KBRA Releases Research – Business Development Company (BDC) Ratings Compendium: December 2020 and COVID-19 Update

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases its Business Development Company (BDC) Ratings Compendium, which analyzes the quarter ended December 31, 2020 results in addition to the impact of the coronavirus (COVID-19) on BDCs within the KBRA universe.

Themes discussed in the Compendium include:

• The BDCs under KBRA’s coverage mostly rebounded by year-end 2020, in a stark reversal from the brutal month of March 2020, at the onset of the COVID-19 pandemic.
• The median NAV change from December 31, 2019 until December 31, 2020, for the BDCs under KBRA’s coverage was -2.7%, largely due mostly to continued spread tightening to pre-COVID levels.
• Median non-accruals as a percentage of total investments at fair value declined in 4Q 2020 to 0.88% and compare favorably to 1.75% in 2Q 2020. The BDCs had positioned their portfolios mostly in non-cyclical sectors prior to the pandemic, which helped keep non-accruals low.
• The BDCs took advantage of the strong private debt markets and increased activity in 4Q 2020, growing their assets with increased leverage; however, they remain cautious and abide to strict underwriting guidelines.
• While KBRA remains cautious, the COVID-related credit impact on BDCs continues to improve as the economy opens. In addition, we believe that the shoring up of balance sheets during and prior to the pandemic, increased unsecured funding replacing secured debt in addition to prudent capital deployment in the uncertain environment with increased financial flexibility, should help most BDCs absorb additional non-accruals and write-downs should the economy worsen.

Click here to view the report.

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.