BDC News Feed: Analysis + Views

Breaking News: PennantPark Floating Rate is in the market for new unsecured debt. We analyze the BDC's cost of funding and wonder whether the new funding is even accretive.

A collection of the latest BDC developments in reverse chronological order.

FIXED INCOME

6/2/2026: FSK Issues $900mn In New Unsecured Notes Maturing In 2031

FS KKR Capital Corp. (FSK) priced an underwritten public offering of $900,000,000 in aggregate principal amount of its 7.500% unsecured notes due 2031. The Notes will mature on August 1, 2031, and may be redeemed in whole or in part at FSK's option at any time at par plus a "make-whole" premium, provided that the Notes may be redeemed at par three months prior to their maturity. FSK intends to use the net proceeds of this offering for general corporate purposes, including potentially repaying outstanding indebtedness under credit facilities and certain notes.

ANALYSIS: FSK successfully issued the new debt, far exceeding its stated initial target (see below), despite its recent downgrade to "junk" status. However, the yield paid was the second-highest issue on the BDC's books and well above its IQ 2026 average cost of borrowing, which was 5.3%. Furthermore, there seems to be no pressing need for the new monies as FSK has two existing notes with a combined value of $900mn - coincidentally the same number as the new issue - coming due only in 2027, one of which is still a year away. FSK already had $2.3bn in excess liquidity, which will now reach $3.2bn - a large amount for a BDC that has announced its intention to shrink its balance sheet and which is also issuing preferred stock to fund its share repurchases.

VIEWS: There is financial engineering underway here beyond our pay grade. We don't understand why FSK has just greatly increased its borrowing cost with this new issue. (We also have questions about other initiatives the manager has taken to stabilize the BDC, but that's another, albeit related, issue). Maybe FSK tapped the markets now rather than when the funds will be needed in February and June 2027 on the expectation that borrowing costs would be even higher by then, or no available. In any case, investments funded with debt this expensive will result in no net earnings dropping to the bottom line for shareholders after FSK's management fee and other costs are figured in.

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6/1/2026: FSK To Issue New "Junk Bonds."

A private credit fund jointly managed by Future Standard and KKR & Co. is looking to sell at least $400 million of junk bonds, according to Bloomberg.

ANALYSIS: To follow.

DIVIDENDS

5-27-2026: Capital Southwest Announces Regular + Special Dividends

CSWC announced a quarterly regular dividend of $0.58 per share, of which $0.1934 per share will be paid monthly for each of July, August, and September 2026, and a quarterly supplemental dividend of $0.06 per share payable in September 2026.

ANALYSIS: This is the third quarter in a row in 2026 that CSWX has paid/announced the same distribution level. At this pace, the BDC will pay out $2.56 a share, the same as last year. This represents a 15.% return on the latest net asset value per share.

VIEWS: In a year where many BDCs have cut their dividend - even after previously hinting that they would not - CSWC is one of the few stalwarts. Still, recurring earnings trail the payout, as CSW is relying on previously realized gains and others expected to be booked shortly.

FIXED INCOME

5-27-2026: PennantPark Floating Rate Prepares To Issue New Baby Bond

According to a brokerage firm, PFLT is issuing $50mn in new unsecured notes with a 5-year maturity at a yield of 7.3750%.

ANALYSIS: The BDC refinanced $185mn of unsecured notes repaid on April 1, 2026, by issuing $200mn of unsecured notes maturing only 3 years out and priced at a yield of 6.75%, and was placed with institutional investors. This new issue is more expensive but has a longer maturity (albeit redeemable by the BDC in two years) and is placed in the public market. The proceeds will likely pay down the BDC's Revolver, $328mn of which was drawn at the end of March 2026.

VIEWS: This is another example of the Big Squeeze impacting many BDCs. Yields on new loans are dropping - PFLT was receiving an average all-in yield of 9.3% in the most recent quarter, while its cost of borrowing is increasing. Add the 1.0% Management Fee shareholders pay to this latest note issuance and figure in the 20% Incentive Fee, and only 0.7% of the yield drops to Net Investment Income. If one adjusts for prospective loan losses over a 5-year period, shareholders may not benefit at all from this latest financing. We're not sure why PFLT chose to raise new debt, given that the BDC was above its target leverage of 1.6x at quarter-end. Moreover, PFLT's average cost of borrowing was already on the high side at the end of March at 6.1%. A full quarter of the 2029 notes and this new Baby Bond are likely to push that average cost debt even higher.

