BDC Common Stocks Market Recap: Week Ended April 10, 2026

Sideways

BDC COMMON STOCKS

Week 15

Yes And No

Last week, we projected – reasonably enough – that BDC sector prices would increase on expectations of a tentative “cease-fire” agreement between the US and Iran.

We were both right and wrong.

The headline number – the percentage change in the price of BIZD, the BDC sector’s only exchange-traded fund – ended up dipping ever so slightly – dropping from $12.37 to $12.36.

The S&P BDC Index, whose methodology differs but whose intent is the same, was up negligibly, from $47.79 to $47.80.

We certainly did not get the relief rally that gripped the major indices, quantified above.

However, when we look at the overall metrics for the week, there are a few signs of light, but still plenty of shade.

Let’s start with the latter.

Same Old

The number of BDCs trading at or above their net asset value per share (NAVPS) remained stuck at 6.

There were no new stocks reaching a 52-week high, and 4 BDCs hit new 52-week lows.

This was especially notable because 3 of the 4 were among the largest BDCs by assets under management: FS-KKR Capital (FSK), Blue Owl Capital (OBDC), and Blue Owl Technology Finance (OTF).

We suppose FSK was in the dog house because the under-performing BDC received bad news from yet another ratings group:

“On Thursday, April 9, Fitch Ratings downgraded FS KKR Capital Corp. (FSK) from BBB- (lower medium investment grade) to BB+ (non-investment grade/junk), with the outlook maintained at Negative. This strips FSK of its investment-grade status at Fitch.

Fitch cited several deteriorating credit factors :

• Elevated non-accruals: FSK’s non-accrual investments reached 4.4% of its debt portfolio by value at year-end 2025, up from 2.5% at year-end 2024 and 3.5% in Q2 2025
• Ongoing realized losses: The company recognized continued realized losses from portfolio restructurings, including roughly $624 million in realized and unrealized losses for the full year 2025
• Software sector concentration: Software and related services loans represented approximately 16.4% of total exposure, a segment facing headwinds from AI disruption
• NII pressure: Fitch expects net investment income yield to decline further in 2026 due to expected interest rate cuts and the potential for additional non-accruals

Beaten Up

The two Blue Owl BDCs – whose performance to date has been far superior to the KKR vehicle – were probably dragged down by further bad press about their parent, Blue Owl Capital (OWL), which found its way to a new record price low (61%) below its peak set in July 2025.

Uh Oh

RWAY investors, in all likelihood, noticed what the BDC Reporter wrote about this week – a big drop in the venture BDC’s NAVPS in the first quarter of 2026.

This was reported in passing as part of an 8-K dealing with RWAY’s acquisition of SWK Holdings. 

The BDC – once again – reiterated that the acquisition would be accretive to earnings, but the market was more focused on the (11%) change in NAVPS.

Such a big drop is out of character for RWAY and leaves the BDC, now under new ownership, trading at half its book value.

Flip Side

In better news for BDC investors, two BDCs are now trading within 5% of their 52-week highs: Capital Southwest (CSWC) and Gladstone Investment (GAIN).

It’s no great surprise that both high-flying BDCs operate in the lower middle market (LMM) – less impacted by whether AI will eat the lunch of incumbent borrowers.

Another small mercy is that the number of BDCs trading within 10% of their 52-week lows has shrunk slightly from the week before, from 36 to 29. Two weeks ago, there were 39 BDCs within that ominous range.

On a YTD basis, there are now 8 BDCs whose stock price is in the black, up from 6 the week before and 2 at the sector’s darkest hours three and four weeks ago.

BIZD closed the week at $12.36, 3.3% above its 2026 and 1-year low of $11.97, set a few days ago after the disbursement of its quarterly dividend.

Sidebar

Ironically, that most recent BIZD dividend was a doozy – the highest quarterly payout in its history, as the chart below shows. We assume this has something to do with a miscellany of special dividends announced in the IVQ 2025.

WHERE WE ARE 

Not Getting Ahead Of Ourselves

We shouldn’t let these glints of good news in the most recent week blind us to what has been an awful year for BDC investors everywhere.

