BDC Redemption Requests Exceed 10% in Q2; Software Exposure, Retail Investor Base Drive Redemption Activity; Certain Investor Behavior Runs Counter to Fundamentals

Credit Research: Lexie Wang Relevant Item: BDC Database   Key Takeaways   Redemptions have risen steadily for six straight quarters. Median shares submitted for repurchase climbed to about 3.24% by the second quarter of 2026 from roughly 0.64% in the first quarter of 2025. On a weighted average basis, total redemption requests against total net asset value across the nontraded business development company universe rose to 11.12% in the second quarter of 2026 from 9.67% in the first quarter.   Software exposure is the top driver of redemption behavior. Funds heavily concentrated in software-based loans show the highest redemption rates.   Retail investor concentration correlates strongly with higher redemptions. Additionally, funds above $5 billion in NAV were found to have the highest redemption rates in the sample. Further analysis revealed that these same funds also carry a notably higher mix of Class S retail shares compared with funds under $1 billion NAV, possibly suggesting that the elevated redemption rates among larger funds are explained by their heavier retail investor concentration.   Some redemption patterns run counter to fundamentals. Lower leveraged funds and those with positive post-dividend cash flow actually redeemed at higher rates, suggesting that redemption behavior is being driven[...]