BDC Wrap-Up: Friday August 24, 2018

DAILY NEWS

There was only one development on the day: GAIN announced changes to its Revolver.

Premium subscribers were briefed on the details and the challenges facing GAIN – and its shareholders – from the ongoing campaign by the Investment Advisor to prepare for “leveraging up” the balance sheet.

BDC DIVIDEND NEWS

We updated BDC Dividend News with NEWT’s latest payout, and maintained the same outlook for the distribution as before through June 2019.

As a glance at the Dividend Outlook Table will show, the BDC Reporter projects 7 BDCs will increase their distribution in the next 12 months and only two are likely to decrease their payout.

We can report that the BDC Reporter’s Motif ( a sort of mini ETF) of BDCs expected to be dividend increasers – which we set up at the end of April – is up 14.1% and is outstripping the S&P 500 over that period !

A similar portfolio which consists only of BDCs that we expect to keep their distributions unchanged over the next 12 months is up only 1.7% and is getting trounced by the S&P.

We did start the second portfolio one month later so the results are not strictly comparable, but you get the idea.

Not to look a gift horse in a month but we are surprised how few BDCs seem likely to join Team Increase given that 30 of 46 have approved higher leverage or are in the process of getting shareholder approval.

Management fees and leverage will definitely be rising in the next 12 months across much of the BDC universe, but will dividends ?

The BDC Reporter continues to look under the hood of every BDC in very great detail and will update our projections when a new candidate for a BDC increase appears.

So far – besides GSBD – no obvious candidates as yet.

(We should point out than an analyst we’ve talked to believes the GSBD managers are doing everything to dampen expectations of a dividend increase and want to maintain the status quo, so we’ll see if we’re too sanguine).

STOCK WATCHThe UBS Exchange Traded Note with the ticker BDCS – which is based on the Wells Fargo BDC Index –dropped from $20.74 to $20.69.

That’s a hardly noteworthy 0.25% drop and a 0.5% loss on the week.

As in the past two days, no BDC moved up or down 3.0% on the day

Proving that the “dog days of summer” really are a thing.

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