KBRA Comments on Hercules Capital’s $150 Million Senior Unsecured Notes Due 2022

Kroll Bond Rating Agency (KBRA) currently maintains issuer and senior unsecured debt ratings of BBB+ with a stable outlook for Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or “the Company”). HTGC announced a public offering of $150 million of 4.625% senior unsecured notes due in 2022 (the “Notes”). The Company intends to use the net proceeds from this offering to repurchase or redeem a portion of its 6.25% Notes due 2024, to fund investments in debt and equity securities in accordance with its investment objective and for other general corporate purposes. The Notes will rank equally with existing and future senior unsecured notes issued by HTGC. KBRA’s current unsecured debt rating covers HTGC’s 4.375% Notes due 2022 and 6.25% Notes due 2024.

HTGC is an internally managed Business Development Company based in Palo Alto, California with additional offices in MA, NY, DC, IL and CT. As of June 30, 2017, the Company had an investment portfolio valued at roughly $1.4 billion consisting mostly of senior secured venture growth loans to high-growth, innovative venture capital-backed companies concentrated in the life sciences and technology industries.

On October 16, 2017, KBRA affirmed an issuer and senior unsecured debt rating of BBB+ with a stable outlook to HTGC. The ratings of Hercules reflect the Company’s focus on senior secured debt, positive asset quality performance, and appropriate leverage metrics. The ratings are also supported by HTGC’s proven access to capital markets, its expertise in investing in venture-backed companies with strong growth potential, and robust risk management and monitoring practices. These strengths are counterbalanced by the potential risks related to Hercules’ significant exposure to illiquid investments, susceptibility to event risk related to technology sector and key man risk.

The ratings are assigned using KBRA’s Finance Company Rating Methodology, published April 1, 2013. The ratings and supporting rationale are available at www.kbra.com.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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