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BDC Common Stocks Market Recap: Week Ended April 5, 2024

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  • The S&P 500 had its worst weekly performance of 2024, dropping 1% due to strong labor market data increasing bets against the Federal Reserve cutting interest rates soon.
  • Strong economic indicators led to inflation fears and a rise in Treasury yields, impacting equities.
  • The BDC sector saw a decline, with the exchange-traded note BDCZ and the S&P BDC Index falling 0.8% and 0.5%, respectively, amid broader market downturns.
  • Of the 42 public BDCs tracked, two-thirds fell in price, but volatility within the sector was minimal.
  • Gladstone Capital (GLAD) experienced a notable drop of 7.5% after a reverse stock split, while Investcorp Credit Management (ICMB) saw a 6.1% increase, attributed to the nature of thinly-traded stocks.
  • The article anticipates investor focus on the first-quarter 2024 BDC results to assess the continuation or change in performance trends from the fourth quarter of 2023.
  • Recent bankruptcies and restructurings among BDC-financed companies could signal a decrease in troubled companies, potentially boosting BDC prices.
  • The BDC sector may benefit from a strong economy and sustained high interest rates, with 2024 poised to be a highly profitable year for BDCs if no Federal Reserve rate cuts occur.


Week 14


The benchmark S&P 500 (SP500) posted its worst weekly performance of the year on Friday and only its fourth overall negative week of 2024. The decline was primarily driven by strong economic data on the labor market, which increased bets that the Federal Reserve would be in no hurry to cut interest rates. Additionally, a rally in commodities led to a resurgence in inflation fears, while a jump in Treasury yields also put pressure on equities

Seeking Alpha – April 6, 2024

Sounds grim.

What was the reason for this market pullback?

“Friday’s non-farm payrolls report blew past expectations, with the economy adding 303K jobs, the unemployment rate ticking down, and the labor force participation rate inching up”.

Apparently Wall Street only cares about getting their hands on lower interest rates – which this latest data may have pushed off a little more – than the performance of the U.S. economy which seems to be shifting from good to great just months after almost every economist and pundit was certain a recession was coming.

However, “this worst weekly performance” was only a (1%) drop for the S&P and (0.8%) for the normally interest-rate hyper-sensitive NASDAQ. The Dow Jones, though, did drop (2.3%).

The BDC sector – as measured by the price of the exchange-traded note BDCZ, and our most favored price indicator – joined the S&P in falling back, but only (0.8%).

The S&P BDC Index – calculated on a total return basis – fell even less on all this favorable economic news: (0.5%).


Of the 42 public BDCS we track, exactly two-thirds dropped in price (24) and one-third increased or remained unchanged (18).

We wouldn’t say, though, that there was much price volatility within those ups and downs.

No BDC fell (3.0%) or more in price except for Gladstone Capital (GLAD), which fell (7.5%).

Less Is Less

This appears to be related to the BDC’s decision to undertake a reverse 2:1 stock split after shareholders failed to approve an increase in the permitted share count.

The Board/management of GLAD shrunk the share count instead with this move, as we noted in the “BDC Publications News Feed” in the Subscriber Tools section on April 5:

BDC Reporter Adds: Unable to get shareholders to agree to an increase in its share count, GLAD decided to go the other way and shrink its shares outstanding with a reverse stock split where every two shares owned became one. As of the opening on April 5, 2024 – as this SEC filing shows – the share exchange has occurred. GLAD closed at a price of $19.86, or $9.93 previously. GLAD has lost (7.5%) of its market cap in recent days.

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This is a strange episode but moved GLAD’s stock price enough to cause our other publication – BDC Best Ideas – to ask itself whether this downward move makes the beloved, long standing BDC a BUY or not. For the back and forth and conclusion, check out BDC Best Ideas. A subscription is required, but there is a 7 Day Free Trial.

BDC Best IdeAS: GLAD UPDATE April 3, 2024

One And Only

Otherwise, the only other BDC to exhibit much price change this week was tiny Investcorp Credit Management (ICMB), which jumped up 6.1%.

Why this sudden burst of investor energy? Sorry, we don’t know but with thinly-traded stocks such as these, high price volatility is common.

Looking Forward

Same Place

As we’ve noted in earlier Market Recaps, investors are waiting for the IQ 2024 BDC results to see if the relatively high number of poor performances registered in the IVQ 2023 will continue, shrink or grow larger.

A number of BDCs are getting themselves on the calendar, but we’re still a month away.

In the interim, we’re just getting bits and pieces of information, most of which you’ll find in the heretofore mentioned BDC Publications News Feed.

Giving Back

A few BDCs – especially those who are monthly dividend payers such as PFLT,PNNT and SCM – have announced upcoming distributions.

As we’ve noted in this publication and in BDC Best Ideas – where we project every BDCs annual payout through 2028 – the latest dividends have met expectations and are unchanged from prior periods.


On the credit side, there has been a spate of bankruptcies, restructurings and realization events of late.

We cover the subject in greater detail at the BDC Credit Reporter but we can report that BDC-financed companies such as the 99 Cents Only Stores; Shoes For Crews and ConvergeOne Holdings have filed for bankruptcy in the last few days. The first name will be liquidated and the other two are subject to debt-for-equity swaps that will leave the BDC lenders as owners.

Elsewhere, long troubled energy company 1888 Industrial Services and Impel Pharmaceuticals have been solds, resulting in modest recoveries for the BDC lenders involved.

We wonder if the total number of deeply troubled companies financed by BDCs will markedly shrink in the first half of 2024 as more businesses resolve – in whichever way possible – wait ails them?

If so, that will be a positive for BDC prices as most potential losses have been reserved for.


Much will depend on whether there is a new batch of portfolio companies – previously performing normally or only modestly out of kilter – that will show up in the deeply troubled credit category.

Our research suggests that was not the case in the IVQ of 2023, as BDCs grappled with companies that had been on their radar for a long time.

Whether that changes early in 2024 might have much to do with whether the first and second quarter BDC results impress or depress.


Otherwise – as we’ve seen this week – the BDC sector should be a beneficiary of a strengthening economy and yet another quarter of sky-high interest rates, which should keep earnings and distributions at their already propitious levels.

We have to be open to the possibility that there might end up being no Fed rate cuts in 2024 – as Apollo Global’s economist mooted this week.

If so – and despite whatever strain that might place on a small number of BDC-portfolio companies on the edge – that will be a boost to expected BDC earnings and may turn 2024 into the most profitable year in recent BDC sector history.

Big If

The markets can be terribly humbling to those of us making any sort of prediction but we don’t see BDC prices dropping into correction territory or worse in the next few week/months if prospective earnings and distributions remain at their elevated levels.

Even canny stock market mavens are loath to leave a party when the payouts are so generous.

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