Last month we shared a list of the top 10 BDC non-accruals based on first quarter 2018 SEC filings. Now that we are mid-way through August and second quarter filings are readily available, let’s take a fresh look at the first quarter’s worst performer.
Business development companies are primarily debt investors, meaning that they're buying the debt in private companies. If that debt isn't performing or they don't expect to be paid, they'll put it on what's called non-accrual.
Our #1 non-accrual in Q1 was Medley Capital Corp. After second quarter filings, Medley drops to our #2 slot. Medley has fewer non-performing investments this quarter: 14 verses 17 from last quarter. A jostling of investments is a likely contributor to its slightly lower non-accrual ratio of 9.96%.
This Quarters top non-accrual didn’t even crack the top 10 in first filing of 2018. And with an 11.33% portfolio non-accrual, it beats out Medley Capital Corp. for the top spot by 1.37%. Want to know who took the top (or bottom) spot? Download our list of Top 10 Q2 2018 BDC Non-Accruals!
Accrual ratios are potential indicators that the credit market may be turning, and that a possible recession is on the horizon. Monitoring BDC accrual ratios can help restructuring and turnaround source new business.
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