We Are Trinity Capital (NASDAQ:TRIN) is a well-managed BDC with an attractive dividend yield of more than 13%. However, in recent quarters, I have increasingly been concerned about the risk of deteriorating portfolio quality at TRIN and other BDCs. As of my last analysis during the run-up to the fourth quarter of 2023 earnings report, there was a marked increase in the portion of the portfolio placed on the watch list at TRIN—a sign that these investments might be inching closer to default. Specifically ...

Market Performance - Preferred stocks had a positive performance for the week and the month of May, with most sectors finishing in the green, marking the sixth up month in the last seven for the asset class [2] - Yields for preferred stocks have mostly range-traded this year at a bit under 7% [3] - Spreads continue to trade at very tight levels, a common theme across the broader income space [4] BDC Bond Issuance and Features - BDC Main Street (MAIN) issued $300 million of 6.5% bonds due 2027, with a shorter maturity of 3 years, which is at the shorter end of the typical 3-5 year BDC bond range [5] - The shorter maturity profile of the relatively high-quality BDC bonds provides investors with higher yields in the current environment, as shorter-dated bonds tend to have higher yields due to the inverted yield curve [5] - The bond includes a make-whole provision, which is favorable to bondholders in case of redemption, as the company would have to pay back the future coupons, appropriately discounted, if the bond is called early [6] - The yield on the bond is less than it would be in a more traditional call structure, but there is a small chance of an unexpected windfall for holders if the company decides to redeem the bond [6] BDC Sector Analysis - The BDC baby bond sector is favored due to the strong performance of book values in the sector, particularly relative to other investment company sectors such as mortgage REITs or many CEFs [7] - BDCs are subject to the asset coverage requirements of the Investment Company Act, unlike mortgage REITs, and most BDCs have on average half of their liability profile in secured financing, which sits ahead of unsecured bonds [7] - Bonds like HTFC, OXSQZ, and TRINZ are trading at yields around 8% or higher, making them attractive in the sector [7]

JamesBrey Introduction Gladstone Capital (NASDAQ:GLAD) is a quality, monthly-paying BDC that is a great investment inside an income-oriented portfolio to compound dividends. The stock has performed well, and the last four articles published on them have all been buy ratings. And while I consider them to be of higher-quality, I think the share price has gotten ahead of itself, warranting a hold rating. In this article, I discuss the BDC's latest quarter highlights and reasons why I think Gladstone Capita ...

Klaus Vedfelt/DigitalVision via Getty ImagesIntroduction For those that may be familiar with Blue Owl Capital Corporation (OBDC), a popular BDC here on Seeking Alpha, they have a newly-listed sister, Blue Owl Capital III (NYSE:OBDE). They went public at the beginning of this year. For those who own OBDC already, their sister is another BDC you may want to consider. The two share a lot of similarities, but their differences may suite investors looking for additional income in a dividend-focused portfolio ...

EEI_Tony Welcome to another installment of our BDC Market Weekly Review, where we discuss market activity in the Business Development Company ("BDC") sector from both the bottom-up - highlighting individual news and events - as well as the top-down - providing an overview of the broader market. We also try to add some historical context as well as relevant themes that look to be driving the market or that investors ought to be mindful of. This update covers the period through the last week of May. Marke ...

MicroStockHub Introduction As a huge fan and longtime investor in BDCs, the high interest rate environment has boosted my income tremendously. My BDC holdings have been my top performers, with Capital Southwest (CSWC) leading the pack. So, in short, I have no complaints from me when it comes to the remaining higher for longer for the sector. That's why I think it's essential not to solely chase high yields, and invest in those that offer not only higher yields, but ones that are well-covered. One BDC that h ...

Hiroshi WatanabeIn December last year, I wrote an article on Monroe Capital (NASDAQ:MRCC) outlining three specific reasons why investors should, in my opinion, avoid investing in this BDC. These reasons were the following: Low margin of safety in the dividend coverage. One of the highest leverage profiles in the BDC space. Clear signs of deteriorating portfolio quality. Back then, in light of expectations on falling interest rates and an increased distress in the corporate segment, investing in a BDC, ...

malerapaso Introduction I think I can speak for a lot of retirees when I say the most important goal in retirement is a reliable stream of income from strong businesses. Capital appreciation is always great to see, but income reliability is a key metric for those in retirement. That's likely a reason business development companies are considered attractive income vehicles for them. Moreover, BDCs can also be attractive for other investors seeking income, as they generally offer higher-than-normal yields. On ...

Richard Drury I found myself adding to my position in Goldman Sachs BDC (NYSE:GSBD) last week as the company’s share price stabilized after an undeserved sell-off earlier in May. In my opinion, Goldman Sachs BDC’s first lien strategy paired with its ability to consistently deliver high distribution coverage ratios skewed the risk profile further to the upside, especially now that the BDC's shares trade at a lower price-to-NAV ratio. Goldman Sachs BDC also has revaluation potential as the Federal Reserve ...

For investors seeking momentum, Putnam BDC Income ETF (PBDC) is probably on the radar. The fund just hit a 52-week high and is up 21.3% from its 52-week low price of $28.77/share.But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:PBDC In FocusThis ETF is active and does not track a benchmark. The Putnam BDC ETF seeks current income. The fund charges 679 bps in fees and yields 9.07% annually.Why the Mo ...