Caution urged on Business Development Companies
The guest argued that investors should be highly cautious of Business Development Companies (BDCs) due to rising distress in private credit portfolios.
The argument
The guest cited research indicating that many public BDCs are becoming unprofitable because the private middle-market companies they lend to are facing financial distress.
The thesis, stress-tested
✓ What validates it
- ✓An increase in non-accrual loans reported in BDC quarterly earnings
- ✓Dividend cuts or downward net asset value (NAV) revisions by major BDCs
▸ Risks discussed
- ▸Rate cuts easing the debt service burden on private portfolio companies
- ▸Stronger-than-expected economic growth preventing defaults
Hear it yourself
"They just write that the issues with private credit have been discussed at length. Our business development companies, the BDCs, I don't they named a number of different, ticker symbols, main CSWC, ARCC, etcetera."
00:00 / 00:16
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE