Over at the BDC Reporter we've been gathering for a couple of years now an ever larger number of credit metrics for all the public BDCs we track. (There are 42 BDCs currently, but will shortly increase to be 44 or 45). All the metrics are contained in the very large - and ever expanding - BDC Credit Table. That's a valuable Subscriber Tool at the BDC Reporter, reserved for subscribers. Now, we're making the Credit Table available to our BDC Credit Reporter subscribers given that not everyone (rightly or wrongly) might not be a BDC Reporter subscriber as well.
Here you'll find by BDC and by quarter an aggregation of key numbers like total portfolio assets on a fair value basis - useful for tracking growth trends since the IQ 2020. Then there's the total number of portfolio companies in every portfolio. Where the data is available (not all BDCs are forthcoming), we have copied the value of underperforming assets and how much of the portfolio they represent from the quarterly filings and whether the value trend is up, down or unchanged. Next to that you'll find a sub-set: the number of companies with debt on non-accrual and the fair market value of the assets they represent.
The blessing and the curse of the Credit Table is that there is just so much data to pick through - all of which we consider important to analyze. We've recently begun to record for every BDC in every quarter what their net realized losses were. After all, these losses are a permanent loss of capital and - indirectly - earnings power. If there are significant company write-offs we count the number thereof. To put net realized losses into context we calculate what percentage of net assets they represent if it's a material number. If all that wasn't enough, we also record unrealized gains or (losses) for the same quarter.
Hand In Hand
No one metric is an island. They all have to be taken into consideration in drawing any conclusion. For example, the BDC sector recorded ($542mn) in realized losses in the IIIQ 2023, which sounds worrying. Yet, in the same period, the sector also recorded $897mn in unrealized gains. There were 32 new non-accruals, but only 15 net of any reversals. "Good quarter" or "bad quarter"? We leave that to our readers to decide.
A recent addition to the Credit Table is naming names where non-accruals are concerned. Look down and you'll see - by BDC - the name of every non-performing company and whether the value of the assets is NIL ($0-1mn), NON MATERIAL ($1mn-$5mn); MATERIAL ($5mn-$50mn) or MAJOR (greater than $50mn). (The point is not to waste your energies worrying about non-accrual situations where very few dollars are left). We also indicate which quarter the non-accrual first began. This list gets updated whenever we learn of a new non-accrual or one gets removed for any reason.
Improvement In Process
Even with all the above, we're not done. The Credit Table is beginning to show the number of Important Underperformers by BDC - drawn from our database. Also included is the FMV of those Important Underperformers (or IU). Very importantly, we're showing what the BDC Credit Reporter estimates further losses might be for these troubled companies. If that's a big number proportionate to a BDC's AUM and capital - beware!
Hand In Glove
Furthermore, we're trying to integrate the Credit Table with the BDC Credit Reporter where possible. Down where we've listed every non-performing company, you'll see we're adding a link to the latest BDC Credit Reporter article we've written about them and another link to their Company File. Both the article and the Company File are useful ways to quickly get up to speed about what's going on at these businesses. Just click.
We recognize that the Credit Table is unwieldy and likely to remain that way as we intend to both constantly update and add further data categories. Once mastered, though, this is a unique resource which provides an almost complete picture of BDC credit performance, especially when the credit metrics are mixed in with the "color" that our articles provide about the most troubled BDC-financed companies. For anybody keen to get into the BDC "weeds", we humbly suggest that the BDC Credit Table should be a regular port of call.