August 1, 2013

BlackRock Kelso Capital

(BKCC-NASDAQ)
Stock Rating: Market Perform Industry Rating: Market Perform

Diversified Financials
David J. Chiaverini, CFA
BMO Capital Markets Corp. 212-885-4115 david.chiaverini@bmo.com

Richard Fellinger
212-885-4092 richard.fellinger@bmo.com

Elevated Credit Market Liquidity Driving Prepayments; Maintaining Market Perform

Event
BlackRock Kelso Capital reported 2Q13 basic adjusted NOI of $0.26, which was $0.04 ahead of our estimate owing to higher-than-expected prepayment fees. Key takeaways include 1) book value declined 1% sequentially to $9.37, slightly below our flat expectation, 2) credit quality remains pristine with no non-accrual assets, unchanged from the prior quarter, 3) portfolio growth was negative in the quarter as total investments declined 1% sequentially owing to $186M of new originations vs. $199M of repayments/exits driven by an elevated amount of liquidity in the markets, and 4) debt/equity was flat sequentially at 0.45:1, below peers at 0.55:1, and provides the company with capacity to ramp up portfolio growth to help support the current dividend level.

Securities Info
Price (31-Jul) 52-Wk High/Low Mkt Cap (mm) Shs O/S (mm, BASIC) Options O/S (mm) $10.11 $11/$9 $749 74.1 na Target Price Dividend Yield Float O/S (mm) ADVol (30-day, 000s) $10 $1.04 10.3% 68.0 556

Price Performance
BLACKROCK KELSO CAPITAL CORP (BKCC)
Price: High,Low,Close(US$) Relative to S&P 500

14 12 10

160

140

120 8 100 6 4 2 30 20 10 0 2008 2009 2010 2011 2012 2013

Volume (mln)

80

60 30 20 10 0

Impact
Net neutral. We view the upside in NOI and strong credit quality as being offset by negative portfolio growth and a decline in book value. Conference call today at 4:30 p.m. ET; (800) 374-0176 code 7903-4571.

Last Data Point: July 30, 2013

Valuation/Financial Data
(FY-Dec.) NOI Pro Forma P/NOI First Call Cons. NOI GAAP Bk Val/Share Price/Book Quarterly NOI 2012A 2013E 2011A $1.00 $1.05 $9.58 1Q $0.25 $0.22A 2012A $1.08 $0.78 $9.31 2Q $0.25 $0.26A 2013E $0.87 12.6x $0.87 $0.97 $9.26 1.1x 3Q $0.30 $0.19 2014E $0.90 11.9x $0.97 $0.90 $9.13 1.1x 4Q $0.27 $0.20

Forecasts
We are lowering our 2013/2014 basic NOI estimates to $0.87/$0.90 from $0.89/$1.00 owing to lower earning assets. Our NOI estimates remain below the stated annual dividend level of $1.04 and we believe additional portfolio growth is needed to bridge this gap.

Valuation
BKCC is trading at 108% of adjusted book value and 11.2x our 2014 NOI estimate compared with peers at 109% and 10.7x, respectively. Our $10 price target is based on BKCC trading at 11x our 2014 NOI estimate.

Balance Sheet Data (30-Jun) ROE 5.8% Exp./Revenues 38.8% ROA 4.5% Exp./Avg. Assets 4.5% NPAs/Loans 0.0% Debt/Equity 45% Notes: All values in US$. Source: BMO Capital Markets estimates, Bloomberg, Thomson Reuters, and IHS Global Insight.

Recommendation
We maintain our Market Perform rating.
Changes
Annual NOI 2013E $0.89 to $0.87 2014E $1.00 to $0.90 Annual Bk Val/Share 2013E $9.41 to $9.26 2014E $9.42 to $9.13 Quarterly NOI Q3/13E $0.23 to $0.19 Q4/13E $0.23 to $0.20

Please refer to pages 4 to 7 for Important Disclosures, including the Analyst's Certification.

