BDC Common Stocks Market Recap: Week Ended February 27, 2026

BDC Common Stocks

Week 9

WEEK IN REVIEW

More Of The Same

The fear that has gripped the country for weeks about the impact of artificial intelligence on any company involved in “Software” - broadly defined - continued for another week.

The damage to the major indices - as shown above - was relatively mild.

Not so for the BDC sector.

Once again, prices tumbled. 

BIZD - the exchange-traded fund sponsored by Van Eck - dropped (3.6%). That’s the second-worst weekly performance since the onset of this fever 6 weeks ago.

42 of the 46 BDCs we track fell in price, which is the highest number so far.

26 BDCs fell (3.0%) or more, also a record during this period. 

According to Seeking Alpha’s records, 3 BDCs dropped more than (10%) - a rare trifecta.

Same Same

All these BDCs reported disappointing IVQ 2025 results - including dividend cuts - and were punished accordingly.

FS KKR Capital (FSK) reduced its quarterly payout from $0.70 to $0.48, a (31%) decrease.

Moreover, the net asset value per share (NAVPS) declined by (5.0%).

Not surprisingly, we rated quarterly performance a 5 on our 5-point scale - as bad as you can get.

TCPC’s financial results were even worse. (See the BDC Performance Table where we are slowly - but systematically - reviewing every BDC that has reported its results).

Recurring earnings per share were off by (19%), and NAVPS fell an incredible (18.8%).

That last metric’s decline - albeit signaled by TCPC earlier - is truly unprecedented. If you look at the BDC NAV Change Table, which shows NAVPS change this quarter and in three prior quarters, you’ll find nothing to rival this loss.

However, as noted, TCPC had given the market a heads-up a few weeks ago, so the stock price dropped “only” (11.3%).

MidCap Financial’s (MFIC) weak performance - NAVPS was (3.3%) down, and the dividend was cut (18%) - was more unexpected, and caused its own rush to the exits. 

All 3 BDCs and 19 others reached new 52-week lows.

Still, 5 BDCs, like last week, managed to trade above their NAVPS, but 41 did not.

WHERE WE ARE

Bad. Very Bad.

With only 9 weeks of 2026 gone, BIZD is in “correction” territory - down (10.9%). 

The S&P BDC Index - which uses a different methodology - is off (11.9%), even after including distributions received so far.

Most spectacularly of all, BIZD is (29%) below its 52-week high and (30%) below the highest point in 2025.

Only 1 BDC is trading within 10% of its individual high price, and 33 are within 5% io their 52-week low, and another 4 are within 5%-10% of that nadir.

Seeking Alpha’s data shows 40 BDCs trading below their year-end 2025 level and only 6 above.

In the last 4 weeks, only 2 BDCs have a higher price, while 44 do not.

Both are tiny BDCs whose enterprise value does not even come to 1% of the public BDC market total.

WHERE WE ARE HEADED

Now We Know

Last week, when writing this section of the Recap, we wrote the following about the way forward:

“We just don’t know which way investors will lean”.

Clearly, the fear has lingered and deepened.

Several BDCs reported very good results - as you’ll be seeing in the BDC Performance Table - including Bain Capital Specialty Finance (BCSF) and SLR Investment Corp (SLRC), but that made little difference.

So far, in BDC earnings season, about one-third of BDCs have performed at or above expectations, another third slightly below (a 3 rating), while the final third have performed anywhere between poorly to very poorly - a rating of 4 or 5.

There are still 13 BDCs yet to report, but we expect the pattern to be maintained.

The actual financial performance of the BDC can be characterized as modestly worse than in the prior, but prices - as we’ve abundantly demonstrated - are in freefall.

Nothing Lasts

We don’t know when a bottom will be found.

If we get just a few credit shocks at Software companies in the months ahead, the panic could worsen, even if their problems turn out to be idiosyncratic and unrelated to AI.

All we can offer is that the non-Software segments of the market, based on what we hear about the current price of syndicated loans, are NOT panicking.

Perhaps sadly for Private Credit/BDC lenders, new loans are being booked at the same narrow spreads as before.

Secondary prices for those sorts of loans remain close to par.

Here’s how one source describes what the overall leveraged loan market looks like:

• Market commentary for 2026 flags a “90/10 rule”: roughly 90% of the market is viewed as fundamentally sound, trading in a tight band around par, while about 10% is structurally challenged (often AI‑sensitive or already over‑levered) and increasingly stuck in the 70s–low‑80s with low odds of a full price recovery.

This is a good-news/bad-news situation.

The good news is that lenders and borrowers are not universally fazed by the fear of AI.

The bad news is that if investors do begin to buy into AI radically changing the landscape of American business in the next few years, with most of us replaced by robots and unemployed, then the bottom is still a long way away.

Of course, if that should happen, say goodbye to the trillions invested in companies, both public and private, by equity investors whose troubles will be even greater - if that’s possible. 

OUR VIEW

We may prove to have been foolish, but the BDC Reporter - and the management of every BDC that has reported to date - remains unconvinced that we are on the brink of a credit crisis, let alone an existential one. The data does not indicate even an early pick-up in AI-related credit failures amongst Software-related borrowers.

Nor do we expect an epidemic later in the year.

However, there’s no denying - as we’ve been writing about for a very long time now - that a significant minority of BDCs have been doing a lousy job - to use a technical term - where their credit underwriting is concerned for some time now.

Unfortunately, once you start slipping down that slippery slope, it’s hard to stop yourself - let alone reverse course.

Many of the poor BDC performers have been struggling with above-normal credit trouble spots since 2021-2022.

We’ve been tracking the Important Underperformers - as we call them at the BDC Credit Reporter - for these troubled BDCs and are looking at how much more damage is possible after the already big write-downs and write-offs taken.

Our work is not completed, but our initial readings for several BDCs are not encouraging.  More material NAVPS loss may lie ahead for some famous names, so even the recent spate of 52-week low prices might not be as low as they can go.

On a more positive note, there are still plenty of BDCs chugging along more or less as you might have expected 1, 3, or 5 years ago.

There are even a few whose financial performance - and returns - are likely to prove outstanding.