It's a positive development, says Ryan Lynch of KBW, liking the paper's low cost, fixed rate (all between 3.75% and 4.5%), and unsecured nature.
The three: Ares Capital (NASDAQ:ARCC), Hercules Capital (NASDAQ:HTGC), and TPG Specialty Lending (NYSE:TSLX).
The amount raised could total $750M if the underwriters exercise their greenshoes, and Ares and Hercules both boosted the deal sizes while they were being sold. The option to convert kicks in when the share prices rise 15% from current levels.
In addition to that news, both Hercules and Medley Capital (NYSE:MCC) announced their intention to call some higher cost notes, and replace them with cheaper debt.
Under the settlement, MusclePharm (OTCQB:MSLP -4.6%) must pay Medley (NYSE:MCC) portfolio company Capstone Nutrition as undisclosed cash amount and other consideration, and MusclePharm will drop all claims against Medley and Capstone.
Capstone can use whatever it gets to help with its debt to Medley. The company initially filed a claim against MusclePharm in May for multiple contractual breaches.
The sector has been a big beneficiary of the rates lower-for-longer thesis, the bounce in oil and the related major move higher in high-yield.
All three of those themes have been called into question since Labor Day. SA author BDC Buzz reminds not all BDCs are created equal, and says the higher risk ones will likely be underperformers in a correction ... Think Prospect Capital (PSEC -4%), TICC Capital (TICC -1%) and KCAP Financial (KCAP -2.7%). Fifth Street Finance (FSC -2%), Medley Capital (MCC -2.6%) and Full Circle Capital (FULL -0.4%) also fit the bill, and PennantPark (PNNT -1.5%), Gladstone (GLAD -3.4%), and Apollo Investment (AINV -1.2%) have the highest amount of oil exposure.
Those BDCs with "true" first-lien assets and stable NAV will be the outperformers: New Mountain Finance (NMFC -1.8%), Solar Senior (SUNS -0.1%), Goldman Sachs BDC (GSBD -0.7%), Golub Capital (GBDC -0.5%), FS Investment (FSIC -1.7%), Monroe Capital (MRCC -0.1%), TPG (TSLX -0.6%), Main Street (MAIN -0.1%), PennatPark Floating Rate (PFLT -0.1%), Hercules (HTGC -1.4%), Horizon (HRZN -1.8%), and TCP Capital (TCPC -0.7%) are worth a look.