BMO Capital Markets

BLACKROCK KELSO CAPITAL (BKCC) - 2Q13 Worksheet ($ in millions)
2Q12 Normalized INCOME STATEMENT: EARNINGS PER SHARE-Basic NOI PER SHARE - Basic Adjusted NOI - Basic Dividends Average Equity Investments Average Interest Earning Assets Total Average Investments Net Interest Margin Interest Income Dividend Income Interest Expense Net Interest and Dividend Income Advisory Fees and Other Income Total Net Revenue Base management fee Incentive management fee General & administrative Noninterest Expense Net operating income before taxes Tax Rate Net Operating Income Net realized gain (loss) Net unrealized appreciation (depreciation) Total net gain (loss) on investments Net Income Shares Outstanding EOP Avg. Shares Outstanding - F.D. FINANCIAL RATIOS: (%) ROE Yield on Earning Assets (Calc.) Cost of Borrowings (Calc.) Fee Income/Total Revenue Expense/Total Revenue Expense/ (Total Revenue + Net Gains) Expense/Average Investments Expense/Average Assets Leverage (Debt/Equity)
* Annualized. ++ Positives -- Negatives Source: Company data; BMO Capital Markets

BlackRock Kelso Capital

1Q13 Normalized

2Q13 Estimate vs.

2Q13 Actual

2Q13 % CHG YoY

ESTIMATED

2Q13 % CHG YoY

ACTUAL

2Q13 vs 1Q13 Seq*

ACTUAL

$0.29 $0.30 $0.25 0.26 123 1,007 1,130 10.47 31.3 0.3 5.0 26.6 3.8 30.4 5.5 0.0 2.5 8.1 22.4 0.0% 22.4 (75.9) 74.5 (1.4) 21.0 73.6 73.6 9.8 12.50 5.09 12.5 39.0 40.9 4.20 4.08 0.64

$0.40 $0.18 $0.22 0.26 153 890 1,042 10.74 28.3 0.0 4.8 23.6 2.8 26.4 5.3 5.3 2.8 13.4 13.0 0.0% 13.0 0.2 16.6 16.8 29.8 74.0 78.4 18.8 12.91 5.85 10.5 38.8 23.7 3.93 3.80 0.44

$0.27 $0.27 $0.22 0.26 161 881 1,043 10.48 28.0 0.3 5.0 23.3 4.0 27.3 5.2 0.0 2.2 7.4 19.9 0.0% 19.9 0.0 0.0 0.0 19.9 74.1 78.4 9.2 12.75 6.15 14.6 41.7 41.7 4.37 4.20 0.49

$0.16 $0.29 $0.26 0.26 189 827 1,016 12.39 30.4 0.6 4.9 26.1 5.1 31.2 5.2 2.1 2.7 10.0 21.2 0.0% 21.2 (58.4) 49.2 (9.2) 12.0 74.1 84.0 5.8 14.77 6.62 16.3 38.8 55.0 4.77 4.49 0.45

(6) (12) (15) NM 31 (13) (8) 2 bp (11) NM (1) (12)

(43) (6) 2 NM 54 (18) (10) 192 bp (3) NM (2) (2)

(239) 254 73 NM 97 (28) (10) 165 bp 30 NM 13 43

(10) (6) (13) (8) (11) (11)

3 (6) 8 24 (5) (5)