FINANCING

5-26-2026: Ares Capital Amends, Extends Bank Revolver

Ares Capital increased the commitment on its existing credit facility by approximately $170 million to approximately $5.5 billion, decreased the funded borrowing costs by 0.10% per annum to reflect the elimination of the SOFR credit spread adjustment (“CSA”), and extended the final maturity date to May 2031 for substantially all of the facility. .. The Ares Capital facility is led by JPMorgan, Bank of America, RBC, SMBC, Truist and Wells Fargo and includes a total of 40 lenders.

VIEWS: This is more evidence that news reports about BDC facing pushback from their bank lenders and wider spreads are not true, at least where ARCC is concerned. However, the interest expense savings should be immaterial.

ACQUISITION

5-26-2026: Trinity Capital Inc. Acquires Equipment Leasing Services,

TRIN has acquired Equipment Leasing Services ("ELS"), a provider of flexible equipment finance options to businesses across the Southwest in various sectors, including manufacturing, transportation, construction, and aerospace.

ANALYSIS: The size of ELS and its income and earnings are unknown. We checked. However, we do know that TRIN's existing equipment leasing activities account for 13% of its AUM as of the IQ 2026 and are a "booming" part of its business. In fact, this accounts for about a quarter of new investments deployed. On a recent conference call, management suggested its equipment leasing vertical was "close to scale," but it seems to have changed its mind. Note that AI infrastructure is a favorite of TRIN's equipment financing, mostly priced at fixed rates.

VIEWS: We have written ourselves a reminder to seek more details on this acquisition so we can place it in a strategic context. Equipment leasing is typically a "good business" to be in and very "hot" right now, but holding too many single-use assets could be a problem. Think of all those horse-drawn carriage leases when the automobile came along, lol. Nonetheless, this acquisition fits into the wider picture of TRIN as an ambitious BDC hell-bent on expansion in multiple directions, even into a segment where they already have a major presence.

BUYBACKS

5-21-2026: Palmer Square BDC Expands Stock Repurchase Program

Palmer Square Capital BDC Inc. announced that the Company’s board of directors authorized an increase and extension of the Company’s previously established open-market share repurchase program (the “Repurchase Program”). Under the increased and extended Repurchase Program, the board of directors authorized the Company to repurchase an additional $30 million of shares of its common stock and extended the Repurchase Program to expire on June 22, 2027.

ANALYSIS: PSBD repurchased approximately 4.4% of its year-end total shares outstanding in 2025 and repurchased approximately 0.45% of its quarter-end total shares outstanding in IQ 2026. If fully deployed at the closing price on 5-22,2026, PSBD's new $30mn program will repurchase another 2,772,643 shares, or 8.9% of total shares as of the IQ 2026.

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VIEWS: Most BDCs have promised, or are undertaking, share buybacks. PSBD, trading at 73% of book, is a natural candidate and seems to be "walking the walk" and could end up repurchasing 1/8 or more of its shares. That will have a materially accretive impact on the BDC's NAV Per Share, and reduce is dividend "liability".

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5-19-2021: Trinity Capital Issues $300mn In Unsecured Notes At A Yield of 7.0%

Trinity Capital Inc. priced an underwritten public offering of $300.0 million in aggregate principal amount of 7.0% notes due 2031 (the "Notes"). The Notes will mature on May 21, 2031 and may be redeemed in whole or in part at any time or from time to time at the Company's option at par, plus a "make whole" premium, if applicable. The Notes are unsecured and bear interest at a rate of 7.0% per year, payable semiannually commencing on November 21, 2026.

