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11% Yielding BDC With Oil Hedges Driving Lower Book Value?

Published Wed, 16 May 2018 09:53:34 -0400 on Seeking Alpha

Quick BDC Market Update As discussed in previous articles, business development companies ("BDCs") have been pulling back since May 2017. However, they have recently started to rebound and as mentioned in "BDC Buzz Begins Purchases Of Higher Quality BDCs," I have been buying additional shares of higher quality BDCs, especially given the oversold conditions driving higher yields.
Some of the positive changes in the BDC sector include:
Rising interest rates and portfolio yields Recent insider purchases Relaxed regulations and tax reform TCP Capital (TCPC) reported results last week with a meaningful increase in its portfolio yield from 11.0% to 11.3%:
"The overall effective yield on our debt portfolio at quarter end increased from 11% to 11.3% as we benefited from the increase LIBOR.”
Source: TCPC Earnings Call
There is a good chance that TCPC will be able to maintain or improve its portfolio yield in the coming quarters due to continued rise in LIBOR as well as new investments at higher yields as mentioned by management on the recent call:

“In the second quarter through May 8, we have invested approximately $57 million primarily in three senior secured loans. The combined effective yield of these investments is approximately 11.5%. At this point in the quarter our pipeline includes many transactions that are well within our historical yield range.”
“We have discussed the potential for rates to rise for... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
APOLLO INVESTMENT 15.13   17.8 0.85 1.80 11.90


Older articles featuring Apollo Investment (AINV):
Gladstone Investment's Dividend Sustainability Analysis (Includes April-December 2019 And Fiscal 2020 Special Periodic...
Strong Buy With 12% Yield With 30%+ Return Potential: TCG BDC
Ares Capital's Dividend, NAV, And Valuation Vs. 14 BDC Peers - Part 2 (Indications Of An Undervalued Stock)
Dividend Cuts For The High-Yield BDC Sector
Dividend Increases For The High-Yield BDC Sector, Part 4: Main Street Capital
Ares Capital's Dividend, NAV, And Valuation Versus 10 BDC Peers - Part 1 (Indications Of An Undervalued Stock)
Dividend Increases For The High-Yield BDC Sector, Part 3: TPG Specialty Lending
Dividend Increases For The High-Yield BDC Sector: Part 2
Dividend Increases For The High-Yield BDC Sector: Part 1
Dividend Portfolio Review: 22% Y/Y Growth In January