BDC Wrap-Up: Wednesday August 22, 2018Premium Free
Premium subscribers will have received the BDC Reporter’s analysis of the impact on CPTA from exiting two portfolio companies, and what might lie ahead both in terms of investment sale opportunities and credit risk.
In the Daily News Table, we mentioned insider sole sales by former CEO Leo Tannenbaum and discussed OCSL’s stock price.
FIXED INCOME NEWS
The biggest story of the day for a second day was about SAR, which completed the pricing of its second Baby Bond .
Premium subscribers: Please read the article “Saratoga Investment: To Issue New Baby Bond.”
In the Fixed Income News, we added commentary about how well the new issue was priced.
A second story was the decision by PSEC to redeem its 2019 5.0%.
We first wrote a full article on this subject back on June 7, 2018 when PSEC bought back half this debt.
Now the other half is about to be redeemed.
We speculate in the Fixed Income News as to where the BDC will come up with the funds to pay off $153mn.
FIXED INCOME TABLE
We’ve not yet added either the new GAIN Term Preferred (Series E) or the new SAR Baby Bond to the Fixed Income Table. We are waiting for both to be actively trading.
However, when that occurs, we’ll temporarily see total BDC Fixed Income issues reach 39, from 37 currently.
This was not an exciting day for readers who crave big moves in stock prices.
The UBS Exchange Traded Note with the ticker BDCS – which is based on the Wells Fargo BDC Index – was down 0.23% on the day.
That’s after a positive day on Tuesday and after reaching an intra-day high of $20.85 before closing at $20.79, from $20.8360 at Tuesday’s close.
Interestingly – but maybe not surprising with so many investors at the beach or in planes, cars and automobiles – volume was only a fifth of the daily average.
Likewise, no BDC moved up or down 3.0% on the day.
We did have some capital to deploy in two different accounts and invested in both CPTA and TSLX.
As discussed before, CPTA fits into our Special Situation strategy. Premium readers were alerted as to the whys and wherefores of our interest in CPTA back, and the potential gain involved.
TSLX fits into our Long Term Income strategy. Following our review of the latest results we updated our 5 year discounted dividend cash flow projections for the BDC.
Of all the BDCs we track TSLX – despite being hardly cheap at this point – offers the highest prospective return through 2023 (a juicy double digit Total Return if we prove right).
So we added TSLX to one of our portfolios.
We updated the Investment Disclosure page within seconds of both purchases.
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