BDC Market Recap: Week Ended April 7, 2017
This was Week 14 of 2017 for BDC common stocks.
The UBS Exchange Traded Note which we’ve roped in to use as our sometimes guide was at $23.71, marginally down from the week before.
However, the YTD chart shows that the BDC market remains very strong:
24 of 45 were still trading above their 50 Day Moving Average, and 35 above the 200 Day Moving Average.
That’s slightly off last week when the respective numbers were 28 and 36.
32 BDCs are trading within 10% of their 52 Week Highs. Last week the number was 34.
Overall that’s a very slight weakening in an up cycle.
DOWN BUT NOT OUT
Remarkably, the bottom end of the 45 BDC table is looking pretty good.
Only two BDCs are within 10% in price of their 52 Week Lows.
Not surprisingly, one is Fifth Street Finance (FSC), which this week lost its most recent CEO, and has been plunged into doubt as to what happens next.
FSC ended at $4.40, just (2.1%) off its 52 Week Low.
In September of 2016 FSC was as high as $6.29. A little under 5 years ago, the stock was over $11 a share.
FSC could go lower. Or is that the plan ?
BlackRock Capital Investment (BKCC) is 8% off the low, but had a tough week.
Overall, though, there are only 7 BDCs who’s stock price has dropped 20% or more off the 1 year high.
That’s hardly as big a list as the BDCs who’ve cut their distributions and/or announced portfolios studded with Watch List Loans or other problems.
Our unofficial and proprietary tally of those is 19 (including the Sucky Seven).
As we’ve said before, this is a very forgiving market.
LITTLE BIT BETTER
If BDC common stocks weakened ever so little on the week, Baby Bonds did the opposite.
The number of issues trading above their 50 Day Moving Average increased by 1 in the 34 issue universe we track.
24 are above the 200 Day Moving Average versus 20 last week.
As usual, we point to the drop in long and medium term risk free rates on the week for cause and effect.
LIKE WATCHING PAINT DRY
Regular readers will glaze over when we tell them that all but one issue is trading over $25.00 par.
Yes, the exception is Medallion Financial’s Unsecured Note (MFINL), now trading at $17.25.
(Medallion Financial has gone very quiet from a disclosure standpoint).
No less than 6 issues are trading at $26.00 or higher. Clearly the apocalypse to be brought on by the implosion of bonds has not yet arrived.
The median price on our list is at $25.62…
NEWS AT LAST
Thankfully, there was some capital market actions at last in the week.
TICC Capital (TICC) issued a new public Unsecured Note with the ticker TICCL ( pronounced “tickle “?).
That replaced a privately placed Convertible which TICC needs to repay, and expanded our coverage universe.
Prospect Capital (PSEC) issued a public Convertible Note (very rare) to refinance two prior privately placed Convertibles.
We’ll be adding both to our master list of Baby Bonds from next week.
Just when we were worrying aloud about a possible shrinkage of BDC Baby Bond issues in which to invest we get 2 new additions.
The markets are going at full throttle right now, so we expect this will change again very shortly.