Published Thu, 13 Dec 2018 00:51:24 -0500 on Seeking Alpha
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, followed by another decline that could have been partially due to tax-loss harvesting and could keep prices lower through mid-to-late December (see discussion at the end of this article).
The following table shows the current pricing for each BDC compared to the closing lows over the last 52 weeks. As you can see, many companies are trading within 5% of previous lows as well as the S&P 500, high-yield corporate bond ETFs such as the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Bloomberg Barclays High Yield Bond ETF (JNK), and UBS ETRACS Wells Fargo Business Development Company ETN (NYSEARCA: BDCS) and UBS ETRACS 2X Leveraged Long Wells Fargo Business Development Company ETN (NYSEARCA: BDCL).
As mentioned last week in "Tax-Loss Harvesting And Merger Fears Driving 10%+ Yield For BlackRock TCP Capital?" I have... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|OAKTREE SPECIALTY LENDING||4.90||0.0||-1.39||0.50||10.02|
|GOLDMAN SACHS BDC||20.13||12.0||1.67||1.80||8.90|
|PENNANTPARK FLOATING RATE CAPITAL||12.59||14.6||0.86||0.95||7.64|
|OAKTREE STRATEGIC INCOME||8.27||12.0||0.69||0.62||7.49|
|GOLUB CAPITAL BDC||17.60||12.8||1.37||1.28||7.41|
|MAIN STREET CAPITAL||36.03||9.7||3.70||2.34||6.71|
|SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF||34.83||0.0||0.00||1.98||5.70|
|ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND||83.62||0.0||0.00||4.50||5.36|
Older articles featuring Tcp Capital (TCPC):Analyzing Main Street Capital's Dividend Sustainability (Projected 2019 Monthly And Special Periodic Dividend...
11.1% Yielding Portfolio With Good Coverage And Decent Growth Prospects
THL Credit: Priced For A Dividend Cut, Driving 16.2% Yield And Continued Rally
2018 Full-Year Report - Down 10% High Yield Income Train, Non-Stop 5 Years Running
A Nice Fat 26% Yield For The New Year, Big Dividend Coming Soon From SMHB
Solar Capital's Detailed Dividend Sustainability Analysis (Includes 2019 Dividend Projections)
Prospect Capital's Updated Dividend And NAV Sustainability Analysis - Part 1 (Includes Fiscal Year 2019 Monthly...
Main Street Capital's Dividend, NAV, And Valuation Vs. 14 BDC Peers (Post Q3 2018 Earnings) - Part 2
Rose 91 Stock Portfolio Bountiful November Dividends Along With Historic Buy Yields + Transactions
Main Street Capital's Dividend, NAV, And Valuation Vs. 10 BDC Peers (Post Q3 2018 Earnings) - Part 1