Morgan Stanley Direct Lending: 10% Dividend Reset

2026-02-28 09:40:11 ET

Fears over defaulting loans in the SaaS space, a sector that private credit platforms heavily lend money to, have created serious selling pressure for BDCs lately, many of which are now trading at 52-week lows. While I recently came out with a number of articles heavily recommending some BDCs like Blackstone Secured Lending ( BXSL ) or Hercules Capital ( HTGC ), I don't see the same opportunity for Morgan Stanley Direct Lending Fund ( MSDL ): the investment firm did not fully support its dividend with net investment income in the last quarter, and management announced a reduction in the regular dividend to $0.45 per-share (a 10% reduction). Further, falling base rates and a rise in non-accruals are concerns that prevent me from upgrading MSDL to buy at this point, despite shares being oversold and trading at fresh 52-week lows....

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