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BDC Market Update For Tuesday February 20, 2018

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NEWS

There was no BDC news on Tuesday. However, with 7 different earnings releases coming in the week that won’t last. See below.

The only item recorded in the just upgraded Daily News Table  was a Stock Watch item: MCC hit a new 52 Week and All Time Low of $4.08, and closed at $4.09.

The BDC Reporter’s Dividend Outlook for the long troubled BDC is a DECREASE in 2018, and has been for months. The market has been slowly coming to the same conclusion.

For our latest Dividend Outlook article, click here.

MCC’s stock price has been dropping in fits and starts since the May 2017 reduction of the payout to $0.16 from $0.22.

The stock chart shows why – in the BDC Reporter’s opinion – it’s so important i) to project out future distributions ; ii) do so as early as possible.

Since May 2017 – and after the May 5 declaration of the lower payout – MCC has dropped (40%) in anticipation of a double dip.

The latest results published February 6, 2018 did not help. One quarter of the drop in price has occurred in the past few days.

Even a very patient Total Return investor who bought the stock just before the May 2017 dividend cut will have to cut coupons for many, many years to recoup the price loss MCC has endured.

MARKET

The BDC Sector – as measured by BDCS – was down again on the day to $19.59.

This next chart shows that BDCs are caught up in the general market turmoil and moving in sync with the major indices for – at least – the last month.

When the indices say: “Go Down !”, BDCS complies and when the indices say “Go Up !”, BDCS salutes and follows orders.

This means that any individual BDC valuation mechanism has gone out of the window for the moment.

That’s good for buyers and reassuring (in a way) for existing investors, but leaves us without a compass.

Obviously, market sentiment remains unfavorable, and most of the pressure is to the downside.

We count 20 BDCs trading within 5% of their 52 Week Lows and another 12 within 5%-10%.

In the former category are several BDCs that have already announced earnings at levels expected by the analysts and whose distribution paying capability remains intact.

Viz: GBDC, GLAD and SAR.

In the latter category are ARCC and PFLT.

Only 4 BDCs are trading within 10% of their 52 Week Highs.

Numero Uno is CSWC – which posted record IVQ 2017 results and is just 5% off it’s All Time High as a BDC.

Then there is MVC, HRZN and SUNS.

Putting all this in a Bigger Context, the BDC Sector remains just shy of a Bear Market since peaking in March 2017.

As this final chart shows, there have been 4 steps down during these last 11 months.

EARNINGS CALENDAR

The BDCs releasing earnings this week will be led by TSLX and followed by GSBD, HTGC, MAIN, SUNS, SLRC and TICC.

We’ve already had Earnings Previews from MAIN and TICC. No great surprises are expected from any of these names with the possible exception of TICC.

The BDC Reporter has a Dividend Outlook of DECREASE in 2018 for TICC. All the others rate an UNCHANGED distribution outlook.

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