Gross fundings plummet at top BDCs in Q1 as yields stabilize – LCD analysis

The apical concern improvement companies saw their portfolios declaration importantly successful the archetypal 4th of 2026, driven by a steep diminution successful caller concern enactment and by markdowns that reduced the just worth of existing assets.

Overall, the apical 12 publically traded BDCs tracked by LCD reported gross fundings of astir $5.7 cardinal successful Q1, down from $9.1 cardinal successful Q4 2025 and from $8.4 cardinal successful Q1 2025. That $5.7 cardinal full represents the lowest gross fundings since LCD began tracking this information 2 years ago.

Several apical BDCs basal out. Golub Capital BDC saw gross fundings shrink 96% year-over-year to conscionable $15 million. CEO David Golub told investors connected May 5 that the institution had prioritized stock buybacks implicit caller concern commitments, and would proceed to bash so.

FS KKR Capital Corp. and MidCap Financial Investment Corp. each saw their gross fundings descend by astir 75% year-over-year; the 2 BDCs besides committed to aggressively bargain backmost their ain shares beneath NAV alternatively than question caller indebtedness investments.

Only 1 BDC accrued its gross backing measurement year-over-year: Ares Capital Corp. reported astir $3.4 cardinal successful caller deployments successful Q1, down from $4.8 cardinal successful the anterior 4th but inactive supra the $2.8 cardinal deployed successful Q1 2025.

Speaking connected an April 28 net call, Ares Capital Corp. CEO Kort Schnabel pointed to heightened superior markets volatility, geopolitical uncertainty and nett outflows from retail products, which helium said had exacerbated “an already seasonally dilatory marketplace period.”

Sales and repayment volumes, by contrast, were comparatively stable. Notably, New Mountain Finance Corp. reported a significantly higher measurement of income and repayments successful Q1 pursuing a ample secondary indebtedness merchantability to Coller Capital astatine 94 cents connected the dollar.

Overall, the apical BDCs reported nett outflows of $2.1 cardinal successful Q1, the largest since LCD began tracking specified information 2 years ago. This is the 2nd consecutive 4th of nett outflows, aft the funds reported a combined $323 cardinal successful outflows successful Q4 2025.

While nett outflows reached $2.1 billion, the just worth of the apical lenders’ portfolios fell by $3.5 billion, reflecting the further interaction of markdowns connected existing portfolio assets.

Many BDCs marked down their loans to bundle companies and different borrowers to bespeak widening spreads successful nationalist markets. Lenders similar Golub Capital signaled that specified markdowns would astir apt beryllium reversed successful aboriginal quarters arsenic marketplace conditions evolve.

Other markdowns volition apt beryllium harder to reverse. In Q1, respective lenders moved lawsuit acquisition bundle developer Medallia to non-accrual arsenic the institution undergoes a restructuring, and they further marked down loans to the borrower that were already importantly impaired. FS KKR disclosed that it had written down its ain nett plus value by 10% successful Q1, driven successful portion by markdowns connected Medallia and different non-performing investments.