Differing BDC Nonaccrual Policies Leads to Timing, Pricing Differences of Companies on Nonaccrual Status; Apollo, Golub Exhibit Conservative Tendencies

Credit Research: Lexie Wang Relevant Items: Link to Octus’ BDC Database Link to List of Loans in the Analysis Link to BDC Nonaccrual Loan Policy   Key Takeaways   Comparing a business development company’s, or BDC’s, stated nonaccrual status policy to the timing of when a BDC actually places a loan on nonaccrual status indicates that these stated policies do in fact correlate to BDC actions. Different BDCs state different policies related to when BDCs place loans on nonaccrual status with certain BDCs basing it entirely on their view of borrowers’ ability to pay while others include an actual payment default element to their policy. Octus ranked the nonaccrual policies of 124 BDCs from category 1 (most forward-looking, judgment with no day count) to category 5 (most lagging, 120 days past due or a qualitative assessment). Category 1, the most forward-looking judgment test, is used by 49% of the 124 BDCs. Apollo-managed BDCs, a category 1 manager, continue to place restructured loans on nonaccrual status even after the restructuring, indicating an additional measure of caution. In Affordable Care, 48forty Solutions and Dental Care Alliance, all restructured in 2026, Apollo is the only holder still reporting these loans on nonaccrual status.[...]