BDCs strained by fall in value of loan investments

摘要

Business development companies are extending losses in 2016 as slumping share prices restrict access to growth capital and the value of some loan investments falls in volatile markets as fears of defaults rise. BDCs specialise in lending to privately-owned US middle market companies and are specialised closed-end investment funds that raise equity capital from retail and institutional shareholders. The sector is currently trading at a steep discount to net asset value, which is making it difficult to raise fresh equity without diluting existing shareholders. With few exceptions, the funds are trading at 75%-80% below NAV, which measures mutual funds' price per share.