Published Thu, 11 Oct 2018 08:35:20 -0400 on Seeking Alpha
Recent BDC Pricing Volatility Readers may have noticed the recent volatility in BDC pricing over the last two weeks. Please see "BDC Market Update: October 9, 2018", that discussed current yield spreads, sector oversold/overbought measures, and recently improved BDC fundamentals including higher portfolio yields, improved net interest margins, improvements in underlying general economic fundamentals including unemployment rate, labor force participation, consumer consumption and corporate earnings.
However, I am expecting temporarily lower BDC prices for the reasons discussed in the update including widening of rate spreads and general market volatility driving ‘flight to safety’. As you can see, the average BDC yield is currently trending higher:
Source: SEC Filings and BDC Buzz.com
As mentioned in "Upcoming BDC Dividend Cuts For Q3 2017", I previously sold shares in FS Investment Corp (FSIC) due to the predicted dividend reduction and my previous public FSIC article "10% Yield And 18% Discount To Book: Priced For Upcoming Credit Issues?", focused on the growing amount of investments with a rating of ‘3’:
Immediately after FSIC reported Q2 2018 results on August 9, 2018, I sold my remaining shares (before the recent decline shown below) for the reasons discussed in this article.
Obviously, timing is important when investing, but especially with business development companies... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|BLACKROCK KELSO CAPITAL||5.28||0.0||-0.12||0.56||13.77|
|OAKTREE SPECIALTY LENDING||4.90||0.0||-1.39||0.50||10.02|
|HORIZON TECHNOLOGY FINANCE||11.94||9.6||1.25||1.20||9.92|
|GOLDMAN SACHS BDC||19.33||21.5||0.90||1.80||9.09|
|OAKTREE STRATEGIC INCOME||8.29||20.2||0.41||0.62||7.65|
|GOLUB CAPITAL BDC||18.34||15.5||1.18||1.28||6.97|
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