ANALYSIS: TRIN was able to place the new 5-year debt with institutional investors, typically cheaper - albeit less flexible - than issuing a Baby Bond. However, the new debt is significantly more expensive than the $200mn of existing notes that mature in 2026. We calculate that TRIN will start incurring, by August 2026, when both existing notes mature, an incremental annualized interest bill of ($4.7mn), or ($0.05) per share per annum. Even in the short run, as the new note proceeds to pay down secured debt, tTRIN will incur an incremental (1.0%) cost, or a pro forma annualized cost of $3.0mn per year.

VIEWS: This is yet another example of BDC's earnings being squeezed by ZIRP era inexpensive unsecured debt rolling off and being replaced with higher cost new notes. This larger interest bill will be an earnings headwind. The only "good" news is that by the end of the year, all the ZIRP debt will be gone. Also, new lending continues to be accretive: yielding about 10.25% while paying out 7.00% - a decent 3.25% arbitrage.

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5-4-2026: Trinity Capital Receives SBIC License from US SBA

Trinity Capital Inc. announced that its sponsored investment fund, Trinity Capital SBIC LP (the "Fund") has received approval from the U.S. Small Business Administration to operate as a Small Business Investment Company. The Fund is the Company's third sponsored investment fund that has received such a license since the Company's inception in 2008.

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VIEWS: On paper, and over time, CSWC is gaining $175mn of new, ten-year-long, unsecured debt. This will increase total debt - from the IQ 2026 - by 13%. Need we say this is a strong positive for CSWC?

DIVIDENDS

5-4-2026: PennantPark Investment Announces May 2026 Dividend

PennantPark Investment Corporation declares its monthly distribution for May 2026 of $0.08 per share, comprised of a $0.04 per share base dividend and $0.04 per share supplemental dividend, payable on June 1, 2026 to stockholders of record as of May 15, 2026.

5-4-2026: Pennant Park Floating Rate Announces May 2026 dividend

PennantPark Floating Rate Capital Ltd. declares its monthly distribution for April 2026 of $0.1025 per share, payable on May 1, 2026 to stockholders of record as of April 15, 2026.

FIXED INCOME

4-27-2026: Great Elm Capital To Redeem Baby Bond GECCO

The Company will redeem all of the issued and outstanding Notes on May 27, 2026 (the “Redemption Date”). The redemption price for the Notes equals 100% of the principal amount per Note being redeemed, or $25.00 per Note, plus the accrued and unpaid interest thereon, if any, through, but excluding, the Redemption Date (the “Redemption Price”). The accrued interest per Note being redeemed that is payable on the Redemption Date will be $0.228472.

The BDC Fixed Income Table will be adjusted accordingly. This will bring the total number of BDC issues outstanding to 29.

4-22-2026: As Blue Owl’s Strains Worsened, Its Bankers Pitched a Long Shot- Bloomberg

Blue Owl Capital needed a win as its shares had plunged nearly 50% and clients were seeking to pull unprecedented sums from its funds.
The firm decided to offer a premium to get a bond sale deal done, which would reaffirm its access to capital markets and reinforce its investment-grade standing.
The deal appears to be working, with Blue Owl's shares jumping 17% since the sale and spreads on the bonds tightening by about 25 basis points, after Pacific Investment Management Co. emerged as the buyer of the entire $400 million offering.

4-21-2026: Main Street: Makes Additional Investment in Mail Company

MAIN recently completed a follow-on investment in its existing portfolio company, UBM ParentCo, LLC, doing business as United Business Mail, a leading provider of "marketing mail" commingle services. Main Street, along with its co-investor, MSC Income Fund, Inc., made the follow-on investment in UBM to support a strategic acquisition. Main Street's portion of the investment consisted of an additional $15.6 million in first-lien, senior-secured term debt. Main Street and MSIF initially invested in UBM in December 2025.

4-20-2026: Trinity Capital Provides Loan To Cala Health

Trinity Capital Inc. announced the commitment of $50 million in growth capital to Cala Health ("Cala"), a bioelectronic medicine company developing wearable neuromodulation therapies for tremors.

4-20-2026: Investcorp Credit Management Hires Financial Advisor

Investcorp Credit Management BDC, Inc. announced that it has engaged Houlihan Lokey, a leading independent investment bank, as its financial advisor to assist the Special Committee of Independent Directors in its ongoing review of strategic alternatives.

See the BDC Reporter article.