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BDC Market: A Word From The BDC Reporter

The BDC Reporter Editor-In-Chief  writes a comment almost every day in our A Word From The Editor column. Normally this is ephemera and we don’t retain the writings.  In this case, we thought the March 8, 2017 post about the subtle change in the mood  of the BDC market might deserve saving and comparing with what happens next.

A Word From The Editor ( March 8, 2017:  For what it’s worth, the BDC Reporter is feeling the first chills of winter for a Business Development Company market that has been enjoying unseasonably good weather most every day in the past year. In the past few days we’ve noticed a modest-but broad based-weakening trend in Baby Bond prices. The picture in BDC common stocks has been more mixed.  Still, the number of BDCs with a stock price over their 50 Day Moving Average has moved down. Currently a third of the universe we follow (15 of 45) is trading below that oft used measuring sick.  Moreover, the easier to beat 200 Day Moving Average has 11 BDCs behind the curve versus 7 last Friday. As of last Friday the number was 12. As you’d expect after so many months of rising stock prices, the analysts are generally advising caution and placing many BDCs on Hold, not necessarily because of performance questions, but due to over-sized valuations.  Of course, when your nose is right up against the screen tracking 45 BDC common stocks and 35 Baby Bonds it’s possible that we’re reacting to what will prove to be a brief pause on the long walk up for BDC securities. Or they may be a divergence between the valuation of fixed income Baby Bonds (look at that employment number !) and common stocks.  The former may give up some of their gains as investors worry about higher medium term rates (after months of stubborn indifference to changes in the risk free rate increases), but common stocks may join the major market indices on their road to new heights (should that resume). All we know-and it’s not much-is that there is a slight chill in the air.