No single ticker was named. Rates & bonds ETFs are one way for retail investors to get exposure. Not a recommendation.
Avoid public business development corporations
The bear case argued for public business development corporations (BDCs) is that rising interest rates are putting severe pressure on small-company debt portfolios, rendering many of these public vehicles unprofitable.
The argument
The guest argued that BDCs are facing intense pressure and are attempting to hide distress through off-balance-sheet borrowing and payment-in-kind (PIK) structures, which he characterized as a sign of insolvency. He warned that this sector is highly vulnerable and should be avoided for the remainder of the year.
The thesis, stress-tested
✓ What validates it
- ✓Further increases in PIK debt structures across public BDC filings
- ✓Rising default rates among small-business borrowers
▸ Risks discussed
- ▸Interest rates stabilizing or falling could relieve pressure on small-company borrowers
- ▸Pockets of private credit targeting distressed assets may still perform well
Hear it yourself
"I feel like this has been one of the best PR moments for the country, just seeing everybody who's been coming to The US and experiencing America. Like, it's one of my favorite things on social media right now is, World Cup fans, in, like, Bass Pro shops or trying Texas barbecue or something. It's been amazing. So Yeah. But you know what it shows you, Julia? Always stay on the attack. Because all the teams that have played conservative, Netherlands, Germany, they've all lost. Yeah. Well, I don't know that much about soccer, so I'm learning. But it's been exciting. It's been awesome to see."