74 (12) (7) (102) 255 255

(5) 1 7

(43) 1 14

(239) 1 29

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August 1, 2013

BMO Capital Markets

BlackRock Kelso Capital Corp.
($ millions) INCOME STATEMENT: EARNINGS PER SHARE-Basic NOI PER SHARE - Basic NOI PER SHARE - Diluted Adjusted NOI - Basic Adjusted NOI - Diluted Dividends Average Equity Investments Average Interest Earning Assets Total Average Investments Net Interest Margin Interest Income Dividend Income Interest Expense Net Interest and Dividend Income Advisory Fees and Other Income Total Net Revenue Base management fee Incentive management fee General & administrative Noninterest Expense Net operating income before taxes Tax Rate Net Operating Income Net realized gain (loss) Net unrealized appreciation (depreciation) Total net gain (loss) on investments Net Income Shares Outstanding EOP Avg. Shares Outstanding - Basic Avg. Shares Outstanding - F.D. BALANCE SHEET DATA: Total Assets Loan Investments - Cost Loan Investments - Fair Value Equity Investments Total Investments Portfolio Companies (#) Total Borrowings Total Necessary Borrowings (Est.) Total Liabilities New investments Sales and repayments Average Assets Average Interest Earning Assets Average Investments Average Borrowings Avg Necessary Borrowings (Est.) Average Shareholders' Equity Shareholders' Equity Book Value/Share Adjusted Book Value/Share EOP Stock Price Nonaccrual Loans (Fair Value) Nonaccrual Loans (Cost) Change in Nonaccruals FINANCIAL RATIOS: (%) ROA ROE Yield on Earning Assets (Calc.) Yield on Earning Assets (Reported at Cos Cost of Borrowings (Calc.) Cost of Borrowings (Necessary) Cost of Borrowings (Reported) Net Interest and Dividend Income/AEAs Net Revenues/Avg Total Investments Fee Income/Total Revenue Expense/Total Revenue Expense/ (Total Revenue + Net Gains) Expense/Average Investments Expense/Average Assets Nonaccruals/Loans (Fair Value) Nonaccruals/Loans (Cost) Loans/Borrowings Loans/Assets Borrowings/Assets Net Leverage (Net Debt/Equity) Leverage (Debt/Equity) Equity/Assets 1Q12 $0.26 $0.28 $0.26 $0.26 $0.25 $0.25 0.26 116 956 1,072 10.20 29.4 0.3 5.3 24.4 3.5 27.9 5.4 2.2 1.2 8.8 19.0 0.0% 19.0 (0.3) 1.6 1.3 20.3 73.4 73.4 73.4 1,128 1,026 974 121 1,095 55 390 391 424 73 41 1,110 956 1,072 355 370 702 704 $9.59 $9.58 $9.82 3.9 8.2 0.2 7.3 11.3 12.37 11.6 6.05 5.81 5.0 10.34 10.54 12.5 33.1 31.6 3.44 3.32 0.4 0.8 250 86 35 0.56 0.55 62 2Q12 $0.30 $0.29 $0.30 $0.30 $0.25 $0.25 0.26 123 1,007 1,130 10.47 31.3 0.3 5.0 26.6 3.8 30.4 5.5 0.0 2.5 8.1 22.4 0.0% 22.4 (75.9) 74.5 (1.4) 21.0 73.6 73.6 73.6 1,202 1,044 1,041 125 1,166 53 450 458 495 148 81 1,165 1,007 1,130 396 425 706 707 $9.61 $9.56 $9.76 3.1 8.4 0.1 7.2 9.8 12.50 12.4 5.09 4.76 4.9 10.60 10.80 12.5 39.0 40.9 4.20 4.08 0.3 0.8 231 87 37 0.65 0.64 59 3Q12 $0.36 $0.19 $0.32 $0.32 $0.30 $0.30 0.26 127 1,003 1,130 10.47 31.7 0.0 5.2 26.5 9.0 35.5 6.0 3.0 2.7 11.6 23.9 0.0% 23.9 2.8 (12.4) (9.6) 14.3 73.7 73.7 73.7 1,125 985 965 129 1,094 50 385 390 421 17 82 1,164 1,003 1,130 421 424 705 704 $9.55 $9.39 $9.72 1.4 8.0 (0.4) 4.9 7.0 12.55 12.0 4.88 4.86 4.7 10.49 12.48 25.4 38.4 52.6 4.83 4.69 0.1 0.8 251 86 34 0.55 0.55 63 4Q12 $0.11 $0.02 $0.11 $0.11 $0.27 $0.27 0.26 136 942 1,078 11.07 31.0 2.5 4.7 28.8 4.4 33.2 5.6 17.3 2.0 24.9 8.3 0.0% 8.3 (15.7) 9.1 (6.6) 1.7 73.8 73.8 73.8 1,090 947 918 144 1,062 47 347 374 403 79 111 1,107 942 1,078 381 382 695 687 $9.31 $9.31 $10.06 0.0 0.0 (8.0) 0.6 7.8 13.08 12.2 4.88 4.88 5.0 12.14 12.22 13.2 39.6 49.4 4.88 4.75 0.0 0.0 265 84 32 0.54 0.50 63 1Q13 $0.17 $0.40 $0.18 $0.17 $0.22 $0.21 0.26 153 890 1,042 10.74 28.3 0.0 4.8 23.6 2.8 26.4 5.3 5.3 2.8 13.4 13.0 0.0% 13.0 0.2 16.6 16.8 29.8 74.0 74.0 78.4 1,065 891 861 161 1,023 44 306 322 365 46 104 1,078 890 1,042 330 348 694 700 $9.47 $9.51 $10.00 0.0 0.0 0.0 11.1 18.8 12.91 12.4 5.85 5.54 5.5 10.76 10.26 10.5 38.8 23.7 3.93 3.80 0.0 0.0 282 81 29 0.46 0.44 66 2Q13 $0.25 $0.16 $0.29 $0.25 $0.26 $0.23 0.26 189 827 1,016 12.39 30.4 0.6 4.9 26.1 5.1 31.2 5.2 2.1 2.7 10.0 21.2 0.0% 21.2 (58.4) 49.2 (9.2) 12.0 74.1 74.1 84.0 1,094 797 792 217 1,009 41 315 315 400 186 199 1,080 827 1,016 298 319 697 694 $9.37 $9.39 $9.36 0.0 0.0 0.0 4.5 5.8 14.77 12.1 6.62 6.19 6.2 12.69 12.33 16.3 38.8 55.0 4.77 4.49 0.0 0.0 251 72 29 0.45 0.45 63 3Q13E $0.23 $0.24 $0.24 $0.23 $0.19 $0.18 0.26 217 807 1,024 10.36 25.9 0.5 4.9 21.6 4.0 25.6 5.1 0.0 2.4 7.5 18.1 0.0% 18.1 0.0 0.0 0.0 18.1 74.2 74.2 78.6 1,124 827 822 217 1,039 345 345 430 100 70 1,109 807 1,024 330 330 695 695 $9.36 $9.19 $9.36 6.5 8.5 12.75 5.84 5.84 10.61 9.91 15.6 43.5 43.5 4.35 4.01 238 73 31 0.50 0.50 62 4Q13E $0.16 $0.17 $0.17 $0.16 $0.20 $0.19 0.26 217 837 1,054 10.34 26.9 0.5 5.1 22.3 4.0 26.3 5.3 6.3 2.4 14.0 12.4 0.0% 12.4 0.0 0.0 0.0 12.4 74.4 74.3 78.7 1,154 857 852 217 1,069 381 381 466 100 70 1,139 837 1,054 363 363 692 689 $9.26 $9.26 $9.36 4.3 8.6 12.75 5.55 5.55 10.58 9.90 15.2 43.3 43.3 4.33 4.00 224 74 33 0.55 0.55 60 % Change Yr./Yr. Q/Q (43) (17) (10) 54 (18) (10) 192 bp (3) (2) (2) 3 (6) 8 24 (5) (5) (43) 1 14 (9) (24) (24) 74 (13) (30) (31) (19) (7) (18) (10) (25) (25) (1) (2) (3) (60) 53 11 24 (7) (3) 165 bp 7 3 11 18 (3) (2) (25) 64 64 (60) 0 7 3 (10) (8) 35 (1) 3 (2) 10 0 (7) (3) (10) (9) 1 (1) (1) 2011 $1.00 $1.05 $1.05 $1.00 $1.00 $1.00 1.10 116 841 958 12.92 126.5 4.1 17.8 112.7 1.0 113.7 19.8 11.9 9.1 40.8 72.9 0.0% 72.9 (49.9) 53.9 4.0 76.9 73.2 73.0 1,091 999 938 111 1,049 343 348 390 402 249 1,026 841 958 291 251 706 701 $9.58 $9.58 $8.16 4.7 8.0 (7.8) 7.5 10.9 15.03 11.9 6.11 7.08 5.23 13.40 11.87 0.9 35.9 34.7 4.26 3.98 0.5 0.8 273 86 31 0.50 0.49 64 2012 $1.00 $0.78 $1.00 $1.00 $1.08 $1.08 1.04 126 977 1,103 10.55 123.3 3.2 20.2 106.3 20.7 127.1 22.5 22.5 8.4 53.4 73.7 0.0% 73.7 (89.1) 72.8 (16.3) 57.4 73.8 73.6 1,090 947 918 144 1,062 347 374 403 317 315 1,136 977 1,103 388 400 702 687 $9.31 $9.31 $10.06 5.0 8.2 12.62 5.21 5.05 4.90 10.88 11.52 16.3 42.0 48.2 4.84 4.70 0.0 0.0 265 84 32 0.54 0.50 63 2013E $0.81 $0.97 $0.87 $0.80 $0.87 $0.81 1.04 194 840 1,034 10.95 111.6 1.7 19.6 93.7 15.8 109.5 20.9 13.6 10.3 44.9 64.6 0.0% 64.6 (58.2) 65.8 7.6 72.2 74.4 79.9 1,154 857 852 217 1,069 381 381 466 432 443 1,102 840 1,034 330 340 694 689 $9.26 $9.26 $9.36 6.6 10.4 13.29 5.94 5.77 11.15 10.59 14.5 41.0 38.3 4.34 4.07 224 74 33 0.55 0.55 60

