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BDC Market Agenda: Monday March 29, 2021

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On The Docket

With BDC IVQ 2020 earnings season behind us and the IQ 2021 results more than a month away, there’s very little sector news of immediate importance at the open except the following minor items in the official filings:

  1. TriplePoint Venture Growth (TPVG): Filed a Form N-2 – an addition to its “shelf registration”.
  2. Capital Southwest (CSWC): Filed a 40-APP with the SEC seeking to allow the issuance of “restricted shares” to the BDC’s independent directors.

Given CSWC is one of the few remaining “internally managed” public BDCs, compensation schemes have to be devised to attract and retain independent directors. On March 21,2021 a Non-Employee Director Plan was approved by CSWC’s Board. If the SEC blesses the Plan, CSWC’s shareholders will vote to approve the arrangement.

We will review the eventual shareholder proxy – should the SEC say yes – and determine if there’s anything of sufficient interest to warrant a full fledged review by the BDC Reporter in the future.

Credit Updates

We will be re-publishing articles published late last week in the BDC Credit Reporter about downgrades affecting two BDC portfolio companies: Integro Parent Inc. and BioPlan USA.

The BDCs involved in these two entities include New Mountain Finance (NMFC); Crescent Capital (CCAP) and Investcorp Credit Management (ICMB). We rate both credits as “Trending” – our term indicating that we expect material changes in valuation and/or income to show up in the upcoming BDC quarterly filings.  As always when re-purposing BDC Credit Reporter articles we’ll offer a preface, placing the news in the overall credit context of the BDCs involved.

Credit Review

Without continually being distracted by BDC earnings releases, the BDC Reporter will begin to undertake full credit reviews of most of the public BDCs we track. We are doing our research on WhiteHorse Finance (WHF) and will publish the review once completed. We already know from the BDC’s own disclosures at 12/31/2020 that there are 67 companies in its portfolio, with a FMV of $691mn, of which $115mn – or 16.7% of the total – are underperforming. Those include three companies marked as non performing with a FMV of $10mn. Our review will get further into the weeds, including seeking to highlight which troubled companies might result in an ultimate loss of income or further fair market value and which might recover.

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