BBDC - Positive loan pricing tailwind bodes well for BDCs in 2021 KBW says

Business development companies ("BDCs") suffered a traumatic shock in Q1 with the onset of the COVID-19 pandemic, but Keefe, Bruyette & Woods analyst Ryan Lynch sees potential for the sector to continue improving from its Q1 trough into 2021.There "is some hope that most, and maybe all, of the losses the BDCs will experience this cycle were pulled forward into 1Q20, and that 2021 can continue the recovery seen in 2Q20 and 3Q20," Lynch writes in a note to clients.But even with progress made in Q2 and Q3 the sector remains below pre-pandemic levels."While a lot of the recovery occurred in 2Q20 and 3Q20, loan prices continue to trend higher in 4Q20 and also still remain below levels in 2019," Lynch writes. "This positive pricing tailwind bodes well for loan valuations, which will help offset credit stress in 4Q20 and 2021."KBW classifies its Outperform-rated BDCs into four themes. Lynch finds

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Positive loan pricing tailwind bodes well for BDCs in 2021, KBW says