Analyzing PIK and Coupon Spread changes can be a great way to identify middle market companies that are beginning to feel pressure from lenders. Whether you're sourcing investments, consulting distressed borrowers or analyzing BDCs, utilizing alternative signs of distress as leading indicators is a great way to get ahead of the market - Download the data sample below!
Market Mayhem: As we discussed at length already in our premium BDC Common Stocks Market Recap, last week was surprising as the BDC sector – and many individual BDCs – fared much better than the main indices and all the main categories from investment grade to “junk”. However, we’d be very surprised if the BDC sector can continue to remain uncorrelated with the broader markets for very much longer. As this chart below shows – comparing the price progress of the Exchange Traded Fund SPY, which is based on the S&P 500, and the exchange traded note with the ticker BDCS,which reflect the BDC sector – the two have moved pretty much in tandem since the decline began in the markets on September 20.
BDC COMMON STOCKS
Back In The Saddle. Again.
It’s Week Two of the late 2018 BDC rally.
More than three-quarters of the 45 BDCs we track were up in price, just like the week before.
The price of the UBS Exchange Traded Note which covers most of the companies in the sector – BDCS – was up to $19.76.
That’s 2.0% on the week, and 5.0% over a fortnight.
The Wells Fargo BDC Index – which provides more of a total return picture – was up 2.7%.
Popular BDC holdings Global Tel Link, Sorenson aim to widen 1L margins; several credits up for add-ons appear in Barings BDC’s portfolio
A deluge of earnings took center stage last week and while results inevitably spurred a number of notable downside movers, the tone in the broader leveraged finance market slowly improved over the course of the week, opening the door for new opportunistic business such as Bausch Health’s latest refinancing effort. Among the week’s biggest earnings-related standouts were Air Methods, Akorn and Revlon.
MARKET RALLY MARCHES ON ? : The BDC sector – as measured by the BDC Wells Fargo Index – was up 2.7% last week, reflecting a broad based rally across the 45 public companies tracked. That was the second week in a row that the BDC sector headed up in price, following 5 consecutive weeks of descent that ended the prior rally which had begun in March 2018.
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