Quick BDC Market Update
Over the last three months, the average business development company ("BDC") stock price has declined by over 10% likely due to investors seeking higher yields on non-investment grade debt as discussed in previous articles. I firmly believe that the recent declines have not been driven by underlying fundamentals, especially as high-yield default rates continue to decline as discussed in "Corporate debt levels and default rates diverge" and the "latest sell-off overpricing recession risk."
As shown below, BDCs started to rally as many reported strong Q3 2018 results,