Fidelity Private Credit Fund, a non-traded business development company sponsored and managed by entities affiliated with Fidelity Investments, announced a significant expansion of its credit capacity following an amendment to its revolving credit agreement with JPMorgan Chase Bank N.A., which serves as administrative and collateral agent.
The credit fund primarily invests in senior secured, floating rate loans that may help mitigate downside risk in turbulent markets and offer a hedge against rising interest rates.
With the updated agreement, the fund boosts its maximum facility amount from $500 million to $1.13 billion, with an additional increase in the accordion feature allowing for potential increases up to $1.695 billion. Furthermore, the commitment termination date has been extended from March 17, 2027, to April 10, 2029, while the loan maturity date has been extended from March 17, 2028, to April 10, 2030.
Under the revised terms, Fidelity Private Credit Fund will pay interest on drawn amounts at a variable rate based on the secured overnight financing rate, a benchmark used to reflect the cost of overnight borrowing in U.S. treasury markets, plus a margin of 2.75%. For example, if the SOFR is 5%, the effective borrowing rate would be 7.75%.
If the fund opts to borrow under the base rate option instead of SOFR, the margin applied is 1.75%. The base rate is defined as the highest of the U.S. prime rate, the federal funds effective rate plus 0.50%, or one-month SOFR plus 1%.
In addition to interest charges, the fund will also pay a commitment fee of 0.375% per annum on any unused portion of the revolving credit facility. Fees related to letters of credit and participation by lenders also apply.
Fidelity Private Credit Fund focuses on capital preservation while seeking to generate current income greater than what is available in public credit markets. According to the company, it intends to make quarterly repurchases of up to 5% of fund shares at net asset value at the quarter’s end.
Privately held for over 75 years, Fidelity Investments has assets under administration of $15.1 trillion, including discretionary assets of $5.9 trillion as of Dec. 31, 2024
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