BDC Common Stocks Market Recap: Week Ended April 2, 2026

Reprieve

BDC COMMON STOCKS

Week 14

Contrarian

The war in Iran might be dragging on - and even intensifying - but the markets are tired of that narrative and returned to a more optimistic frame of mind this holiday-shortened week.

As noted above, all the major indices reflected widespread FOMO after many weeks in the bunker.

The BDC sector was no exception - despite the unrelenting bad publicity coming out of the non-traded segment - jumping 2.30%, going by the S&P BDC Index on a price return basis.

(We’re not looking to BIZD - the Van Eck BDC sector exchange-traded fund, which is our usual number one source - because this was a quarterly dividend payout week, which caused a slight drop in the price.)

On a total return basis, the S&P BDC Index was even more impressive: up 3.57%.

With all that said, the data is mixed overall.

28 BDCs were up in price, including 11 which jumped more than 3.0%, but 18 were down, of which 4 fell by (3.0%) or more.

Strikingly, 17 BDCs managed to reach new 52-week lows before the markets turned intra-week.

The number of BDCs trading at or above their net asset value per share (NAVPS )- an investor favorite - improved ever so slightly from 5 to 6.

We get the impression that some of the many BDC investors who have been sitting on the sidelines, awaiting a better entry point, decided the time was right to dip back in.

Winners

Here’s a list of all the BDCs whose price increased more than 3.0% in these 4 days:

No Thread

We find little in common amongst these BDCs. 

They come from every segment, including the upper middle market, which has been the most beaten down of late.

Topping the list are three BDCs that have performed very poorly for several quarters, but appear to be attracting so-called bottom fishers.

Hercules Capital's (HTGC) long-term financial performance, by contrast,  has been pristine, but the “AI will devour everything” theme has caused its stock price to drop by (28%) in 3 months. 

Maybe punters are having second thoughts about the credit risks, or the price finally reflects the increased pro-forma credit losses expected by some.

WHERE WE ARE

Unpleasant Memories

The IQ 2026 has come and gone as of last Wednesday.

In those 3 months, BIZD dropped (9.7%) and the S&P BDC Index dropped by (12.30%). On a total return, the S&P BDC Index fell (10.1%).

High To Now

If we calculate back from February 17, 2025 - when the market was last at a peak - BIZD is down a shocking (28.3%) in price terms. 

On a total return basis, the S&P BDC Index from its own highest point on February 18, 2025, to last Thursday is down a crushing (18.7%). 

YTD

Since the end of 2025, BIZD is off (12.8%), the S&P BDC Index (13.0%) on a price basis, and (10.24%) even when all dividends are figured in.

According to Seeking Alpha, only 6 individual BDCs have managed to increase their stock prices in 2026, and none by much.

Leading a small pack is WhiteHorse Finance (WHF) - up 6.5% - as a “turnaround play” following several years of high losses and a big dividend cut in 2025.

More pertinently, among the 40 BDCs that have remained in the red this year, some percentage price drops are massive.

11 BDCs have fallen (25%) or more, with the highest percentage (47.8%).

That’s Investcorp Credit Management (ICMB), which became the first BDC in years to suspend its dividend, as we discussed in an article this week. 

Second worst is BCP Investment (BCIC) - the former Portman Ridge, which swallowed up Logan Ridge, changed its name and its ticker but not its fortunes, and is (36%) off in 2026.

These are both smaller BDCs, and their setbacks won’t resonate much outside of a relatively small number of shareholders.

Biggies. Not Goodies.

More disturbing is that several much larger BDCs, sponsored by famous asset managers, have performed so poorly as to cast doubt on their long-term futures as independent BDCs.

In percentage price drop terms, BlackRock TCP (TCPC) is the worst performer: down (35%) YTD, (55%) over 12 months, and (65%) over 3 years.

That’s clear evidence that the BDC has deep-seated challenges that have not yet been addressed.

However, based on the evidence at hand, we’re equally worried about KKR’s managed BDC - FS-KKR Capital (FSK), which could well end up following the same path as TCPC.

The KKR BDC is one of the largest out there, nearly 9x the size of TCPC and 72x the size of ICMB.

Also on our “Brand Name BDCs To Watch Out For List” are Prospect Capital (PSEC), Monroe Capital’s Horizon Technology Finance (HRZN), Triple Point’s BDC’s TriplePoint Venture Growth (TPVG), and several others.

The asset managers involved are responsible for trillions of dollars in AUM across the private markets, but cannot demonstrate the ability to deliver stable financial results at their BDC flagships under relatively normal financial conditions.

At a time when many questions are being asked of Private Credit and of BDCs, this is not a good look.

Next week, we’ll discuss what actions the BDCs - and especially the underperformers - could take to put a better foot forward.