BlackRock Kelso Capital

% Change 13E/12 14E/13E 25 (20) (25) 0 55 (14) (6) 40 bp (10) (3) (12) (14) (7) 23 (16) (12) (12) 26 1 9 6 (9) (7) 51 1 10 2 16 36 41 (3) (14) (6) (15) (15) (1) 0 (1) (1) (7) 7 10 (7) 10 5 5 (6) 8 0 14 19 19 0 15 31 31 25 (7) (46) 12 11 11 36 32 1 6 (1) (1) 0 (7) 6 5 0 12 11 11 -38 bp 9 16 7 -

2014E $0.85 $0.90 $0.90 $0.85 $0.90 $0.85 1.04 217 932 1,149 10.57 121.2 2.0 22.7 100.5 17.0 117.5 23.0 17.0 9.6 49.6 67.9 0.0% 67.9 0.0 0.0 0.0 67.9 80.2 80.2 1,314 1,017 1,012 217 1,229 497 497 582 400 240 1,234 932 1,149 448 448 701 732 $9.13 $9.13 $9.36 5.5 9.7 13.01 5.06 5.06 10.78 10.22 14.5 42.2 42.2 4.31 4.02 204 77 38 0.68 0.68 56

12/11 (26) 0 8 (5) 8 16 15 -236 bp (2) 14 (6) 12 13 (8) 31 1 1 (25) 1 1 (0) (5) (2) 29 1 1 8 3 (21) 26 11 16 15 33 59 (1) (2) (3) (3) 23 -

-241 bp -90 bp

66 bp 73 bp

-28 bp -88 bp

Source: Company data; BMO Capital Markets estimates.

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BMO Capital Markets

BlackRock Kelso Capital

BLACKROCK KELSO CAPITAL CORP (BKCC)

Quarterly Price (US$) 13 14 12 10 8 6 4 14 12 10 8 8 6 4 7 6 5 BKCC Relative to S&P 500 BKCC Relative to Capital Markets BKCC Relative to S&P 500 BKCC Relative to Capital Markets 8 7 6 5 12 11 10 9 1) Mkt Target Price(US$) Share Price(US$) 13 12 11 10 9

120 150 100 80

120 100 80 60 40

150

100

100 60

50

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Revenue / Share - (US$) Price / Revenue

50

40

2011

2012

2013

3 2

10 5

50

BKCC Relative to S&P 500 Y/Y (%) BKCC Relative to Capital Markets Y/Y (%)

50

-50 0 EPS (4 Qtr Trailing) - (US$) Price / Earnings

2011

2012

2013

-50

2 1

20 10

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

FYE (Dec.) 2007 2008 2009 2010 2011 2012 Range*: Current*

EPS US$ 0.35 -2.78 1.20 1.21 1.05 1.14

P/E Hi - Lo 45.1 na 9.5 10.7 12.3 9.3 45.1 33.8 na 2.0 6.5 6.0 7.0 2.0

DPS US$ 1.69 1.72 0.80 1.28 1.10 1.04

Yield% Hi - Lo 14.1 10.6 33.6 11.1 33.8 7.0 16.2 9.9 17.5 8.5 13.1 9.8 33.8 7.0

Payout % >100 >100 67 >100 >100 91

BV US$ 13.8 9.2 9.6 9.6 9.6 9.3

P/B Hi - Lo 1.2 1.7 1.2 1.3 1.4 1.1 1.7 0.9 0.6 0.2 0.8 0.7 0.9 0.2

ROE % na 13 13 11 12

BKCC - Rating as of 19-Aug-10 = NR Date 2-Nov-10 Rating Change NR to Mkt Share Price $12.02

0.85

11.0

1.04

11.1

>100

0.0

246.3

>50

Growth(%): 5 Year: -9.0

-9.3

-69.2

* Current EPS is the 4 Quarter Trailing to Q1/2013. * Valuation metrics are based on high and low for the fiscal year. * Range indicates the valuation range for the period presented above.

Last Price ( July 30, 2013): $10.12 Sources: IHS Global Insight, Thomson Reuters, BMO Capital Markets.