BIZD is down (12.8%) on a price basis this year, and the S&P BDC Index on a total return basis is off (10.8%) – both in “Correction” territory.

By contrast, the S&P 500 – for all its woes in recent weeks – is almost flat this year after some fat and some lean weeks.

If we look back to mid-February of last year, when BIZD peaked, we can see in this chart that investors have experienced 3 massive drawdowns in the space of 14 months:

As the chart also shows, BIZD’s trading volume has picked up significantly, especially around the 3 lows.

However, the “value buyers” who pounced in April 2025 and again in October of that year have not been rewarded for their bravery, as BIZD has continued to slip further down.

Even investors looking for a bottom in recent weeks have been disappointed, as reflected in the new 52-week lows we report every week.

We have not experienced a week without new price lows since January 23, 2026 – 11 weeks ago.

Unwanted Records

As this lifetime chart of BIZD that goes back to 2013 shows, the public BDC sector is at its lowest level since November 2020 when BIZD was recovering from its precipitous – and greatest ever – price decline due to Covid fears.

WHERE WE ARE HEADED

Unrelenting

We can’t help feeling that not getting a bounce this week, like the one the other markets experienced, is a bad sign for what might be coming.

Not helping is that Private Credit, including the BDC sector, is constantly in the headlines.

Unfortunately, this proves that the old adage about there being no bad publicity is wrong. 

Investors – both those long BDC stocks and those on the sidelines – are being fed daily stories about non-traded BDCs limiting redemptions; the Treasury fretting about Private Credit exposure to banks, and – the biggest bugaboo of all – the possibility that BDC-financed software borrowers will be dropping like flies.

The focus right now – thanks to a recent Bloomberg article – is whether Private Credit’s software loans coming due between now and 2028 will get refinanced.

The lenders – almost unanimously – have been asserting that their borrowers are sound and their confidence in the sector undiminished.

That might be true, but what else can they say under the circumstances?

More interesting will be to see what these same lenders do when borrower X comes around looking for a new 5-7-year loan to replace its existing facility. 

Over at the BDC Credit Reporter this week, we undertook an analysis of Ares Capital’s (ARCC) software borrower exposure – both in general and that coming due through 2028.

We didn’t draw any conclusions one way or the other, but with the help of AI, we identified the businesses that might be at the greatest risk.

Not So Easy

This is a highly complex subject because, even without the challenge of new AI competition, some companies will always underperform.

If we hear of some credit stumbles, does that necessarily mean many other businesses will follow the same path, or are the wrong conclusions being drawn?

However, it is fair to say that the number of software underperformers in the BDC universe has been lower than the sector average until now.

If we do see a sudden spike in new software companies being added to the BDC Credit Reporter’s Watch List (rated a 3 on our 5-point scale) or deeply discounted and/or going on non-accrual, there might be good reason to worry.

This is unlikely to happen overnight, and we may get a false reading if many BDC software loans are written down in the IQ 2026 to reflect broader market worries.

This could show up, as we’ve already seen with RWAY and Palmer Square Capital (PSBD) in lower first-quarter NAVPS at many BDCs.

This might cause more investor panic, but only time will tell whether those write-downs were appropriate.

The actual picture may take several more quarters to become clear.

Unfortunately for the public, BDCs in our coverage universe, a significant minority – like FSK – are also contending with “normal” above-average credit challenges that have nothing to do with AI.

See the BDC Reporter’s recent article about IVQ 2025 BDC performance.

Will the “walking wounded” in the public BDC community be able to contend with both setbacks in their software companies and the rest of their portfolios?

There are many “ifs” and “maybes” in all this, and a long timeline that could linger into next year. Or even beyond.

With so much uncertainty on the road ahead, we find it hard to imagine BDC sector prices turning meaningfully upward in the months ahead despite the juicy yields on display.

However, we have been fooled before by the resilience of BDC investors, many of whom are not swayed by the “noise” emanating from the media and end up venturing forth regardless.

Finally – as the price action at GAIN and CSWC has shown – not every BDC is equally exposed to the risks we’ve discussed above.

The BDC tent is very big, and there are a multitude of strategic approaches in there that could succeed even while others spectacularly fail.