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BDC Wrap-Up: Wednesday September 20, 2017

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On Wednesday September 20, 2017 we followed yesterday’s Premium article about Gladstone Capital‘s (GLAD) new Term Preferred with an update after the BDC announced pricing and the amount to be raised. The BDC Reporter admits to being surprised by the final terms and the apparent funding approach GLAD’s Investment Advisor is taking, but this remains a Work-In-Progress. This is also an important story as part of the greater context as to what is happening in the capital markets for BDC unsecured debt.  With nearly half all BDCs with some form of public Note, Convertible or Term Preferred on its books – and most of those redeemable at any time or within the next few quarters – what happens at GLAD may be an augury for what could come next in many, many other BDCs.


There were several other developments during the day of varying degrees of importance. Saratoga Investment (SAR) – whose stock price has been trending up in the past month – announced its coming earnings release and Conference Call schedule: October 11 and 12th respectively. The smaller BDC is one of the few BDCs that has been increasing its distribution. Will the Good Times continue to roll ? In three weeks we’ll know more. Elsewhere, Hercules Technology (HTGC) reported in a press release that S&P had reaffirmed its BBB- credit rating.  Details were sparse, but the BDC was anxious to get the word out to investors. CM Finance (CMFN) filed its official Proxy on the day, but Premium subscribers had already been briefed on September 1 in a long review of the preliminary Proxy. We rated CMFN as “very average” where BDC corporate governance was concerned at the time, and provided ample amounts of reasons why.


A quiet day from a stock watching standpoint. No individual BDC moved 3% or more up or down.  However, yesterday’s biggest up moving stock – OHA Investment or OHAI – was the Biggest Loser on the day: down (2.5%).  Markets can be so fickle ! Otherwise all other BDC stocks – including the 16 others on our Special Situations Watch List trod water. (Premium subscribers will shortly be getting the compleat list of where we believe the best opportunities for a short term gain might lie). Likewise, nothing much happened to prices amongst the 14 BDCs we’ve identified for our long term Income strategy.


We missed some of the end-of-day market action meeting with two of the principals of Capital Southwest Corporation (CSWC), a newer BDC with a long history. We wrote an article for our Premium subscribers as recently as August 30th, when CSWC raised its distribution All our readers interested in the under-leveraged BDC might want to read the back-to-back articles we wrote about CSWC’s financial performance on June 1 and June 2.  The BDC Reporter will have much more to say when we complete our discussions with the very affable and responsive senior managers, both with many years experience at American Capital. Will CSWC become a mini-MAIN , which is the most successful BDC over the history of the sector ? We will tackle that question and many others shortly.

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