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BMO Capital Markets Important Disclosures

BlackRock Kelso Capital

Analyst's Certification I, David J. Chiaverini, CFA, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Ltd. are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Company Specific Disclosure Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to this issuer within the past 12 months. Disclosure 2: BMO Capital Markets has provided investment banking services with respect to this issuer within the past 12 months. Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to this issuer within the past 12 months. Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from this issuer within the past 12 months. Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months. Disclosure 6: This issuer is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12 months: Investment Banking Services & Non-Securities Related Services. Methodology and Risks to Our Price Target/Valuation Methodology: Our target is based on a price/book multiple, price/NOI multiple, and/or target dividend yield. Risks: Risks to our target include economic risk and credit risk. An economic downturn or recession may cause credit quality to suffer and book value to deteriorate. Distribution of Ratings (June 30, 2013) Rating BMOCM US BMOCM US BMOCM US BMOCM BMOCM Starmine Category BMO Rating Universe* IB Clients** IB Clients*** Universe**** IB Clients***** Universe Buy Outperform 37.9% 17.6% 52.7% 39.6% 51.0% 53.2% Hold Market Perform 56.8% 10.2% 45.9% 53.9% 45.5% 41.1% Sell Underperform 5.3% 3.2% 1.4% 6.5% 3.5% 5.6% * Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts. ** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage within ratings category. *** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage of Investment Banking clients. **** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts. ***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as percentage of Investment Banking clients. Rating and Sector Key (as of April 5, 2013) We use the following ratings system definitions: OP = Outperform - Forecast to outperform the analysts coverage universe on a total return basis; Mkt = Market Perform - Forecast to perform roughly in line with the analysts coverage universe on a total return basis; Und = Underperform - Forecast to underperform the analysts coverage universe on a total return basis; (S) = Speculative investment; NR = No rating at this time; and R = Restricted Dissemination of research is currently restricted. BMO Capital Markets' seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US Large Cap, US Small Cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating). Prior BMO Capital Markets Rating System (January 4, 2010 April 4, 2013): http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf

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BMO Capital Markets

BlackRock Kelso Capital

Other Important Disclosures For Other Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3. Dissemination of Research Our research publications are available via our web site http://www.bmocm.com/research/. Institutional clients may also receive our research via FIRST CALL, Thomson Reuters, Bloomberg, FactSet, Capital IQ, and TheMarkets.com. All of our research is made widely available at the same time to all BMO Capital Markets client groups entitled to our research. Additional dissemination may occur via email or regular mail. Please contact your investment advisor or institutional salesperson for more information. Conflict Statement A general description of how BMO Financial Group identifies and manages conflicts of interest is contained in our public facing policy for managing conflicts of interest in connection with investment research, which is available at http://researchglobal.bmocapitalmarkets.com/Public/Conflict_Statement_Public.aspx. General Disclaimer BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its subsidiaries BMO Nesbitt Burns Inc., BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc., BMO Capital Markets Ltd. and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (BMO Financial Group) has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein. Additional Matters To Canadian Residents: BMO Nesbitt Burns Inc., affiliate of BMO Capital Markets Corp., furnishes this report to Canadian residents and accepts responsibility for the contents herein subject to the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc. The following applies if this research was prepared in whole or in part by Andrew Breichmanas, Tony Robson, or Edward Sterck: This research is not prepared subject to Canadian disclosure requirements. This research is prepared by BMO Capital Markets Limited and subject to the regulations of the Financial Conduct Authority (FCA) in the United Kingdom. FCA regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5% or more of the equity of the issuer. Canadian regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 1% or more of the equity of the issuer that is the subject of the research. Therefore BMO Capital Markets Limited will only disclose its and its affiliates ownership interest in the subject issuer if such ownership exceeds 5% of the equity of the issuer. To U.S. Residents: BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd., affiliates of BMO NB, furnish this report to U.S. residents and accept responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd. To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the Financial Conduct Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together referred to as relevant persons). The contents hereof are not intended for the use of and may not be issued or passed on to, retail clients.

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BMO Capital Markets

BlackRock Kelso Capital

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personal and commercial banking clients are served by BMO Harris Bank N.A., Member FDIC. Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets. BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A, BMO Ireland Plc, and Bank of Montreal (China) Co. Ltd. and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC), BMO Nesbitt Burns Securities Limited (Member SIPC) and BMO Capital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund) in Canada, Europe and Asia, BMO Capital Markets Limited in Europe, Asia and Australia and BMO Advisors Private Limited in India. Nesbitt Burns is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. BMO Capital Markets is a trademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license. Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. TM Trademark Bank of Montreal COPYRIGHT 2013 BMO CAPITAL MARKETS CORP.

A member of BMO

Financial Group

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