Well, in my view, a BDC that lends capital to US SMEs is rightly losing ground due to the overall economic situation in the USA. Interest rate cuts or not, the financing conditions for SMEs are likely to remain steep. Things are not looking so rosy for SMEs in the USA at the moment due to consumer restraint in connection with the economic situation, tariff disputes, etc. Additional tariffs on imports etc. also need to be compensated for financially, which experience has shown is much easier for large corporations (by increasing prices) than for Mittelstand🤷🏼♂️. Have you looked into risk provisions (provisions for loan defaults, etc.), write-downs on receivables, etc.? These would be the first points I would look into.
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@All-in-or-nothing Other BDCs have also fallen recently. Even the heavyweights Main and Ares. Falling interest rates are rather bad for BDCs, as their financing is often linked to the prime rate and they can of course no longer charge such high interest rates when interest rates are generally lower
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@All-in-or-nothing At 3.0%, their default risk (non-accruals) is indeed higher than the industry average. But still within reasonable limits. Again, I did not expect this to have such an impact.
Well, let's see what I do. I don't really have any difficulty getting rid of bad investments, but I probably need to learn/research more here to improve my assessment ...
Well, let's see what I do. I don't really have any difficulty getting rid of bad investments, but I probably need to learn/research more here to improve my assessment ...
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