However, at this time, there are too many BDCs whose underlying financial performance has been mediocre - or worse - to allow for any complacency, and this is reflected in the miserable stock prices we’ve been discussing. 

Balanced

To be fair, those BDCs that have managed to post good results in recent years have been rewarded with relatively robust returns in the past few years, even if their stock prices are in the red in 2026.

Seeking Alpha calculates the 3-year total return for all the public BDCs, and the top ten performers, when both price and dividends are taken into consideration, have a median return north of 50%.

All 10 BDCs' actual financial performance - as measured by their NAVPS - has been way better than the BDC average and what we’ve seen from the underperformers we mentioned earlier.

There is a way to be successful in BDC-land and be rewarded by the market, but many BDCs have, unfortunately, lost the formula or never had the right stuff in the first place. 

We should say, though, that in each of the different market segments in which BDCs operate - we have broken them into 5 - there are both winners and losers.

So, there’s more to this than the size of the borrower or the type of company you’re lending to.

Unvarnished

With that said - and this is bad news for both the public and private BDC sector - if we’re right: the upper middle market (UMM) - which typically consists of companies with EBITDA of $75mn and above and often with enterprise values in the billions - has proven to be a hard nut to crack.

The UMM segment is highly competitive, with “direct lenders” competing both against one another and against syndicated loan and high-yield bond financing alternatives.

This has resulted, as everyone knows, in razor-thin loan spreads and pressure on loan structures, which have become very, very lender-friendly. 

The bad news part is that most BDC dollars - both public and private - have gravitated to the UMM in recent years.

We analyzed the IVQ 2025 and found that, of 46 public BDCs, 11 fished almost exclusively in the UMM. That’s less than a quarter of the BDC universe.

However, these BDCs account for 51% of the total AUM.

Even those numbers understate how much of BDC investing goes into the larger companies, those with a multitude of financing options.

There are several multi-sector BDCs, some of whose portfolios are aimed at the UMM, such as SLR Investment (SLRC) and, as we discovered recently, Great Elm Capital (GECC), which bought into First Brands' debt with negative consequences.

Blue Owl Technology Finance (OTF) is a UMM lender, more than a venture lender, as we currently have them tagged.

There are $14bn involved, so the right categorization is important. 

Also, some of these BDCs have off-balance-sheet lending vehicles that are invested principally in UMM loans. Those assets are not counted in our numbers. 

Anyway, of the 11 BDCs in the UMM, 5 have registered high levels of NAVPS decline in the past 12 months. There are $20bn of investments involved, and those numbers are likely to get worse before they get better.

WHERE WE ARE HEADED

Best Guess

Judging by recent price action, we get the impression BDC investors are lining up to re-enter the building.

There are a couple of reasons why this might be the case.

The obvious one is that BDC prices have already fallen significantly, and as a result, many stock prices are near record lows.

Even after this week’s price rebound, 36 BDCs are trading within 10% of their 52-week lows.

There are 12 stocks trading at yields north of 15.0%, and 16 trading between 12.5% and 15.0%.

By the way, those yields are calculated by dividing the BDC Reporter’s projected 2026 payout by the latest price.

In our experience, investors usually can’t resist those sorts of prospective yields.

The second reason is that the strong employment numbers released this week seem to indicate that interest rates will not go down any time soon.

Unchanged rates and likely wider spreads on new loans going forward should be enough to ensure BDC profitability, after falling for two to three years, should stabilize, or even perk up a little. 

Beyond

Further down the road, the outlook is as muddy as ever.

There’s the war to worry about, and its longer-term economic impact. 

We also worry that the poor IVQ 2025 performance - with its increasing level of unrealized losses and lower NAVPS - which we discussed in an article recently, might continue in 2026.

If so, more income could be lost to non-accruals, and some BDCs might pull back on new investments to remain within their debt-to-equity targets.

Interest rates might have stabilized for the short term, but 6 months from now, the uncertainty about whether rates go up, down, or sideways might return.

We learned this week that the courts are not allowing the Administration to re-file charges against Chairman Powell.

This could have the perverse effect of allowing Powell to stand down on schedule and bring in interest-cut zealot Stephen Miran in May. 

How long till “Chairman” Miran, whose mind is clearly made up, uses his bully pulpit to convince his colleagues?

He may get lucky, and a weaker economy brought on by the war - this week’s employment numbers notwithstanding - might make the case for him, but not for the reasons he advocates.

Further down the road - and much more speculative - we’ll have to see if the malaise surrounding Private Credit goes from being everyone’s favorite punching bag to something more concrete.

Much of that will depend on whether there’s even a scintilla of truth in the dire predictions of a tsunami-like surge in “software” company defaults.  

We can make as good a bullish argument as a bearish one, but the fact of the matter is, these are indubitably known unknowns.

Winning or losing in BDC investing in 2026 will involve as much luck as skill.