BDC Weekly Review: BDCs Are Taking Advantage Of Wider Spreads

May 02, 2025 11:44 PM ET, , , , , 1 Comment
(7min)

Summary

  • We take a look at the action in business development companies through the fourth week of April and highlight some of the key themes we are watching.
  • BDCs saw a 3% total return last week, with the median valuation improving from a 20% to a 10% discount.
  • Rising credit spreads present both challenges and opportunities for BDCs, enabling them to reinvest at wider spreads due to high portfolio turnover.
  • Prospect Capital's tender offer for its 2026 bond saw limited uptake, while Capital Southwest's new SBA license enhances its borrowing capacity and lowers interest expense.
  • CION Investment Corp's low valuation and inconsistent performance warrants only a tactical hold.

Abstract concept of stock exchange charts, bar graph and market data, colored in blue and orange.

Torsten Asmus

Welcome to another installment of our BDC Market Weekly Review, where we discuss market activity in the Business Development Company [BDC] sector from both the bottom-up—highlighting individual news and events—as well as the top-down—providing an overview of the broader market.

Check out Systematic Income and explore our Income Portfolios, engineered with both yield and risk management considerations.

Use our powerful Interactive Investor Tools to navigate the BDC, CEF, OEF, preferred and baby bond markets.

Read our Investor Guides: to CEFs, Preferreds and PIMCO CEFs.

Check us out on a no-risk basis - sign up for a 2-week free trial!

This article was written by

13.11K Followers

ADS Analytics is a team of analysts with experience in research and trading departments at several industry-leading global investment banks. They focus on generating income ideas from a range of security types including: CEFs, ETFs and mutual funds, BDCs as well as individual preferred stocks and baby bonds.

ADS Analytics runs the investing group Systematic Income which features 3 different portfolios for a range of yield targets as well interactive tools for investors, daily updates and a vibrant community.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of OBDC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Related Stocks

SymbolLast Price% Chg
OBDC--
Blue Owl Capital Corporation
PSEC--
Prospect Capital Corporation
CSWC--
Capital Southwest
CION--
CION Investment Corporation
CICB--
CION Investment Corporation CAL NT 29

Related Analysis