2008-05-08 23:46:11 -

- Fitch Ratings has placed the long-term Issuer Default Rating (IDR) and unsecured debt rating of MCG Capital Corporation (MCGC) on Rating Watch Negative. Approximately $143 million of unsecured debt is affected by this action.

Fitch has placed the following on Rating Watch Negative:

MCG Capital Corporation

--Long-term Issuer Default Rating (IDR) 'BBB-';

--Senior unsecured debt

'BBB-'.

The Rating Watch Negative reflects MCG's reduced liquidity and funding flexibility given disruptions in the CLO markets, the maturity of a $130 million unsecured revolving facility in June 2008, the necessity to repay outstanding borrowings on an existing warehouse facility with Merrill Lynch by Aug. 31, 2008, and uncertain access to the equity markets following the completion of a rights offering in April 2008 and the announcement of a dividend cut. The resolution of the Rating Watch will be dependent upon MCG's ability to renew the unsecured revolving facility and secure additional funding to provide enough excess liquidity to support existing portfolio company investments, as needed, and repay outstanding borrowings on the Merrill facility, as scheduled, while maintaining compliance with all financial covenants. An inability to renew the revolving facility and/or secure additional funding could result in negative rating action.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings
Meghan Crowe, CFA, 212-908-9121 (New York)
William A. Artz, 312-368-3178 (Chicago)
Media Relations:
Kenneth Reed, 212-908-0540 (New York)