Think

Back In Sync: As we expected, in the week ended November 30, 2018 the BDC common stock and the broader indices adjusted to get more in sync. The major markets raced ahead, while the BDC sector – which had performed better the week before – followed behind, up 0.62% in price terms. As this 2018 year-to-date chart comparing BDCS to the Dow Jones, NASDAQ and the S&P 500 shows all four have followed a similar shape even if there are short term divergences. If you adjust for the fact that the BDC sector pays out much higher distributions, even the total return is highly similar.

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

Two Weeks Forward. One Week Back

The BDC common stock winter “rally” took some time off this week, after two weeks of upward momentum.

Repricings at Avantor and MRO to reduce yield on credits held by CCT, BDVC, OCSI, BBDC, CION and Flat Rock

Editor’s note: Due to the Thanksgiving holiday, LFI BDC Portfolio News will not publish on Monday, Nov. 26. The report will resume publication on Monday, Dec. 3.

Download: LFI BDC Portfolio News 11-19-18 

The tone in the broader leveraged loan market deteriorated as last week progressed, complicated by a handful of high-profile earnings misses that came in as the traditional 45-day reporting period trailed off and the jumbo LifePoint Health deal that quickly faded in the secondary loan and bond markets despite a host of investor-friendly revisions. In many cases, price talk and structure are deeply in flux, and investors are increasingly skittish amid poor secondary performance as the list of recently issued loans bid below their OIDs grows.