BDCs boosting leverage

|By:, SA News Editor

vai Leela Parker Deo at Reuters

Apollo Investment (NASDAQ:AINV), FS Investment (NYSE:FSIC), PennantPark Floating Rate (NASDAQ:PFLT), and Gladstone Capital (NASDAQ:GLAD) are among those who have received board approval for increased leverage. Ares Capital (NASDAQ:ARCC) plans to discuss the same with its board.

The moves come after last month's passage of the Small Business Credit Availability Act, which lowered asset coverage requirements for BDCs to 150% from 200% (effectively allowing max leverage of 2:1 vs. 1:1 previously).

The industry had been working for more than five years for this change. Now that it has it, look for even more competition in the already-busy middle-market loan sector.

Other players of interest: Prospect Capital (NASDAQ:PSEC), KCAP Financial (NASDAQ:KCAP), Saratoga Investments (NYSE:SAR), THL Credit (NASDAQ:TCRD)

ETFs: BDCL, BDCS, BIZD, FGB, LBDC

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