Hi YXI friends,

This is a quick end-of-month overview of the BDCs within our coverage.

We start with the credit spreads movements for the past year, and then compare the BDCs in terms of enterprise value, price premium to NAV, and dividend yields.

Table of Contents

• 1. Credit Spreads

• 2. Enterprise Value of BDCs

• 3. Price Premium / Discount To NAV

• 4. Dividend Yields

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. Credit Spreads

BDCs tend to be BBB or BB rated. Their ratings affect the cost of raising money from debt capital markets.

BDCs lend to private companies. While they don’t have direct ratings like public markets, we can use the CCC rating to approximate their credit risk.

CCC spreads have been historically tight for the past 3 months. This reduces the returns on new deals for BDCs, but shows confidence in the underlying economy, thereby reducing the risks of non-accruals too.

2. Enterprise Value of BDCs

ARCC, FSK, BXSL, OBDC, and GBDC are the top five BDCs by size.

OBDC and GBDC are going through separate mergers which will increase their sizes.

3. Price Premium / Discount To NAV

BDCs are publicly traded stocks, meaning their share prices could deviate significantly to the reported NAV.

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