Jul 26, 2026 3 min read

BDC IIQ 2026: Performance Outlook Ratings

The IIQ 2026 BDC earnings season is about to begin, and the BDC Reporter is introducing a new feature: our preliminary performance ratings. These summarize what we expect will happen for every BDC and will be quickly followed by the actual rating for the IIQ.

July 26, 2026

The IIQ 2026 BDC earnings reveal is just around the corner. As the just-updated BDC Earnings Calendar shows, Ares Capital reports on Wednesday, July 29, 2026. Several weeks of press releases, official filings, investor presentations, and conference calls will follow for 43 more BDCs. We'll review every document for every BDC and update the Individual BDC Performance Table with our paragraph-long summaries of how everyone has performed. In the BDC Performance Table, we'll rate each BDC's performance on a scale of 1 to 5, as we've been doing for several quarters. Remember that a rating of 1 indicates a BDC has outperformed expectations, and a rating of 2 means performance is as expected. Anything from 3 to 5 represents a varying degree of underperformance when we look at EPS, changes in NAVPS, and credit performance.

New Feature

In advance, we've been re-reading our own articles, notes, and our findings in the BDC Credit Reporter to prepare ourselves for what MIGHT be coming. We've also been updating the BDC Performance Table with the analysts' earnings expectations for IIQ 2026, and comparing those against what the consensus was previously and the recent historic results.

We're distilling our work into the rating that we expect we'll see when all is considered. Go to the BDC Performance Table, and you'll see these ratings, tagged as "Preliminary". We wish we had the bandwidth to spell out, in 44 articles, the underlying rationale for each BDC's estimate, but that's impossible. The preliminary rating will have to do for anyone interested in what we expect to happen.

First Three

Besides ARCC, Hercules Capital (HTGC) and OFS Capital (OFS) will report results this week. ARCC earned an unexpected and unusual 4 rating last quarter, as unrealized losses exceeded its Net Investment Income and its earnings per share dropped more than expected. Credit results were as poor as we've seen in some time, even though management denied any unusual challenges. This quarter, we expect EPS to recover slightly, but unrealized losses could remain high-ish as several troubled companies from last quarter continue to decline. On the other hand, overall loan values have stabilized after a rocky IQ 2026, so the NAVPS drop should be less extreme than last time.

We estimate ARCC's rating will be a 3 - modest underperformance.

HTGC has already announced most of its key metrics for the IIQ 2026, and we've been impressed by what we've learned. In the IQ 2026, the giant venture-debt BDC did not fare well and received a rating of 3, an unusual black mark for this high achiever.

However, in the IIQ 2026, our preliminary rating is a 1. Outperforming in the current environment would be quite an achievement if that opinion holds.

Tiny OFS Capital (OFS) had a very difficult IQ 2026, with both earnings and NAVPS dropping; its portfolio shrinking and its asset coverage close to regulatory limits. OFS was one of 17 BDCs that received our lowest rating of 5. Unfortunately, we expect more of the same in IIQ 2026, with EPS dropping sharply again (and below the level of its quarterly dividend); NAVPS falling and the portfolio getting even smaller. We've been worried for some time that OFS may go the way of Investcorp Credit Management (ICMB) and need to merge or liquidate before too long. We'll be curious to see if that dire scenario still holds.

Reminder

We do not have a crystal ball, nor do we know much from the public record about what has transpired since the last quarter. We are likely to be wrong as much as we are right when the actual results come out. For anyone interested, just go to the BDC Performance Table. We'll be undertaking more homework and announcing more preliminary ratings in the days ahead.

INVESTMENT VIEW

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As you can see in the BDC Best Ideas Table, we rate ARCC a DON'T BUY, notwithstanding its stable dividend and renowned reputation, mostly on credit concerns that might or might not continue. HTGC is a HOLD because the stock has moved 20% above its 52-week low, i.e. is not cheap and because there is the possibility of another general BDC price melt-down. Need we say, OFS is a clear DON'T BUY, trading (36%) below its 52 week high and is (76%) below its 5 year peak.