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BDC Market Recap: Week Ended March 17, 2017

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Week 11 was Comeback Week for the BDC sector.

BDCS was up to $23.47 after closing out the prior week at $23.04.

That’s a 1.9% jump upward.

DUSTING THEMSELVES OFF

28 of the 45 BDCs we track were above their 50 Day Moving Average, better than 22 the week before.

33 are trading above the 200 Day Moving Average, almost tied with last week’s 34.

CLOSE TO THEIR TOP

Looking at who is within 10% of their 52 Week Highs, we identify 35 names, versus 33 the week before.

6 BDCs this week were within 1% of that 52 Week High.

Most notable was technology lender Triple Point Venture Growth (TPVG) which reached a near 2 year high.

The BDC reported decent results for the year and quarter during the past several days.

Not surprisingly perhaps the Silver Medal Winner was Main Street Capital (MAIN), a crowd favorite for years.

In third place was a more recent market favorite- Goldman Sachs BDC (GSBD)- notwithstanding lacklustre recent results.

TERRIBLE TWO

Down at the bottom, there were just 3 names within 10% of their lowest price in a year.

Only two count: Fifth Street Finance (FSC), still nursing its wounds from a dividend cut and OHA Investment (OHAI).

The latter cut its own distribution by two-thirds, reported further losses but still dropped only (13%) on the week.

After years of poor results, only speculators remain in OHAI’s stock and there remains hope in this crowd that some upside exists.

Still, OHAI ended the week just (5%) off its 52 Week Low and (54%) off the corresponding high.

IRREPRESSIBLE

Overall, earnings season is coming to a close. There have been a number of dividend cuts, poor results and higher credit losses. Of course, overall BDC prices are up, all the above notwithstanding.

 

We worried that the long expected Baby Bond price adjustment might happen as rates rose.

UNSHAKEABLE

However, the median price of our 35 BDC Baby Bond universe ended up at $25.60.

That’s slightly (negligibly ?) above last week’s $25.55.

14 issues are still trading above their 50 Day Moving Average, but 21 are below.

20 are trading above their 200 Day Moving Average, which is marginally better than last week.

Still, only 3 BDC Baby Bonds are trading below par, same as last week.

KEEP CALM ETC.

BDC Bond investors appear to have kept their nerve in the face of much dramatic commentary.

Or, maybe like the 10 Year Treasury which dropped to 2.50% from 2.58%, doubt remains about the long end of the curve.

BOND SELL OFF

We had apocalyptic warnings ourselves last week: worrying about possible Baby Bond redemptions down the road.

This week BlackRock Capital Investment (BKCC)  did announce ,in an SEC filing, its intention to redeem its 2018 6.6% privately-placed Notes.

That won’t affect our universe of publicly traded Baby Bonds but does suggest we might be on to something.

THERE’s (NOTHING) HAPPENING HERE. WHY IT IS AIN’T EXACTLY CLEAR

Otherwise, though, BDC Baby Bonds remained remarkably stable as a group.

Why that’s the case we won’t debate this week.

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