Octus’ BDC Coverage Roundup: Dividend Coverage, Software Exposure, Stressed Credits Across Private Credit

Relevant Items:
Octus’ BDC Database
Private Credit Dashboard

Octus’ full Private Credit product suite includes deal origination & private credit coverage, BDC and Private Credit Data, Private Credit Fundamentals, Deal Term Analytics and Covenants analysis. Contact [email protected] or your account manager for a demo.

BDC Software Exposure and Market Impact – Software at approximately 29% of BDC investments by cost across 155 funds. Fund-level pricing, PIK, maturities and stressed loan data in a downloadable dataset. Includes coverage of how the software selloff is flowing through to BDC stock prices and secondary trading.

BDC Quarterly Cash Analysis – 53% of BDCs spent more on dividends than they generated in cash, up from 38% the prior year. PIK income rising at more than 60% of funds. Downloadable cash flow calculations for every fund.

Analysis of True BDC Leverage – When consolidating debt from majority owned joint ventures, leverage increases about 1x. BDCs are not required to consolidate joint venture financials even if majority owned.

Blackstone Secured Lending Fund – Record deployment quarter, but cracks emerging. Dividend coverage was strong at 104%, though Medallia, the fund’s largest holding, was marked down further to 77.75% of par and nonaccruals ticked higher to 0.6% of cost. Leverage at 1.3x, slightly above the company’s long-term target.

Golub Capital BDC – One of the first major BDCs to cut its base dividend, reducing the quarterly payout 15.4% to $0.33 per share. Software at 26.4% of portfolio. Management described a challenging outlook for 2026 driven by lower base rates, tighter spreads and muted M&A.

FS KKR Capital Corp. – Cash dividend coverage has not exceeded 0.8x in any LTM period reviewed. Nonaccruals at 3.4% of fair value. Non-income-producing assets at 6.1% of portfolio fair value. Management guided first-quarter 2026 net investment income below the fourth-quarter figure.

Midcap Financial Investment Corp. – Pure cash coverage at 0.81x as the cash-to-reported-yield gap widens to 80 bps. Dividend cut from $0.38 to $0.31 per share. Noncash income increasingly supporting reported returns.

Cliffwater Detailed Model – The company’s exposure to CLO junior and equity tranches effectively increases the interval fund’s leverage and exposure to changing loan prices. Cash flow after dividends negative on lower shareholder reinvestments.

BlackRock TCP Capital Corp. – 19% sequential NAV decline driven by six positions previously marked near par, three of which had already restructured. Over 20% of nonaccrual loans carried PIK. $325 million of 2.85% notes were maturing imminently.

Crescent Capital BDC – Following the $3.2 billion Crescent Credit Solutions VII closing, Octus assessed which assets likely transferred and the remaining portfolio’s composition. Average fair value at 97.6% of par.

FS KKR Health Clinic Rollups – $847 million of exposure to dental, ophthalmology and dermatology rollups. Fair values from 86% to 101% as well as comparison of fair value marks to other lenders. Historical pricing data included.

New Mountain Finance Corp. Portfolio Sale to Coller Capital – Ahead of New Mountain’s announcement, Octus learned that Coller Capital was the winning bidder of the BDC’s $500 million portfolio sale at a closing price in the low 90s.

Pluralsight – Second-out loans on nonaccrual, equity written to zero. Fair value marks range from 70% to 100% across BDC holders. Capital structure and holder-by-holder positioning included.

Medallia – At 77.75% of par after five consecutive quarterly markdowns. BDC marks range from 77.3% (Apollo) to 85.0% (HPS). Capital structure discussions expected.

BDC Q3’25 Nonaccruals – Across 160+ public and private BDCs, aggregate nonaccrual debt up 12% QoQ to $6.72 billion at cost (1.51% of total). Consumer discretionary driving the increase; circa 15% of prior-quarter nonaccruals restructured or exited. Maturity wall peaks in 2027.

Octus’ sector watchlists track PE-backed rollup strategies across BDC portfolios, with platform-level fair value marks and lender positioning. Each report examines how business model and ownership structure drive credit performance.

Veterinary Rollups – 15 platforms across five business models. Veterinary service organizations showing widening fair value dispersion, ranging from 88% to 101% of par.

Home Services Rollups – 17 residential HVAC and services platforms. Recurring-revenue models outperforming; regional players under most pressure. Air Pros chapter 11 in March 2025.

Dental Practice Rollups – 30+ PE-backed dental platforms with over $3 billion in BDC exposure. DSOs showing widest dispersion. National Dentex Labs marked to 39% on digital disruption. Labor inflation and consumer pullbacks on elective procedures pressuring the sector.

Private Credit Restructuring – Discussion with Accordion and Paul Hastings on nonaccrual trends, credit document evolution, PIK negotiations and early intervention. Replay and transcript available.