Business development companies are an important and growing source of funding for middle market companies. Along with private equity and other investment funds, BDCs provide billions of dollars of investment capital to private companies in every segment of the economy. Mercer Capital produces a quarterly newsletter that tracks the financial and stock market performance of the public BDCs. The second quarter 2014 issue has been released.
Per this issue:
For the balance of 2014, we expect BDC financial performance will be driven by pricing on new originations and credit performance of existing assets. The intersection of the Fed’s continuing zero interest rate policy and more capital allocated to the middle market will likely force lenders to either accept lower yields on new loans at a given level of underwriting risk, or to accept greater risk in an effort to maintain yield. Of course, BDC investors are also hungry for yield so share prices may be able to withstand pressure on asset yields, although at the expense of total return.
You can download the issue in pdf format here.
For more information on the services Mercer Capital provides to business development companies, click here.