On October 8, 2026, Bain Capital Private Credit closed a private placement of $350 million in aggregate principal amount of 7.600% senior unsecured notes due October 8, 2031, according to an SEC Form 8-K filing. Concurrently, the private debt manager executed a matching $350 million interest rate swap maturing in 2031 to convert its fixed interest obligation into floating-rate financing based on three-month compounded SOFR plus 2.8515%, immunizing the fund against duration mismatch across its direct lending portfolio.
The transaction illustrates how non-traded business development companies and private credit funds access institutional bond markets while managing interest rate risk. By combining a fixed-rate Rule 144A institutional debt placement with an interest rate derivative, Bain Capital Private Credit locked in five-year term funding while keeping its financing costs dynamically aligned with its floating-rate corporate loan assets.
Key Terms of the Debt Offering and Derivative Hedge
The notes were issued under an indenture dated October 8, 2026, with U.S. Bank Trust Company, National Association serving as trustee. The debt was placed with qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S through initial purchaser representatives BNP Paribas Securities Corp., J.P. Morgan Securities LLC, Scotia Capital (USA) Inc., and SMBC Nikko Securities America, Inc.
| Transaction Metric | Disclosed Term / Structure | Primary Source / Status |
|---|---|---|
| Issuer Entity | Bain Capital Private Credit | Form 8-K (Item 1.01) |
| Transaction Status | Closed on October 8, 2026 | Form 8-K confirmed close |
| Gross Principal Amount | $350,000,000 | Gross face value |
| Stated Maturity Date | October 8, 2031 | 5-year stated maturity |
| Stated Coupon & Frequency | 7.600% per annum, payable semiannually | April 8 & October 8 (commencing April 8, 2027) |
| Redemption / Call Provisions | Make-whole at Treasury + 45 bps prior to Par Call Date | Par call on or after September 8, 2031 |
| Interest Rate Swap Notional | $350,000,000 (maturing October 8, 2031) | Form 8-K (Item 8.01) |
| Swap Cash Flows | Receive 7.60% fixed; pay 3M SOFR + 2.8515% variable | Semiannual settlement |
| Net Synthetic Liability Cost | 3-Month SOFR + 2.8515% floating rate | Synthetic floating-rate obligation |
| Reported Use of Proceeds | General corporate purposes and/or credit facility paydown | Revolving credit facility refinancing |
Why Private Debt Funds Swap Fixed Notes into Floating Rates
In standard corporate bond markets, issuers frequently prefer fixed-rate coupons to protect against potential interest rate increases. In institutional direct lending, however, fund balance sheets operate on the opposite logic. As documented in our deep dive on private credit direct lending, middle-market corporate borrowers pay floating coupons benchmarked to the Secured Overnight Financing Rate (SOFR) plus an agreed credit spread.
According to Bain Capital Private Credit’s most recent Form 10-Q filing for the quarter ended June 30, 2026, the fund invested $1.2 billion across 113 portfolio companies during the first six months of 2026, with first-lien senior secured loans comprising 84.8% of total portfolio fair value. Because direct loan assets float with SOFR, issuing an unhedged 7.600% fixed-rate note would create an asset-liability duration mismatch: if benchmark interest rates fall, investment income drops while debt obligations remain fixed at 7.600%, squeezing net investment income.
Through the $350 million swap, Bain Capital Private Credit receives 7.600% fixed from its derivative counterparty (perfectly offsetting the 7.600% coupon owed to noteholders) and pays variable interest at SOFR plus 2.8515%. The net financial result is a synthetic five-year floating obligation. If short-term interest rates fall, Bain’s debt service declines alongside its portfolio yields; if rates rise, increased asset coupons offset higher swap obligations.
Covenants, Registration Rights, and Capital Structure
Under the indenture terms, Bain Capital Private Credit agreed to statutory leverage restrictions, specifically covenanting to maintain compliance with Section 18(a)(1)(A) as modified by Section 61(a) of the Investment Company Act of 1940. This regulatory standard mandates a minimum 150% asset coverage ratio for business development companies, ensuring that senior debt obligations do not exceed two-thirds of total fund assets.
Additionally, the company entered into a Registration Rights Agreement requiring it to file an exchange offer registration statement with the SEC within 365 days of issuance. This provision allows institutional buyers holding unregistered Rule 144A notes to exchange them for freely tradable, SEC-registered notes with identical economic terms. As examined in our guide on private credit versus syndicated loans, institutional liquidity features like exchange registration rights help private debt funds attract large pension and insurance allocators seeking standardized fixed-income documentation.
Sources
- SEC Form 8-K: Bain Capital Private Credit (October 8, 2026) — Material definitive agreement, indenture terms, 7.600% notes due 2031, and Item 8.01 interest rate swap disclosure.
- SEC Form 10-Q: Bain Capital Private Credit (Quarter Ended June 30, 2026) — Portfolio composition, first-lien asset mix, and investment activity.
Disclosure: This article is for informational purposes only and is not investment advice.