Business development companies (BDCs), a class of lending vehicles that have taken up some of the middle-market loan space previously occupied by banks, are largely trading below net asset value (NAV) – meaning they will continue turning to the private markets to raise capital. The trend also means it’s less appealing to create a BDC at the moment – a stark contrast from 2012 and 2013, when BDCs were the belle of the ball.  

Public BDCs trading below NAV cannot issue equity in the public markets, so if they want to raise more money, they will have to turn to the private markets. But BDCs trading above or at NAV are also turning to the private markets to raise capital because of the interest they receive from institutional investors, such as pension funds and endowments, which are hoping for yield from private debt investments. 

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.