Publicly traded BDCs use accounting rules to keep debt off balance sheets
Updated
Updated · The Wall Street Journal · May 1
Publicly traded BDCs use accounting rules to keep debt off balance sheets
2 articles · Updated · The Wall Street Journal · May 1
The S&P BDC Index trades at 86% of net asset value, while Octus estimates leverage rises from 1.2 times equity reported to 1.5 times on a full look-through basis.
Examples include Blue Owl, Bain Capital Specialty Finance, New Mountain Finance and Ares Capital, where majority-owned lending vehicles carried debt from 2.8 times equity to more than 10 times.
Congress doubled BDC borrowing limits in 2018, but non-consolidation rules can further obscure leverage, raising investor concerns that hidden debt could magnify losses if private-credit stress deepens.
Are BDCs using 'Enron-like' accounting to hide leverage, setting the stage for a new financial crisis?
As regulators push private credit into 401(k)s, are they ignoring the sector's massive hidden risks?
With tech giants hiding billions in debt, is the AI boom fueled by an invisible private credit bubble?