PIK Income Fell Modestly in 2Q25 for BDCs, Dividend Coverage Varies
Payment-in-kind (PIK) income for Fitch-rated business development companies (BDCs) declined modestly in 2Q25 but remains above pre-2024 levels. This reflects persistent challenges in portfolio credit quality and the impact of structured PIK arrangements amid elevated interest rates. The latest quarterly earnings data reveal diverging PIK trends across the sector, with some BDCs reporting significant reductions while others saw increases, partially linked to portfolio amendment activity and asset quality pressures.
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