Leveraged Loan Insight & Analysis – 11/18/2019

Distressed percentage accelerates on BDC loans


For several years in an asset and yield starved market, BDCs stretched up the risk spectrum in an effort to keep up their lofty dividend yields. As the credit environment becomes tougher this year amid slowing global growth, more cracks are beginning to surface in BDC holdings. So far based on 3Q19 earnings reports, over 80% of BDCs reported a decline in Net Asset Value per share signaling that the credit environment is starting to deteriorate.