of the company's financial health and led to economic losses.
- Legal Representation Information: The Schall Law Firm specializes in securities class action lawsuits, and investors are encouraged to contact the firm via phone or website to discuss their rights and participate in the lawsuit, ensuring legal representation in the class action.
See More
Faruqi & Faruqi Investigates FS KKR Capital Securities Claims
- Legal Investigation Launched: Faruqi & Faruqi LLP is investigating potential claims against FS KKR Capital, particularly for investors who purchased securities between May 8, 2024, and February 25, 2026, urging them to apply for lead plaintiff status by the July 3, 2026 deadline to represent other investors in a federal securities class action.
- False Statement Allegations: The lawsuit alleges that FS KKR Capital and its executives violated federal securities laws by overstating the effectiveness of their portfolio restructuring and investment valuations, misleading investors and impacting the company's reputation and stock price.
- Asset Value Decline: A report on August 6, 2025, revealed a 6.2% decline in net asset value and a $474 million drop in total fair value of investments, resulting in a loss per share of negative $0.75, exacerbating investor losses significantly.
- Dividend Cut Impact: On February 25, 2026, FS KKR Capital announced a reduction in its dividend from $0.70 to $0.48 per share, reflecting deteriorating financial conditions that may lead to decreased investor confidence and increased stock price volatility.
See More
Shareholder Notice for FS KKR Capital Corp Class Action
- Lawsuit Background: The Gross Law Firm has issued a notice to shareholders who purchased FS KKR Capital Corp (NYSE: FSK) shares between May 8, 2024, and February 25, 2026, regarding potential legal action due to false statements.
- Allegation Details: The complaint alleges that the company made materially false and misleading statements regarding the effectiveness of its portfolio restructuring, the valuation of its investments, and the sustainability of its distribution strategy, leading to shareholder misconceptions about the company's prospects.
- Action Steps: Shareholders must register by July 6, 2026, to participate in the class action, and upon registration, they will receive updates through portfolio monitoring software to keep them informed about the case's progress.
- Law Firm Overview: The Gross Law Firm is committed to protecting investor rights and focuses on recovering losses incurred by investors due to misleading statements and illegal business practices, highlighting its expertise and track record in class action lawsuits.
See More
FS KKR Capital Corp. Class Action Notice
- Class Action Notice: Rosen Law Firm reminds investors who purchased FS KKR Capital securities between May 8, 2024, and February 25, 2026, to apply as lead plaintiffs by July 6, 2026, to potentially receive compensation without any out-of-pocket costs.
- Lawsuit Background: The lawsuit alleges that FS KKR Capital made false statements regarding its portfolio restructuring and valuation, resulting in investor losses when the truth emerged, highlighting significant deficiencies in the company's financial transparency and investor trust.
- Law Firm Credentials: Rosen Law Firm specializes in securities class actions and has achieved the largest securities class action settlement against a Chinese company, demonstrating its extensive experience and success in handling such cases, which bolsters investor confidence.
- Investor Action Recommendation: Investors can visit Rosen Law Firm's website or call the toll-free number for more information, emphasizing the importance of careful selection of legal counsel to ensure professional legal support and effective litigation representation.
See More
Multiple Companies Face Class Action Lawsuits
- Regencell Bioscience Lawsuit: During the period from October 28, 2024, to October 31, 2025, Regencell is accused of failing to disclose its vulnerability to market manipulation, exposing investors to significant financial risks and potential regulatory scrutiny.
- SES AI Misleading Business Prospects: From January 29, 2025, to March 4, 2026, SES AI is alleged to have overstated its business prospects, as deals with companies lacking operations did not yield expected revenues, casting doubt on its growth outlook for 2026.
- FS KKR Capital Overstatements: Between May 8, 2024, and February 25, 2026, FS KKR is accused of overstating the effectiveness of its portfolio restructuring efforts, which negatively impacted its financial results and rendered previous positive statements misleading.
- Graphic Packaging Operational Issues: From February 4, 2025, to February 2, 2026, Graphic Packaging is alleged to have downplayed significant inventory management issues and reduced demand, leading to unreliable financial guidance and adverse effects on its business performance.
See More
FSK Failed to Disclose Portfolio Risks, Investors Lost $2.03
- Investor Losses: Following the disclosure of deteriorating portfolio valuations on February 25, 2026, FS KKR Capital Corp. investors faced a loss of $2.03 per share, leading to a 15.24% drop in stock price to $11.29 on February 26, highlighting significant deficiencies in the company's risk disclosures.
- Rising Non-Accrual Rates: The company's non-accrual rate surged to 5.5%, significantly above the industry average of 3.8%, indicating a deterioration in financial health that could jeopardize future dividend payments and further erode investor confidence.
- Legal Action Allegations: The lawsuit alleges that FS KKR Capital employed vague language in its risk disclosures, failing to clearly identify specific issues already present in the portfolio, which misled investors and affected their decision-making processes regarding investments.
- Investor Rights Protection: Investors are urged to take action by July 6, 2026, to safeguard their rights in the FS KKR case, reflecting a strong demand for transparency and accountability from the company.
See More
Class Action Lawsuit Reminder Against FS KKR Capital Corp.
- Class Action Notification: The Schall Law Firm reminds investors of a class action lawsuit against FS KKR Capital Corp. (NYSE:FSK) for violations of securities laws during the period from May 8, 2024, to February 25, 2026, with a deadline for participation set for July 3, 2026.
- False Statement Allegations: The complaint alleges that FSK misled investors regarding the effectiveness of its portfolio restructuring activities, overstating the value of its portfolio and the valuation process, which resulted in investor losses when the truth emerged.
- Dividend Program Misrepresentation: The company is accused of making false and misleading statements about the strength of its quarterly dividend program, which affected investors' perceptions of the company's financial health and led to economic losses.
- Legal Representation Information: The Schall Law Firm specializes in securities class action lawsuits, and investors are encouraged to contact the firm via phone or website to discuss their rights and participate in the lawsuit, ensuring legal representation in the class action.
See More
