Hi YXI friends,

Welcome to our fortnightly update on Business Development Companies (BDCs). BDCs are private credit companies that lend money to medium-to-large private businesses outside of the banking system.

We focus on the latest price movements and metric comparisons across all of the BDCs in our coverage, plus earnings analysis where applicable.

Business Development Companies Enterprise Values

Announcement: This is likely my final update on BDCs under our coverage in the current format. I understand some of the subscribers may have initially signed up for in-depth BDC coverage and company specific fundamentals - I apologise for this decision.

There are a tonne of individual company research by people who may be passionate about a specific sector (Real Estate, Bonds) or even single names (TSLA, PLTR).

At the same time, very few publications share a cross-asset view translating macro impact into micro level directions.

This is where our edge lies.

Going forward, BDCs will fall into thematic opportunities as a basket under the right macro conditions. Think more of the sections 1 and 2 content below, plus more quantitative analysis and macro relationships, but less of the section 3 content. The same will happen to other individual names we cover. I will write more about the concept in April.

Table of Contents

• 1. BDC Key Metrics Overview

• 2. Private Credit Under Trump

• 3. FSK Earnings Review

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. BDC Key Metrics Overview

Latest Price Performance

BDCs couldn’t escape the broader market sell off in late February / early March. In the past month, FSK, HTGC, and FDUS dropped by 7%.

Meanwhile, ARCC, BXSL, and MAIN dropped by over 2% but have stayed well positive YTD, a big win compared with the S&P 500.

OBDC saw much less volatility, down just 0.6% in the past month and still up 1.2% on YTD.

Price / NAV Premiums

MAIN and HTGC continue to be highly priced at 85% Premium to NAV. I am avoiding these two names as I think the premium levels are unattractive.

While BXSL has a 22% premium, it still offers an attractive dividend yield with high portfolio quality and safety.

OBDC and GBDCs are trading at NAV, and I like the prices here given their dividend levels and portfolio quality.

FSK - More on this in the earnings review section.

Annualised Dividend Yield on Stock Price

Currently FSK offers a 12% dividend yield after a sharp price correction since February. This is an attractive level compared with peers.

GBDC, BXSL, OBDC are showing dividend yields at the 9-10% range. These are quality BDC names to hold for dividends.

2. Private Credit Under Trump

There are 3 things investors must consider before investing in BDCs under the new administration.

Claim Your 7-Day Free Access To YXI Premium