ORCC - BDC Sector Market Review: BDCs Or Loan CEFs For Higher Rates?
- We take a look at the action in BDCs through the fourth week of January and highlight some of the key themes we are watching.
- BDCs continue to outperform the broader income market helped by a consensus shift to 5 hikes this year.
- Two trends this year are that larger BDCs have tended to outperform and higher valuation BDCs have underperformed.
- BDC income levels should perform better than income levels of loan CEFs due to a significant fixed-rate debt profile.
- High equity-allocation BDC valuations may be biased upwards due to weak equity markets - we highlight two credit-focused BDCs we have more confidence in.
For further details see:
BDC Sector Market Review: BDCs Or Loan CEFs For Higher Rates?