BDC Common Stocks

Week 10

And So It Begins

The freight train of economic uncertainty that we’ve been worrying about on these pages bore down on the markets this week, causing considerable damage to stock prices – including the BDC sector.

As the summary above from Seeking Alpha shows, all the major indices were down – a lot.

The S&P 500 had its worst weekly performance since September 2024.

In Our Case

When we experience violent broad market swings like this one, the BDC sector rarely escapes unscathed – and this week was no exception.

BIZD – the only BDC exchange traded fund and one of the ways we measure sector price performance – fell (2.5%).

Intra-week, BIZD dropped a great deal more but – apparently – a reassuring tone from Chairman Powell on Friday boosted investors spirits.

The S&P BDC Index – another measuring stick we use – dropped (2.8%) on a total return basis.

This was – without a doubt – a bad week for BDC stocks, but we’ve seen worse.

Not all that long ago, SVB Bank got into trouble and everyone began to worry that we were in for a repeat of the GFC and BIZD dropped (9.9%) in a week.

Retreat

This time, 39 of 46 BDCs we track dropped in price.

Amongst the BDCs in the red, 20 – or roughly half – moved down (3%) or more and only 1 increased by greater than 3.0% amongst the 7 BDCs in the black.

Here’s a list of all the (3.0%) plus price losers:

All Sorts Of Reasons

We tried and tried to determine a pattern amongst all these price declines but could not.

WhiteHorse Finance (WF) – as we made clear in a Premium article – under-performed and paid the price – so to speak.

Stellus Capital (SCM) – which we’ve not yewt had the opportunity to write about – posted “solid” results, but may have disappointed the market or just got caught up in the broader maelstrom.

We imagine many of the Biggest Losers this week, like Hercules Capital (HTGC); Main Street Capital (MAIN) and Fidus Investment (FDUS) – usually apples in the market’s eye – were brought down by profit taking.

After all, all the BDCs mentioned – and many others – were reaching 52 week or even all-time highs in the weeks running up to this week.

No wonder that one of our regular metrics – the number of BDCs trading within 5% of their 52 week price peaks – dropped from 18 to 9…

Also, the number of BDCs trading at or above Net Asset Value Per Share (NAVPS )- which had been at a record level in 2025 of 20, dropped back to 15.

Holding On

However, it’s worth mentioning that no BDC reached a new 52 week price low this week and there are only 3 BDCs whose price is within (5%) of their 52 week low.

The 3 involved include Crescent Capital (CCAP) – punished for a lackluster IVQ 2024 performance and now trading (14%) below its 52 week high.

Also down in the nether regions are Palmer Square (PSBD) and Kayne Anderson BDC (KBDC) – two new BDCs whose fundamentals are pretty good, but not good enough to keep their stock price up.

Hanging In There

What may surprise you is that BDCs that have performed poorly again and again in recent years are trading well away from their lows, even in this market miasma.

Some of the names involved are Horizon Technology Finance (HRZN), whose latest NAVPS fell (7%) quarter to quarter and is down (27%) since the end of 2021.

The same applies – though the metrics vary – for Oaktree Specialty Lending (OCSL); BlackRock TCP Capital (TCPC); TriplePoint Venture Growth (TPVG); Prospect Capital (PSEC) and the previously mentioned WHF.

None of these BDCs covered themselves in glory in the IVQ 2024, but investors are in a forgiving mood.

Where We Are

Let’s step back from this week’s drama and take a snapshot of the BDC sector 10 weeks into 2025.

Clearly, the vertiginous gains of just recently are gone and BIZD is up only 2.9%.

BIZD is (4.1%) below its 52 week high set on February 19, 2025.

The S&P BDC Index on a total return calculation is up 2.4%, using a different methodology and including the dividends received to date.

The BDC sector – at least – is well ahead of the S&P 500, which is down (1.9%) on a price basis and (1.7%) when dividends are included.

Before this week’s implosion, 41 BDCs were trading in the black in 2025.

That has dropped to 32 – still three quarters of the public BDC universe.

Tops

Amusingly, of the 45 BDCs that have been active all year, tiny Oxford Square Capital (OXSQ) has increased the most in price: 15.2%.

In the IVQ 2024 OXSQ reported lower Net Investment Income and a lower NAVPS than the quarter before but did continue its long streak of paying out a monthly distribution of $0.0350 per share, or $0.42 per annum.

The current yield is 14.9%, which may explain investor fascination.

With the silver medal for price performance comes Trinity Capital (TRIN), which is up 11.5%, probably boosted by first rate IVQ 2024 results and high hopes for the BDC’s long term future.

The third best performer is OFS Capital (OFS), up 10.7%. The BDC announced a BIG jump in its NAVPS in the IVQ 2024 on the back of one portfolio company’s higher valuation, and a more modest boost in its recurring earnings.

OFS has been a troubled credit of late so this represents one of the biggest surprises of the season.

All in all, even after this week’s fallback, the BDC sector is doing pretty well after 10 weeks.

Where We’re Going

We’re Not There Yet

It’s hard to believe this week’s dramatics is a one and done phenomenon.

As before, we continue to have no idea how remaking the world order will play out in the results of BDC-financed companies, nor does anyone else.

Nor is there any sign out of Washington D.C. that the stops and starts and re-starts that have characterized the government’s new policies are at an end.

Uncertainty – the bugbear of investors and anyone running a business – seems likely to continue.

As a result – some time soon – we might be in for more of the rocking and rolling of week 10.

On the other hand, markets – after awhile – adapt to their new normal and react less to every headline, but that thick skin may still be some time off.

Passenger Seat

Those of us invested in the BDC sector are mostly just along for the ride.

With 39 BDCs having reported results – and after having heard up to date thoughts from the managers involved – there’s little about current conditions in the leveraged loan market to cause investors to stay away.

As at any time, some BDCs are out-performing; most are puttering along as one might have expected and a (sizable) minority have tripped up – typically on their credit underwriting.

Still, all-in loan yields remain higher than their historical averages; non-accruals are lower; leverage is mostly well within targeted levels and portfolios are mostly growing.

If you were a fan of private credit/BDC investing a year ago, there’s no reason amongst the fundamentals to not be today.

Nonetheless, if the major indices continue to slump we would be very surprised if BDCs hold their own price-wise.

We’ve said since the beginning of this year that 2025 would be an unusually volatile year and we’ve just had our first taste of what that looks like.